Journal of Financial Planning: September 2016
Eleanor Blayney, CFP®, is the consumer advocate for the Certified Financial Planner Board of Standards, helping consumers understand how financial planning and CFP® professionals can improve their lives, and the author of Women’s Worth.
What makes for a great career for women? To start, it’s a position that is financially rewarding and intellectually stimulating, allows for healthy work-life balance, and is part of a growing profession. Put these criteria in a search engine and what’s likely to come out is “financial adviser.” According to U.S. News & World Report, this was the No. 4 career choice in 2014 for “best business jobs.”
If you further refine your search to focus on those women financial advisers who are CFP® professionals, you’ll discover that these women are significantly more satisfied with their careers than women who are financial advisers without the CFP® certification. Research by CFP Board found that 72 percent of the women CFP® professionals surveyed reported that they enjoyed their jobs, versus 46 percent of women advisers who did not hold the certification.
For women in general, however, the CFP® certification is the proverbial light under a bushel basket: shining brightly but largely disregarded. The percentage of CFP® professionals who are women has flatlined at 23 percent for the last decade. The most obvious explanation, borne out by CFP Board’s research, is that most women college graduates arrive in the professional workplace with little to no knowledge of financial planning. As girls or high school students, they probably never met or talked to a female financial planner. It’s also unlikely their parents encouraged them to consider such a career, even as they pushed the idea of law or medicine on their smart, ambitious daughters.
Yet for all the girls and young women who were never turned on to financial planning careers, there are other, better-informed females actively turned off. Job satisfaction notwithstanding, to some women this career choice may come at too high a price. The indisputable fact that the profession is male dominated can, in and of itself, be a turnoff for career-minded women. They may reason they have enough to deal with in balancing work, life, and family without also having to forge their way as a distinct minority to achieve the recognition they deserve. There are other satisfying professions where gender is not such a constant issue.
But being conspicuous as a woman in a traditionally male domain is not necessarily all bad. I have spoken to women financial advisers who cite the economics of supply and demand to argue that their low numbers increase their value to clients who might prefer to work with female advisers. But others believe their rarity makes them unwelcome. According to the Women’s Initiative (WIN) research conducted by CFP Board as presented in the white paper “Making More Room for Women in the Financial Planning Profession,” there is evidence of gender discrimination in financial planning.
First there is the matter of compensation. As part of its WIN study, CFP Board compiled a survey of the characteristics of men and women financial advisers and found that the average female adviser is younger, less experienced, and less entrepreneurial than the average male adviser. She is more likely to work for a large firm than to go out on her own. But when these variables were held constant between the two genders—limiting the comparison of women and men advisers to those similar in experience, revenue production, and firm ownership—there was a non-trivial pay gap. Annually, women advisers were found to make $32,000 less than their male counterparts.
Question of Competence
Then there is the question of competence. The aggregate results of CFP Board’s survey showed that a majority of respondents did not believe that one gender was more likely to have the skills to be successful financial planners than another. Drilling down into the data tells a more disturbing story. First of all, the majority response was barely that—only 51 percent. The other 49 percent who did pick one gender over the other in terms of competence were overwhelmingly in favor of men as the more skilled. As a worthy side note, women CFP® professionals answering this question stood out in their conviction that they had the gender advantage over men in terms of their financial planning skillset.
Most distressing were the attitudes of respondents representing financial services firms (in other words, the industry’s employers and executives). Only 7 percent of this group believed that women had the edge over men in becoming successful financial planners. But in another set of questions in the survey, these same respondents were given a set of planner qualifications, such as “highly ethical” and “well trained” and asked to indicate if these qualifications were true for male planners, as well as if they were true for female planners. A “yes” for one gender did not preclude a “yes” for the other, and indeed many respondents said “yes” to both. However, in all cases of cited qualifications, women scored decisively higher than men, with the “strongly ethical” qualification having the widest spread between the two.
Recognize the Potential
What’s troubling about these results is the contradiction among financial services firms, seeming to believe simultaneously that women are well-qualified to be financial planners, but that men will be more successful. The bias may be unconscious, with employers simply unaware of their contradictory responses. But it could also be an honest, though not encouraging, assessment of a ground zero reality: men are more successful in the profession because there are more men.
Whether it’s eliminating bias, or changing reality, there’s some hard work ahead. Just as girls and women need to be educated and turned on to the opportunities in financial planning, firms and employers must understand what may be turning women off once they start exploring those opportunities.
First of all, they need to understand that their future critically depends on attracting women, as the war for talent accelerates in the wake of retiring boomers. They need to re-examine their processes for recruiting, hiring, reviewing, and promoting, making sure that female candidates are being fairly considered at each phase. They need to rethink their definitions and models of leadership: being aggressive and outspoken may work nicely for men, but when exhibited by a woman usually earns her the dislike of her colleagues. They should adopt transparent compensation structures and standardized job descriptions to eliminate any gender discrepancies in pay and responsibility. Finally, setting measurable goals for gender diversity should not just be a task for human resources or compliance, but should become a visible top-of-house commitment by the managers and directors of financial planning firms.
Kate Healy, managing director of TD Ameritrade Institutional and founding member of CFP Board’s WIN Council, offers this wise advice in her frequent presentations on the importance of diversity in the financial advisory profession: “Hire for potential, not for experience.”
It’s a given that women, as well as people of color and millennials, lack experience because they lack presence and acceptance within the industry. But they do offer the potential to effectively reach and understand a rapidly changing social reality that will shape the practice of financial advice and planning in the future.