How She Is Changing The Gender Imbalance In Financial Advisors

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The Bureau of Labor Statistics reports that women make up only 31% of financial advisors in the United States and only 23% of Certified Financial Planners. The CFP Board set out to investigate what’s keeping women out of the financial services industry. The interview below is from Milk’s conversation with Eleanor Blayney, the author of the CFP Board’s report on the issue.

Eleanor Blayney: The reality is that the financial planning profession is truly as we sometimes say male, pale and stale. I wish I could say I was the author of that rhyming phrase, but I’m not, that’s been used, but the point is that we’re an aging profession. We’ve got more CFPs over seventy than we do under thirty. The demand and the awareness of the need for a trusted advisor has been increasing, so all else equal it should be a growing profession, but we’re not reproducing ourselves in a vital, relevant way. And by that I mean we have got to get younger people into the profession. They are the ones that will be first of all the holders of money in the future, in a decade or so, major holders of money. And we need to be relevant in that we look like the population we’re serving. And that has to do with all the gender and racial diversity issues. We have some catching up to do in terms of our place in the business landscape.

Jennimaria Palomaki: I want to get into the distinction between financial planner and a CFP and why the lack of gender parity among CFPs is an especially important issue for you and the CFP Board.

EB: Anyone can call themselves a financial advisor. And you find many people doing that. If you decide you’re going to advise people about money or investments, you can be a financial advisor. Nobody has any sort of restriction on that term. To be a CFP however, you’ve got to meet certain requirements. It’s like a doctor or a CPA. In other words you have to qualify for the right for the privilege or the professional status of calling yourself a certified financial planner. The CFP Board is the one that sets the requirements, and a CFP is qualified by education, experience, exams, and ethics, as well as having to accept enforcement—the right of the CFP Board to enforce the proper behavior.

JP: And why is the lack of gender parity among CFPs an especially important issue?

EB: There’s one statistic in the report that I think is really really important. We studied women, both women CFPs and women financial advisors...In the report we asked women who had their CFP as well as women in financial services without their CFP about their career satisfaction, and the difference was quite marked and remarkable. I believe it was something like 72% of women CFPS have high career-satisfaction versus 46-48% of women, fewer than half of women without their CFP. So what that’s telling us is that there’s something highly satisfying to women about becoming a CFP. And anecdotally, you’re hearing all the time, that women are really good at financial planning, because it requires really knowing a client, it requires building a relationship, and there’s a lot of empathy, ability to understand, ability to communicate. There’s a lot of soft skills as well as the technical skills that women tend to be really good at. This is what makes the question [of gender disparity among CFPs] so much more urgent. Why, in a field—in a profession—where 72%, well over the majority of women with CFPs have high satisfaction versus those without the certification, fewer than half—a big difference—why is a profession so well-suited for women attracting so few of them?

Another issue is, more women in this country are acquiring and managing wealth. There are some great statistics from the Center for Talent Innovation in how much wealth is out there that is being managed or under the supervision of women. It’s huge. We need more women, they’re good at it, they like the profession. Wealth is beginning to get more dispersed or more equitably held across gender.

JP: You identified some of the reasons women aren’t entering the profession in your report. Could you talk about them a little more?

EB: What we found in our report is that there’s a gender gap in terms of understanding what financial planning is. More men know about it than women. But there’s also perception. And perception can be very negative on the part of women, they see it as more about money management, stock markets, trading—and that’s somewhat deserved. In terms of the way the industry has evolved.

JP: Do you think millennials are entering the financial profession? If not, why not?

EB: It’s very similar to what we’ve observed about women. We haven’t done the studies yet focusing on millennials.

Millennials, when you think about it, these are young adults who have grown up and may have seen their parents lose a lot of money in 2008. If you’re talking about a 30-year old, ten years ago they may have seen tremendous loss just as they’re emerging into the marketplace, when they have student loans. They may have a very negative view of what these large financial services companies did and how they behaved.

