Demand for female financial advisers is strong, but the job's attraction undeniably is weak.
“There is a very high demand for female advisers because a lot of female clients want to work with female financial advisers and feel more comfortable in many ways with another woman,” said Felix Malitsky, managing director of MetLife Financial Group of New York.
Women also are sought after by both clients and employers because they tend to be successful advisers, he said. Last year at Mr. Malitsky's firm, the top quintile of advisers included nearly as many women as men, even though only about 30% of the firm's advisers are women.
Alexandra Armstrong, a pioneering female adviser who founded Armstrong, Fleming & Moore Inc. in 1983, is one of two female planners at her four-adviser firm. She has been looking for ambitious younger women to join her practice for years, “and it's not that easy to find them.”
Despite their value, female advisers earn on average only 61% of the pay of their male colleagues, according to the Bureau of Labor Statistics. Female advisers earn $49,000 on average, versus a man's $80,000. Across all careers, the national average pay for women is 82% of what men earn for performing in the same job.
That difference in pay can be explained to a certain extent by the fact that female advisers tend to manage fewer assets and are more likely to be at independent advisory firms, which typically have lower account sizes than wirehouses.
But other factors also are at play.
“The pay gap is an indicator of the trends that keep women out of the profession, like the cultural attitude of women not being seen as a person to go to for managing your money,” said Amelia Granger, senior analyst with NerdWallet Inc., which analyzed the government pay data on advisers.
“This is known to be a male industry; females may be afraid to get into the industry,” said Danielle Dempsey, an adviser with MetLife Financial Group of New York. Most of her clients are men, and she has found that “first you have to earn their respect as a woman, and then as an adviser.”
Some women are just looking to earn a decent living and may choose to have fewer clients and manage fewer assets, Ms. Armstrong said. She's observed that many of the women who have been the most monetarily successful bring home the sole income, such as in the case of two advisers she knows — one who is divorced and one who is widowed.
“We are always surprised by how few women choose to make a lot of money at this business,” Ms. Armstrong said. “Other women have said, 'If I can have flexible hours and have a certain number of clients, that makes me happy.'”
In fact, despite the pay gap, female financial advisers appear more content than their male counterparts. Female advisers tend to be more satisfied at their jobs and less likely to consider a new position, according to a J.D. Power and Associates survey last month, which found that women advisers as a whole are more likely to be dedicated to their firms. Fewer female advisers are “indifferent” toward their firm, compared with men, it found.
Financial adviser Valerie Peck knows the challenges of the career and said the first five years of building up an advisory business are hard financially and require complete dedication. That makes it a daunting career choice for someone who is supporting a family.
Also, the path toward success in this field is not clearly drawn, and even the costs of owning an advisory business — such as compliance and technology — are murky, she said.
A disconnect with demand
Cerulli Associates Inc. estimates that only 7.9% of advisers who work directly with clients are women. Estimates from the Bureau of Labor Statistics showed 36% of advisers were female in 2010, but that included all professional women who worked for advisers, as well. That amount is actually an increase from 31% in 2009. The government measure has been around the 30% level for about a decade.
“There's a disconnect with market demand,” said Kim Dellarocca, head of practice management for Pershing LLC.
Investor surveys show time and again that a large number of women prefer to work with other women. In a study last year, Pershing found that 70% of women would like to work with a female adviser, though only about 20% of women do.
Shrewd firms understand that consumers of the future increasingly will be wealthy women who have built their own fortunes through the rising numbers of woman-owned businesses, or gained it through divorce or an inheritance. In addition, an increasing number of women are choosing to remain single, Ms. Dellarocca said. And women control 85% of the purchasing decisions.
So if studies show that women want to work with other women, a savvy firm is going to make sure it has women on board, Ms. Dellarocca said.
Wirehouses and most independent broker-dealers have programs aimed at cultivating female advisers, though it's unclear yet whether they are having much of an overall impact on the market.
The lack of female financial advisers has industry groups such as the Certified Financial Planner Board of Standards Inc. forming groups aimed at breaking down the barriers that keep women out of the industry.
The CFP Board is putting together a panel of nine women to conduct research beginning this summer into the challenges that may be keeping the numbers of women in the field down, said Marilyn Mohrman-Gillis, managing director of public policy and communications for the CFP Board. About 23% of the group's 67,000 CFPs are women.
“Essentially, it's been a flat line for more than a decade, and we think there should be more women,” she said. “Our goal is to try to develop a plan for bringing more women into the practice of financial planning.”