The feminine famine in financial services

I had one of those aha moments last month when I served as moderator of an InvestmentNews webcast on women and investing. Although female investors present an enormous growth opportunity for the financial services industry, the number of female financial advisers who may be best suited to serve them has remained stagnant. Call it the feminine-famine paradox: Why can't an industry based on planning sync its workforce with burgeoning customer demand? For the first time in history, half of U.S. workers are female, and mothers are the primary breadwinners in four out of 10 American families. The number of women earning $100,000 or more annually has quadrupled in the past decade, and women-owned businesses are growing at twice the national rate. Women control the majority of wealth in the United States and make most of the buying decisions for their families. And they are likely to become double inheritors, as they are expected to be the beneficiaries of more than $28 trillion from their parents and spouses over the next several decades. They will need good financial guidance to manage their increasing wealth. Yet two-thirds of women don't trust advisers, according to a 2008 State Farm Insurance study. And in a global survey of women by The Boston Consulting Group in 2009, the financial services industry ranked lowest in customer service. Why? Because the industry, designed decades ago by men for men, doesn't know how to communicate with women, who are generally more interested in investing as a means to achieving their financial goals rather than beating a market index. Nearly 1,000 advisers tuned in to the InvestmentNews webcast July 30 for tips on how to work with the growing ranks of female clients. One of our expert panelists, Rick Kahler, president of Kahler Financial Group, distilled his years of experience working with women into one simple directive: “Shut up and listen.” It is something that most female advisers already know how to do. They tend to listen rather than lecture, and they are more likely to ask a client questions about his or her family goals rather than pointing to pie charts about mutual fund families. “Men want headlines; women want stories,” said Kathleen Burns Kingsbury, a wealth psychologist expert and founder of KBK Wealth Management, who also participated in the webcast. Working with female clients can take more time, but it pays off. Women tend to be more receptive to adviser recommendations and make more referrals than their male counterparts. Clearly, being female-friendly is good business. Yet as the industry braces for a potential explosion of female clients, who have become economic powerhouses in recent years, it is having a hard time recruiting women as advisers or to hold on to them once they do. This year, the Certified Financial Planner Board of Standards Inc. asked me to serve on its 10-member women's initiative advisory panel to address the shortage of female CFP professionals. For the past decade, the percentage of CFP professionals who are women has remained static at about 23%. That compares with the 30% of women in the financial advisory industry in general. But women in client-facing advisory roles are a miniscule 8%, according to the most recent Cerulli Associates Inc. data. “In order to better address the ranks of women out there who we know have more money, we need more women advisers,” said Eleanor Blayney, the CFP Board's consumer advocate. “Women are hungry for better advice, and on the professional side, we should be hungry for more women advisers.” But there is the rub. Many women are reluctant to enter the financial services field because they think that it requires more juggling of career and family priorities than they can muster, said Mindy Diamond, a leading industry recruiter and chief executive of Diamond Consultants. Others are frustrated by the lack of entry-level positions and are turned off by the hard-sell, cold-call tactics required of many new recruits. But women should give a career in financial services a second look because it can be exceedingly lucrative and a good fit for their relationship-driven personalities, said Ms. Diamond, who serves with me on the CFP Board's women's initiative panel. I would like to hear from InvestmentNews readers about the opportunities that the financial services industry offers women as a career path, as well as the barriers that they face.