Defining the 'female effect' on Advice

How female advisers are managing their practices and clients–and igniting a new wave of growth

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Defining the 'female effect' on advice

How female advisers are managing their practices and clients–and igniting a new wave of growth

By IN Research and Advisor Group — May 11, 2018

While women still represent a distinct minority of the overall population of financial advisers, there has been some notable progress in the composition of the advisory industry landscape. Within the independent space, women now hold roughly 34% of all advisory roles, and represent 15.7% of the total universe of 298,000 brokers and financial advisers. While 23% of advisers with the Certified Financial Planner designation were women at the end of 2017 – a number that has held steady since 2003 – the number of women holding the CFP designation grew to 18,288, a 78% increase during the same time period.

A clear gender gap still exists, but generational shifts and broader initiatives to bring more women into the financial advice industry suggest that progress will likely continue. At the same time, these recent advancements have presented a unique opportunity: With more women advisers in the industry, it is now possible to identify meaningful differences in the ways that men and women work with their clients and approach the business of financial advice.

Through our research, we have identified clear contrasts in how women advisers operate their firms, view their roles as advisers and are ultimately growing their businesses relative to their male adviser counterparts.

The goal of this paper is to highlight both these differences and define the unique impact, or the “female effect,” that women can have on the performance of an advisory firm. By identifying these elements, we aim to provide enhanced visibility into the complementary skill sets and strategies that could drive the future success of financial advisory firms.

Key findings and areas of exploration in the research brief will include:

Growth: Women advisers are growing their book of business at a faster relative rate than male advisers

Client acquisition: Women are more likely to employ a diverse and proactive array of marketing methods, which is driving their growth and their ability to attract new clients

Technology: Women are using technology-driven, client-facing solutions more often than men, which is setting the stage for a divergence in the digital experiences and expectations of their clients

Positioning: Women more frequently describe themselves as financial, holistic or life planners, as opposed to wealth managers

Focus: At the same time, women also tend to outsource investment management more than men and spend more time on practice management.

In order to examine how male and female advisers contrast in the ways they grow and operate their businesses, InvestmentNews Research fielded a survey to financial advisory professionals, collecting representative samples of both genders consisting of 203 women and 288 men.

FIGURE 1: Tale of the tape
Women
Men
Note: Respondents were presented with a list of 28 common advisory firm positions, including titles for executives and partners (“senior management”); advisers and investment specialists (“financial advisory”); and advisory support and administrative (“administrative”) roles. “Independent” firm channel includes RIA-, IBD- or Hybrid-affiliations; “Captive” includes wirehouse orregional broker-dealer affiliations.

One of the more notable differences between the demographic makeup of women and men in our study is their age, with women aged 42 on average versus 53 for men (Figure 1). This gap, which has been persistent across InvestmentNews' research, has been described as the “leaky pipeline” of women's career advancement in the financial advisory industry. Women are equally represented at the beginning of the advisory career path, but at more senior positions, their ranks slip to a much thinner margin of the population. Ninety-seven percent of men and 81% of women responding to our survey hold client-facing professional roles, with 52% of men and 42% of women indicating they are a partner or hold a C-suite role.

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