In the next five years, private wealth is estimated to grow from approximately $14 trillion to $22 trillion. During that period, furthermore, women are expected to control two-thirds of private wealth. Yet female advisors are drastically underrepresented in the financial planning industry. For example, only 23% of Certified Financial Planners are women. Other studies have concluded that among all advisors, less than 30% are women.
Encouragingly, the small showing of women in the industry is creating an attractive opportunity for entrepreneurial advisory firms that want to pursue assets of female clients and capture a slice of the ever-growing pool of private wealth.
Broadly speaking, women tend to do a better job of marketing to female prospects than do their male counterparts, so they can play a big role in helping firms capture assets and retain clients. Simply put, women understand women. That’s important because clients typically want to have an affinity with their advisors.
Women advisors can often identify with challenges that female clients face, such as balancing a career and raising children or working in a male dominated culture. Since the advisory business is highly entrepreneurial, women advisors may also have a strong affinity with women who own businesses.
In addition, women advisors frequently have a style of financial planning that is more likely to resonate with female clients. Indeed, some planners have noted that women tend to seek security as a primary goal, so comprehensive planning often lends itself to women, while men tend to focus on chasing returns.
Women may also be more focused on passing their values on to loved ones, so their wills may be more likely to have ethical considerations. Women also tend to speak in everyday language rather than spewing industry lingo that can baffle non-professional investors. Female clients are also likely to connect with advisors who are capable of expressing empathy, which is often thought to be another area where women financial planners may excel.
The challenge for advisors firms, not surprisingly, is finding women advisors since they are so drastically underrepresented in the industry.
Some firms have taken the search to the Internet. Morgan Stanley, for examples, has an online Women Financial Advisors Forum that aids in recruiting female advisors. The site features banner ads that promote that the company has been recognized as an attractive employer for women by Conceive magazine and Working Mother magazine, while also be recognized by other and organizations for having a highly diversified workforce. The Forum also offers profiles on successful female advisors.
The recruiting process for female advisors, furthermore, can be different than for male advisors. Women tend to be less motivated by money, but typically do not have a common driver that will entice them to join a firm. With that in mind, firms should be direct and ask recruits what workplace characteristics they seek. Some recruiters have also observed that women advisors may be less likely to boast of their accomplishments than male counterparts, so they may appear to be less qualified.
Firms should also include more traditional strategies to recruit female advisors. For example, advisory firm executives should focus on networking and involvement with industry organizations so that they can get to know successful female advisors.