Strong representation at junior level advisory positions could drive future growth in female adviser headcount.
The financial advice industry has long been known for being heavily represented by male employees, but there are some signs in the latest InvestmentNews adviser benchmarking study that the gender gap may be on the verge of tightening.
Large demographic shifts in the workplace don't happen overnight. It often takes multiple years, if not decades, for industries to reflect trends in recruiting practices.
The 2019 InvestmentNews Compensation & Staffing Study, sponsored by Pershing Advisor Solutions, highlights this slow change in gender representation at independent financial advisory firms.
The study shows that female employment at advisory positions within these firms has grown at a turtle's pace from 2017 to 2019.
The percentage of female practicing partners has slightly dipped over the last three years from 18% in 2017 to 15% in 2019. But slight increases in the percentage of women holding support adviser roles, 46%, and lead adviser roles, 25% suggest that increased female representation is imminent.
Over the last few years, an increasing number of firms have instituted an advisory career track. These plans have proven to be a valuable tool for recruiting, developing and retaining advisory talent.
While it differs from firm to firm, the career track outlined in the latest 2019 InvestmentNews Compensation & Staffing Study, shows that it typically takes an individual four to five years to advance to each rung in their career ladder.
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While an adviser can begin his or her career as a paraplanner, providing mostly support to their more experienced colleagues, he or she may not be promoted to service adviser until they have multiple years of experience and a demonstrated ability to manage client relationships.
Similarly, a service adviser may not be promoted to lead adviser until he or she learns how to develop new business and formulate and implement financial advice.
Because there are more women at the lower levels of the advisory career track, it may mean that gains in female representation at the higher up advisory positions are upcoming and partially dependent on firms hiring and promoting experienced female talent.
Career Track Positions
Recent hiring data from the study showed that some of these trends are starting to come to fruition.
Per the research, females entered advisory roles in slightly greater numbers last year than in 2017. While only 31% of all advisory positions are currently held by females, 34% of roles that firms hired for or promoted last year fell into that category.
In short, there is a slightly greater percentage of women in new advisory positions than there are a percentage of women in advisory positions overall, which indicates a minor shift in hiring practices.
Firms can be intentional in hiring women, and that without a doubt immediately affects the overall demographics of their firm and to a lesser degree the industry. But it is likely that many future promotions will also be influenced by the growing number of women waiting in the wings.
Some of these promotion trends at the upper ranks of firms are already taking place. For example, of lead advisers promoted last year, 42% were women.
There has been just minor growth in the number of women holding advisory positions, but there are encouraging signs that firms may be positioned to implement and benefit from a more diverse workforce.
Greater representation by females at the less experienced advisory positions could mean that slightly tightened gender gaps are on the horizon. It may just take some time for these shifts to be realized.
James Gallardo is a research analyst for InvestmentNews.
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