Financial planning, what we practice as CFPs, we were colored with the same brush. Wall street, the media, everything kind of depicted this narrative that it’s all rigged. That sort of takes hold when you see the devastation that was wrecked by excessive risk-taking. So I think in terms of millennials—they’re not particularly attracted to the financial services field. We’re a subset—we have higher standards and higher qualifications—but we’re part of that environment, there’s no question about it.

The second factor, millennials, unlike their baby boomer parents or grandparents, their elders, it’s not just about making money [for millennials], it’s about meaning. They’re more socially aware and conscious. They’re very much a social purpose generation. And I think they don’t see that in financial services—it seems like more of a cutthroat, whoever makes the most money wins. That may be repelling them.

JP: That’s so interesting—the experience of millennials and how it has affected their view of the financial sector and careers in financial services. It’s a shame, because millennials as much as any generation before them, perhaps even more, could benefit from learning how to use their resources well. So many of us are jumping around from one gig to another. It’s really hard to find a job where you can stay indefinitely.

I want to switch gears back to talking about women. What is the CFP Board doing to increase the number of women CFPs?

EB: We have programs we’re developing or that are now ongoing in both camps. There are two major types of barriers [contributing to the gender gap among CFPs]. One being the awareness and the perception issue—what do people know, or what do they think, and how accurate is it? Secondly, on this other side is the more inherent bias in the profession. That comes through in attitudes about women, that they may be more apt to cut and run when they start having children. Although, again, I think the reality today is—and this is as much a family issue as it is a women’s issue—there’s this leftover feeling that if you hire a woman she’s going to be gone.

The bias has to do with acknowledging that women can be really, really good at financial planning, but then when push comes to shove and you ask people who makes a better financial planner, the numbers are interesting. 51% [of those surveyed] said it doesn’t matter. Over half say it’s not up to gender. The problem is that 49% most say men. You would expect everybody to say it doesn’t matter. Or you would expect those who say it matters to be split 50/50. There is a bias against women. But then when we also asked the firm executives making these decision about qualities of individuals in terms of desirable qualities in a financial planner, women scored higher on every single dimension than men.

We have got to now do what we can to change firm culture. Right after the white paper was released we had a lot of people, primarily women but not exclusively so, raise their hands and ask “What can we do to help?” So we created—knowing that we needed more awareness, knowing that we needed more voices, knowing that we needed to reach girls and high school students and get the story out there—we created what we call a WIN advocate program, where we get those people out in the community talking about what it means to be a certified financial planner. It’s the old “She can not be what she can not see” kind of thing.

My daughter, when she was in middle school, parents were supposed to come in and talk about their careers. I was in financial planning, happily so. I came in and talked to the sixth graders, and right before I spoke, a father spoke, and he happened to be a mounted policeman, which you have in Washington, D.C. He had a gun on his hip, and they were just like “Oh my god!” —they were thrilled. And then I get up there and say I’m a certified financial planner, they sort of looked at me like “huh?” One kid in the back who was totally bored with it all raised his hand and said “Shat kind of car do you drive?” And I said “a Honda,” and I knew I’d lost every single kid in the room. I’ve since changed my story and made it a little more exciting, because it is a wonderful career.

JP: The last thing I wanted to ask you about was the reference in your report to some studies that show that companies with women in leadership roles outperform companies with no women in leadership roles. There’s really an economic incentive for companies to diversify their leadership. What do you think companies are doing to achieve that goal?

EB: The business case is very compelling, and the business reason is out there, but it has yet to be truly important to companies. There’s a couple of reasons why. Those statistics are really important, but remember, these are statistics that come from publicly held industries—they’re culled from published SEC reports. There’s a large component of our industry that is not publicly held. The very large very visible wirehouses, they’ve got shareholders who may be beginning to put some pressure on them and you’re beginning to see this happen. Shareholders want more socially aware sustainable types of practices. But the large part of our industry is very small firms. [The business case for more women] doesn’t compute yet.

There’s a huge amount of money out there, and I think that firms that start making their insides—their inner workings—look like the outside that they’re trying to attract, are going to do better.

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