It’s hard to believe that five years ago, my op-ed, Consider Firing Your Male Broker, was published in the New York Times. I still receive media attention for it from time to time. Last month, I was a guest on NPR’s The Indicator podcast to discuss a new paper about women and investing. While the focus of that attention is generally on the op-ed’s salacious title, I wrote the piece to draw attention to the dearth of female advisors. Stereotypically, women make great advisors because we are great listeners and are naturally more inclined to have empathy. Some fun academic papers suggest women may also be better investors. And financial advice can be a fabulous career for balancing work and family life. Because, let’s face it, women still bear more of the burden of housework and raising children.
So, have we made any progress in the last five years? The answer is, unfortunately, not much. Zippia estimates that 27.7.% of advisors are women. If true, that represents a modest increase over the past five years. We are closer to 3 in 10 than 1 in 5, which isn’t impressive given that women comprise 51% of the population. Only 23.8% of CFP certificants are women, a number almost identical to 2018. This is the top industry designation in financial planning. The CFA Insitute hasn’t published new demographic data since 2016, when the percentage of female members was 18%. I assume little progress has been made here despite an uptick in women registering for the exams.
Why is progress so slow? I have a few theories:
Young women do not perceive financial careers to be appealing. It’s not shocking that women are gravitating toward more predictable career paths in accounting, medicine, and even law. The best thing the financial industry could do to attract more women is to create a true profession. Professions require advanced degrees, designations, and continuing education. Professions also instill trust from the public. Our mishmash of letter designations does little to inspire confidence and likely confuse clients more than aid in advisor selection. The CFP(R) working in a brokerage firm is still a broker, and an insurance agent with a CFP(R) is still incentivized to sell high-commission insurance policies. Imagine a physician with the same incentives to sell pricey procedures, surgeries, and prescriptions.
Mid-career women opt-out and lack support. The pipeline issue is important, but I would argue that the failure to keep women in the industry past mid-career points is a huge drain on the number of female advisors. When most of the leaders are men, they naturally promote more men to senior positions. This is not because of blatant discrimination but blind, unintentional bias. Why take a chance on a woman in her early 30’s, if she’s likely to have children soon? Women also have a harder time than men in switching roles; moving from admin and support to client-facing, for example. And since there are few women at the top, there are fewer mentors and sponsors to lift younger women up the rung.
Women don’t like ‘eat what you kill’ compensation structures. Financial advice remains a heavily commission-based business. But it doesn’t have to be this way. Other professions, such as law and accounting, have service professionals who earn salaries and bonuses. The rainmakers who can bring in new business might earn more, but stable earnings are an option for those who prefer not to be responsible for sales. Plus, young advisors naturally have difficulty winning wealth management clients, who are typically older and wealthy. We need a model that allows young advisors to gain experience and skills before they are thrown to the wolves and asked to drum up to new clients. Investing in young people will pay off in spades for the industry.
Women still think the industry is like the Wolf of Wall Street. Financial careers are not portrayed in a positive light in film and media, and for good reason. Sonia Dreziler’s Do Better Series was written in 2019, proving that bad actors are still prevalent in financial services. Even though firms have attempted to clean up their image, words mean nothing without action to support them. Staffing a DEI officer and hosting HR training on sexual harassment is insufficient. The culture change must come from the top. Leaders must start practicing what they preach by building firm cultures that genuinely desire to recruit, hire, and promote women.
Despite these uphill battles, I remain optimistic for the future of financial advice. In its second year, Future Proof Festival was well-attended by women, specifically young women. I met with several college students who were there to network and gain their first jobs in the industry. We are no longer single specks among the crowd, but a true force within it. I am committed to using my voice and my connections to assist women who want to become advisors and those who are looking for advancement in their careers. After all, women will soon control more wealth than men from a combination of inheritances (we live longer) and wealth creators (we earn the majority of college degrees). And you might still Consider Firing Your Male Broker … especially if he’s not giving you the time and attention you deserve.