The wealth management industry is lagging when it comes to financial inclusion for women.
According to the Bureau of Labor Statistics, 31% of financial advisers are women, but this number appears high based on my anecdotal observations. An estimate by Barron’s that 20% of financial advisers are women and the CFP Board’s estimate that 23% of certified financial planners are women are perhaps more realistic.
Among the larger financial advisers, these numbers drop even lower. Only 12% of Barron’s top 100 advisers are women.
Women are indeed underrepresented in financial advisory roles. Yes, the industry needs to adapt in order to better reflect society, but also because more and more of its clients are women, and the share of global wealth controlled by women is increasing.
A recent report by Boston Consulting Group documented that 37% of wealth in the U.S. today is controlled by women. That rate is expected to grow 40% faster in the years ahead than the growth rate of wealth controlled by men. Increasing professional earnings, inheritances and transfers from divorce or the death of a spouse are all factors, but most of all the shift reflects the inevitable and slow removal of cultural barriers.
However the numbers are sliced, it is clear that women are underrepresented and yet are needed more than ever in the wealth management industry.
To accelerate their representation, we need a three-pronged approach: education, encouragement and examples.
First, the career option of being a financial adviser is not well known. Financial planning degrees are relatively new and at most business schools, careers in asset management, investment banking and corporate banking are better advertised and more sought after than wealth management.
Yet there is more flexibility in this industry than in other financial sectors. If flexibility is more valuable for women, we need to do more to showcase and teach the skills that are needed to pursue these professions. Business schools can do more here, but successful wealth management firms can as well by offering training programs to high-potential women in adjacent areas of sales, marketing and administration.
Women are also 20% to 30% more likely to drop out of the workforce mid-career than men. Just increasing the number of women entering wealth management is not going to solve that missing balance. We also need to encourage and support reentry after family-related commitments take women away from work, and do that in a way that is authentic. This may call for dedicated resources and programs for stepping away and re-onboarding. Depending on the time away, retraining should also be available so they can catch up with their cohort.
Finally, successful women in this industry have a significant role to play. They have an opportunity and a responsibility to stand up as role models and examples of what to do and what not to do. We need more examples to drive belief among young adults and parents alike that this field is an attractive and realistic option.
Some might question whether female advisers are needed simply because women are controlling more wealth. This is a valid argument. While women don’t necessarily need female advisers, they do need a lack of stereotyping, and evidence suggests that financial advisers (both men and women) treat their female clients differently.
So while the industry needs to encourage more women to the profession, it also needs to train everyone — men and women — to be aware of the conscious and subconscious biases and behaviors that continue to drag down these relationships due to outdated associations. The truth is, female advisers might be able to understand, empathize and adapt more easily than their male counterparts because they have experienced these forces themselves.
Both women and men have a role to play in accelerating the gender balance among advisers and the clients they serve. This kind of financial empowerment — for both advisers and clients — will lead to a society where the pursuit of happiness is not constrained by financial choices that are limited simply because of gender
Dr. Vinay Nair is founder, CEO and chairman of The TIFIN Group, a platform for creating and operating wealth and investment fintech companies. He is also a visiting professor at the Wharton School.
Empower’s Ed Murphy sees $8 trillion DC business as growth market
As our second lead editor, Cindy Hamilton covers health, fitness and other wellness topics. She is also instrumental in making sure the content on the site is clear and accurate for our readers. Cindy received a BA and an MA from NYU.