How Wealth Firms Can Plug the Gender Gap
Women are dramatically underrepresented in the ranks of financial advisors and proportionally manage even less than their slim numbers would indicate. Still, successful female advisors tell FA-IQ they’d heartily recommend the business to smart, ambitious young women — especially if they’re keen on work-life balance once they’ve established a solid book of business.
And that’s a message advice firms may want to take to heart.
Making time for a growing family was a big reason Carrie Gallaway entered the advice business from the asset management side in 2005.
“I knew that moving up in asset management would involve a lot more travel — and I loved planning, problem solving and working with people,” says Gallaway, a working mother who co-runs YorkBridge Wealth Partners in New York.
More, to avoid a family-unfriendly travel schedule and be able to meet occasional family obligations without encountering resistance, Gallaway felt she needed “some sort of team setting” on the theory it would provide “some flexibility” — for men and women alike — to “be at kids’ events.”
Gallaway first found the rudiments of this flexibility at Morgan Stanley before moving to Lebenthal Wealth Advisors in 2014. Last year she and business partner Andrew Stern founded YorkBridge with help from RIA-platform provider Dynasty Financial Partners. The firm now manages nearly $600 million.
Successes like Gallaway’s belie the fact — according to Cerulli Associates — women make up less than 16% of the total FA workforce.
One reason the Boston-based research firm gives for this lackluster result is that women simply don’t get wind of job opportunities in the advice business to the extent men do. Another contributor is eat-what-you-kill compensation models that deter would-be applicants in search of more stable ways to make money, according to the study.
Besides filling fewer cubicles, women advisors account for just 14% of assets under management in the industry. Cerulli suggests this is because they’re generally more focused on helping clients than aggressively gaining wallet share.
The reality of low female headcount among advisors and factors that may help explain it are of more than just academic interest.
Though recruiting women may present unaccustomed challenges to a male-dominated industry, client demographics are changing to the point where such “inclusion” could mark a competitive advantage to big and small firms alike.
As Cerulli warns, “skirting the issue may prove disadvantageous in an evolving competitive landscape.”
Firms haven’t made great strides recruiting women “despite efforts over not just years but decades” because they’ve been slow to recognize that while women are “a little slower at building their businesses,” they garner “more stable recurring income” because they’re gifted planners and careful listeners, says Krawcheck.
It hasn’t helped that, historically at least, trainee FAs have to cold-call their way into permanent jobs — precisely the way to turn off advisors whose strengths may lie more in nurturing relationships than in closing deals.
Similarly, firms may do well to realize women don’t want to be viewed as tokens, according to Marti Awad, a founding partner of Cardan Capital Partners in Denver.
“I’ve talked with firms that say, ‘We need a woman,’” says Awad, whose firm manages about $600 million. “That’s insulting. I’m not just a woman, I’m a tax attorney who has worked at top firms” — including UBS and Merrill Lynch.
If overtures to potential women hires can be clumsy, management’s handling of them once they’re aboard can be just as maladroit, says Awad. This runs the gamut from outright sexism to dismissing legitimate questions and concerns, she says.
But Awad and Gallaway, though now independent FAs, say there’s something to be said for learning the ropes in the hard-edged wirehouse world.
“They’re not out to do you any favors,” Gallaway says of these big firms. In this context, right from the training stage, men and women advisors have to "strive for bank by building their books of business.”
If nothing else, this treatment toughens you up, according to Awad.
“I’m not particularly thick-skinned,” she says. “But if you’re super-sensitive, there’s no way you’re going to succeed in this business. There’s no way.”