Change is slow when it comes to gender diversity at independent advisory firms

Women have seen little to no change in representation among advisory professionals, according to the 2017 InvestmentNews Compensation & Staffing Study.

There is no statistically significant observable difference from four years ago in the number of women who hold primary advisory positions at typical independent firms, designated in the catchall terms of lead adviser, service adviser and support adviser.

More than 1,000 lead adviser entries, who could be partners or employees, were submitted for the 2017 study, and 21% of that cohort were women — near-identical to the figure reported in the 2013 study. Lead advisers have broad responsibilities over business development, client relationships, service and managing the process of formulating and implementing advice – they are the primary engine of any advisory firm.

Forty percent of service advisers — professional advice delivery specialists, whether it be in planning or investment advice, who rarely have a primary role in winning new client business — were women in 2017, compared with 41% in 2013. And 41% were support advisers, or adviser-track entry-level staffers whose role typically revolves around the support and implementation of advice for the lead and service advisers, compared with 44% in 2013.

In the 2015 study, a woman was equally as likely as a man to be in the support adviser role. But that likelihood dropped back to 41% in the 2017 study.

Why? One reason probably has to do with the fact that the support adviser position, like many entry-level jobs, has the highest turnover rate among advisory firm professionals. About 37% of the largest firms lost at least one support adviser over the previous year, and a quarter of all support advisers in the study reported that they were hired during the past year.

(More: How does your advisory firm stack up?)

Firms are clearly having trouble retaining women advisers through the apprenticeship phase of their careers.

That could be due to uncertainty about their prospects for advancement in the industry. In a separate survey of individual advisers, about 19% of women advisers with fewer than 10 years of experience cited a “lack of defined career paths” as the number one barrier to their advancement. About 13% of comparable men cited a lack of career paths.

Equal distribution among men and women in entry-level advisory track roles is important in improving and sustaining parity among the sexes along the career track all the way up to lead adviser and executive positions at advisory firms. Any diminishing of that pipeline hurts the industry’s progress toward cultivating more women in leadership roles.

(More: Meet the 2017 Women to Watch)

There is a glimmer of progress at higher ranks of employee advisers. This year’s study shows that women are entering the ranks of lead and service adviser roles at a faster rate. About 15% of all lead and service advisers are newly hired or promoted into the role, and one-third of them are women.

More than 1 out of every 5 participants in InvestmentNews’ 2017 study have a staff headcount of more than 30 people. These firms represent the future of an industry that is looking more and more like the big brokerage firms they left behind 25 years ago (the typical age of a firm with over $5 million in revenue).

With approximately one in four advisers being women at independent advisory firms, these firms outpace the industry as a whole, where an estimated 16% of all advisers are women. As the industry continues to mature from small practices to larger companies with management structures more akin to large corporations, rather than to small privately held businesses, will the independent space continue tp surpass the levels of gender diversity seen at their big brokerage cousins?