Women play an increasing role in managing wealth, but the underrepresentation of female advisors is hurting investors and the wealth management industry, according to a new report by Carson Group.
Women control more than a third of total U.S. household assets and by 2030 that figure is expected to grow to $30 trillion as a result of the coming generational wealth transfer, according to McKinsey & Company. But most advisors don’t know how to customize advice for women.
Part of that is because there just aren’t enough women advisors.
According to the Certified Financial Planner Board of Standards (CFP Board), women make up less than 24 percent of total CFP professionals, wealth management’s most popular designation, a number that has grown less than one percent over the last decade.
According to the report, women think this is a bigger problem than men do. According to a survey of 276 financial advice professionals, 68 percent of men and 92 percent of women agree underrepresentation is a problem. Last year, 91 percent of women and 91 percent of men agreed it was a problem.
Carson said the analysis found that many executive women preferred working with female advisors who could relate to their experiences. Female advisors are increasingly becoming the preferred choice of female clients so their underrepresentation hurts firms that aren’t staffed to meet the changing needs of its clients, said Carson.
“The findings of our 2023 Women in Wealth Management study reinforce the crucial role that female financial advisors play in today’s industry. Beyond the qualitative insights, the statistical data underscores the need for continued efforts to enhance gender diversity, promote sponsorship, and create inclusive cultures,” said Julie Ragatz, vice-president of nextGen and advisor development programs at Carson Group, in a statement. “This commitment involves conducting studies like this, building a supportive community, creating inclusive cultures, actively recruiting more women, and ensuring ongoing support for female professionals.”
Inclusive cultures are essential to attract and retain female talent. According to the report, 91 percent of female respondents (and 83 percent of male respondents) said that corporate or firm culture was an important element in their level of satisfaction at work.
However, only 36 percent of respondents of both genders ‘strongly agree’ with the statement, “I feel supported by leadership at my firm.”
Carson said it was important for firms to also understand that many women have additional responsibilities outside of work such as needing to provide caregiving for children and aging parents, and being the primary person that handles domestic work. They also face additional barriers such as sexism, biases, stereotypes, harassment, and bad behavior, said Carson.
Among the survey respondents, only 18 percent of the women said they were always able to balance their personal and work obligations and an additional 55 percent said they are “often” able to find that balance. However, nearly 50 percent of male respondents said they always are able to find that work life balance and an additional 40 percent said they were “often” able to find balance.
Workplaces can help female advisors, said Carson, including designing and offering flexible work arrangements with input from female employees; providing education and training designed by and tailored to females; implementing formal sponsorship programs that are tied to advancement and bonuses; and creating introductory wealth management programs for young students.