Financial advice firms recruit and hire women less often and pay them less than men, a new report from the Certified Financial Planner Board of Standards Inc. found.
The study, which examined why only 23% of those holding the CFP mark are women and why females represent only about 31% of the financial advice business, found the culture to be less welcoming for women. It also concluded that women are more reluctant than men to take professional risks, such as accepting a job that pays on commission or is fee-based on assets under management.
Most of the reasons as to why there aren't more female advisers have to do with them not getting into the business as opposed to leaving it early, according to the study, which was released Tuesday.
(See also: What obstacles female advisers face in their careers.)
"The issue of the low number of women CFP professionals is primarily a problem of attraction, and not one of retention," the report said. "Once women achieve their CFP certification, the rate of relinquishment is extremely low."
The CFP Board created a group of 11 industry professionals a year ago to examine what barriers might be keeping women out of the industry. Some of the suggestions from the board's report were that firms offer more salary-based pay, especially at the entry level, and that they facilitate more mentoring of women in the profession.
Going forward, the CFP Board said it will conduct pilot programs at four to five firms aimed at boosting gender diversity and start a media campaign that shows more women acting as advisers.
The report also found that 66% of female CFPs become practitioners, compared to 80% of men. Given that finding, the report said the number of practicing women CFPs is probably even less than the 23% previous studies suggest, and it's more like one in five, or 20%.
At least anecdotally, young women seem to have an especially difficult time breaking into the financial planning business.
“The feedback I get from students after they return from job interviews is that the people interviewing them are middle-aged men. These men comment that these women look young and would not relate to their clients," an unnamed CFP Board program director said in the report. "This is not being said about their male counterparts."
(Here are other challenges women in the advice industry face.)
Interestingly, the report mostly debunked one reason sometimes cited as a reason for women staying out of the industry — a worry about work life balance. Only about 9% of men and 10% of women said they believe the profession doesn't offer good work life balance, the report found.
About 43% of financial advisers and 40% of those with the CFP designation said they think men are favored over women in hiring, the report found. About 6% of all advisers and 8% of those with a CFP said they think women are actually given a preference in hiring.
Women advisers earn about $32,000 less each year than male advisers, according to a 2012-2013 Aite Group industry study cited in the CFP Board report.
In addition to salary-based compensation, firms can try to increase the number of women in the industry by appointing a chief diversity officer, ensuring men and women are paid the same for doing the same jobs and encouraging the formation of women adviser networks, the report said.
(Check out some gender diversity efforts of some firms.)