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Financial Perspective of Women Gaining Ground

By the year 2030, two-thirds of the wealth in the United States will be controlled by women.

So proclaims the Federal Reserve Bank, the Social Security Administration, the U.S. Department of Labor (DOL) and a variety of think tanks that analyze these sorts of things.

“As financial advisors look back at their business over the past year, many will take note of the larger number of women among their clients,” Matt Sommer, vice president and director for the retirement strategy group at Janus Capital Group, said in a CNBC commentary. “This should not be surprising, since the number of wealthy women in the United States is rising twice as fast as the number of wealthy men.”

Yet, women are underrepresented in the gender ranks in the financial services industry despite the fact that they make significant decisions where economics and money are concerned.

Males Still Outnumber Females

In a press release accompanying their 2017 report comparing the number of female financial advisors to their male counterparts, Marina Shtyrkov, an analyst with the Boston-based Cerulli Associates, said:

“Women remain outnumbered in financial advisor communities despite efforts to recruit more female advisors; only 16 in every 100 advisors are women.”

The report also stated that just shy of 16 percent of the nation’s 310,504 financial advisors are women and labeled this statistic as one that “stubbornly lags” behind today’s reality that a woman’s financial viewpoint is increasingly driving economic decision-making.

To back up that statement, economists point to stats released in summer 2017 by the U.S. Census Bureau regarding the female influence in household spending. According to government data, women are the final say in making the following choices:

• 80 percent of health care decisions
• 65 percent of new car purchases
• 91 percent of home buying

That’s a lot of decision-making power, and even more notable is its rapid rise.

Women’s Net Worth Growing Exponentially

In 2014, women earned $14 trillion nationwide representing a 50 percent increase as compared to just three years earlier in 2011, according to the DOL.

So, what’s the deal? Why is the number of women working as financial advising professionals so skewed when compared to other industry stats regarding women? Why only16 percent when women represent 50.8 percent of the general U.S. population?

One long-time financial industry pro attributes the imbalance to the fact that girls in secondary education and young women in college are not encouraged to seek careers as financial advisors.

It’s Time

Ursula Daley, CEO of Daley Financial Partners in Oak Brook, Illinois, said her own daughter – who grew up watching her mother work as a professional advisor and is now a business major at a leading East Coast college – told her that the option of becoming a financial advisor isn’t really being discussed at the university.

“She said that exploration of that career path isn’t being encouraged or even talked about,” Daley said. “That needs to change. I hope that more exposure to this career field will lead to greater demand for education regarding it at the university level.”

But if the past does guide the future, Daley has some well-founded concerns that women’s role in the financial services industry might be slow to increase.

While she sees unlimited opportunity for female financial advisors in the landscape of today’s industry, she also notes that the landscape itself hasn’t changed much through the years.
She remembers reading an article about 15 years ago regarding the status of female financial advisors – less than 20 percent of the active advisors were female.

Just recently, she saw another article stating the same information – except it was regarding the industry’s current status.

“Nothing has changed,” she said in reference to the percentage of female to male advisors.

Loreen Gilbert, president of WealthWise Financial Services in Irvine, California, echoes the sentiment.

“In the 30 years that I’ve been in the business, I’ve seen the stats remain the same – it is one female advisor to nine male advisors,” she said in an interview with “U.S. News and World Report.”
As a member of the executive board of National Association of Women Business Owners, Gilbert knows her own chosen industry has a long way to go to achieve gender balance.

“Unfortunately, statistics tell us that the industry is still not attracting many females and I think a concerted effort is needed to educate female college students that there’s a great opportunity in the industry.”

Hope on the Horizon

According to a 2013 Insured Retirement Institute survey, 70 percent of women of any age indicate they would rather work with a female advisor. Couple this with fee structure changes within the industry over the past decade and female financial advisors may have an advantage, according to Marcella Behman, a Boston-based financial advisor.

Movement away from competitive commission-based compensation for advisors toward a fee-based approach based on developing relationships can benefit female advisors. Women are more likely inclined to succeed in an environment where family values – not benchmarks – guide decision-making.

“Women tend to be good communicators and are adept at understanding wealth through the lens of family values and goals,” Behman told “Barron’s” in 2016.

More Gals Giving it a Go

The good news from Cerulli Associates is that there is a significant uptick in the number of female rookie advisors in 2017. Nearly 30 percent of newcomers to the financial advising profession were women last year – a dramatic increase from just a few years ago when first-year female advisors was half that.

Younger women joining the industry are also embracing its professional development side.

The Financial Planning Association (FPA) based in Denver, Colorado, offers its NexGen as a professional development community for advisors ages 36 and younger. Its membership is now 32 percent women, according to Pamela Sandy, founder and CEO of Confiance LLC, in Cleveland, Ohio, and the 2016 FPA president.

Women are receiving more gender-specific support from within the industry.

FPA launched its Women and Finance Knowledge Circle – an online community for its female members – in in 2015. The Lincoln Financial Network introduced its WISE (Women Inspiring, Supporting, Educating) also in 2015 to support the unique needs of female advisors and clients.

Perspective from Other Industries

Perhaps the numbers for the financial services industry aren’t too alarming in comparison to other traditionally male-dominated career fields.

According to 2014 numbers from the U.S. Bureau of Labor Statistics, women represented approximately 16 percent of the following work forces: aerospace, civil, computer and industrial engineers as well as parts salespersons.

The following traditionally male-dominated industries had slightly higher percentage of employed women in 2014:

• Butchers, 23.5 percent
• Chefs, 21.4 percent
• Chiropractors, 22.4 percent
• Detectives, 21 percent
• Environmental scientists, 24.5 percent

As women in greater numbers move in to career fields – especially higher-paying ones – their economic prowess is something leaders within the financial services field may wisely accommodate.

 

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