I spend a lot of time wondering why there are so few women working as advisors, or at least why the numbers don’t change year after year. I think about the signals we give to young girls about money. Somehow these girls received the message they can be anything they want to be; doctor, lawyer, engineer, President (someday?), but not portfolio manager or financial advisor. Hopefully these messages are changing.
To understand this uphill battle, let’s review some highlights from women’s history. It’s easy to forget that great strides in women’s rights are recent history.
Thousands of years ago, men wrote (and continued to teach) that all of humankind’s troubles were caused by evil Eve eating the forbidden fruit. Witches were burned at the stake. Women were (and still are in some places) considered property of their father and then of their husband, with no legal rights. Single women in the U.S. could not take a loan in their name until 1974. They needed a man to co-sign.
It took 144 years for American women to have the right to vote. The passing of the Nineteenth Amendment in 1920 was less than 100 years ago. Even with the right to vote, women were barred from most professions and relegated to secretarial and teaching jobs.
Prior to 1973, there were gender segregated help wanted ads in the newspaper. I’m sure Wall Street firms put ads for portfolio managers in “female help wanted” section. Secretarial science was a college degree. In 1974, the Supreme Court banned the exclusion of women from juries. Imagine being a woman on trial when women were not allowed to serve as jurors. The Pregnancy Discrimination Act was passed in 1978, and before then it was perfectly legal to fire a woman when she became pregnant.
The 1980’s brought many firsts and accomplishments for women. In 1981, Sandra Day O’Connor was the first woman appointed to the Supreme Court. That same year Diana Spencer deleted the word “obey” from her wedding vows to Prince Charles. Sally Ride was the first American woman in space, and Geraldine Ferraro was a vice presidential nominee.
Then things got quiet. Perhaps we thought the problem was solved. Women rose to the top of Fortune 500 companies, local legislatures, and the federal government although they remain grossly underrepresented in these places. More women than men earn college degrees, and women now account for half of medical and law school students.
Meanwhile, women hold about 30% of global private wealth, and their share is increasing. Whether through earnings, divorce, or inheritance, women are expected to control more than $72 trillion in assets by 2020. Women are also the primary breadwinner in more than 40% of US households.
What kind of advisor do women want?
Only 23% of CFP® professionals and 18% of CFA charterholders are women. According to Cerulli Associates, 15.7% of financial advisors are women. Not all women want a female financial advisor, but they do want one who will listen to them and not fling financial gobbledygook in their face.
Women investors are interested in more than returns, benchmarks, and Sharpe ratios. They are more likely than men to focus on financial goals over absolute investment performance. And they may be better investors. In one of my favorite academic papers, Terrance Odean and Brad Barber found that accounts owned by women outperformed those of men because they traded less often and incurred less trading costs.
When I began my career, I never imagined being a woman would be a huge advantage. By virtue of being different, I stand out among my peers. When a conference coordinator is looking to add a woman to an all-male panel, I’m on the short list. When Josh wrote about his failure to hire enough women advisors, I walked through that open door.
The deck is still stacked against young professional women. The cost of childcare is more than the average mortgage payment. Too often, the mother is the parent who steps away from work to care for the child. There’s no clear career path for financial advisors. In brokerage firms, banks, and insurance companies, success depends on an antiquated “eat what you kill” sales commission model. Independent firms are just beginning to grow past their first generation founders and hire professional planners and advisors.
Ladies, my hope is that you consider the benefits of a career helping people become financially independent and spend their time doing what they love. I promise it’s one of the most rewarding careers that exists, even though the career path is not as clear as other professions.
If you have a degree in another field, take the courses required to sit for the CFP(R) exam. If you’ve taken time away from work to care for young children or elderly parents, don’t be shy about promoting your talents and re-entering the workforce. Do what the men do, and apply for jobs even when you don’t meet all of the qualifications. Parents, consider the messages you send your daughters about money and encourage them to be involved in finances. Managers, stop talking about how you want to hire more women and do it.
I attended a luncheon honoring New Orleans’ first female mayor, Latoya Cantrell, last week. It only took us 300 years to elect the first woman as mayor! In her remarks, she repeated one of my favorite sayings, and I will do my best to summarize the quote.
If you need someone to talk about it, hire a man. If you need someone to get it done, hire a woman.