Women remain underrepresented in the financial advice industry, progress toward gender equality is moving at a snail's pace and women in the industry still face substantial barriers to advancement.
As a new report from InvestmentNews Research and State Street Global Advisors, "Women in advice: Inspiring the next generation of financial advisers," points out, firms can take steps to address these issues by transforming workplace culture, increasing flexibility, and creating a system that is transparent around compensation and promotions.
However, addressing these management issues will do little good if younger generations are unaware of the industry or, for those who are, see it as unwelcoming.
Male and female advisers alike believe that these are two of the largest barriers to achieving higher gender equality across the financial advisory industry.
Overcoming a lack of awareness of what a career as a financial adviser entails, and exposure to the industry, needs to be addressed. In our survey, only 27% of women decided to pursue a career in this industry prior to or during college. Unlike other careers, such as doctors or teachers, exposure to the profession is limited. Only through deliberate outreach will younger generations understand this profession exists and form impressions from an earlier age about what being an adviser entails.
For those who are aware of the industry, the perception is generally not one that is welcoming to women.
The difficulty in trying to prove the industry is welcoming lies in the numbers. According to InvestmentNews' 2017 Adviser Compensation & Staffing Study, women represent just 28% of client-facing professionals — a figure that is likely higher than the industry at large, where some estimates place the proportion of women advisers as low as 16%. The sheer imbalance places the financial advice industry on its heels, forcing it to overcome a "boys' club" image propagated by negative portrayals of the industry in popular culture. Such branding issues steer potential talent away from choosing a career in financial advice.
Additionally, there are substantial misconceptions about what a career as an adviser looks like.
Twenty-two percent of respondents in our survey believed that the perception that "the job is 24/7 with little flexibility" is dissuading women from joining the industry, while another 15% believed the perception that "the job is primarily number-crunching" was a barrier to higher gender equality. There is a disconnect between reality — that the job is increasingly relationships-based, rooted in connecting with investor goals and needs and pairing them with services that help realize outcomes — with the public's basic perception of the industry, which conflates the role of a financial adviser with a money manager. That divide, according to advisers in our survey, needs to be bridged in order to bring younger generations into the fold and improve parity among the sexes.
The good news is that men and women alike are aligned in recognizing the barriers to achieving higher gender equality, and both groups are keenly aware of the issues. The industry can help break down the perception that a career as a financial adviser is unwelcoming to women, offers little flexibility and is primarily about number-crunching by combating any practices that may contribute to these perceptions and by purposefully promoting the industry. And reaching out to younger generations early in their education will not only bring awareness of the importance of personal financial education, but also demonstrate that the profession is not predominately about math. Illustrating how advisers help guide investors at the intersection of their life goals and finances will show firsthand that the job is not only well-suited but also rewarding for women, opening the door to talent with a greater variety of strengths.