This is part one of a two-part series on gender inclusion in the financial services industry
Diversity and inclusion are hot topics throughout the business world, but the stark lack of either topic is particularly noticeable in the financial services industry. With all the changes happening in the industry, including evolving client demands and expectations, there are more opportunities than ever for women financial advisors to rise in the ranks and level the playing field. Why isn’t this happening?
A recent InvestmentNews study called Women in Advice: Inspiring the Next Generation of Financial Advisors surveyed 612 financial advisors (208 women and 404 men) from across different advisory channels to answer this question. From their research, five common problems seemed to emerge.
We’ll explore the first two problems in part one of this series, with prescriptive action items that advisors and firms can follow to address each problem. In part two later this week, we’ll follow up with the final three problems as well as overall steps that advisors and firm management can take to create a more inclusive workplace.
1. Stalled Professional Progress
While the gender split among junior advisors suggests that the future will be female within the industry, this is not currently the trend, due in part to the high turnover among all entry-level positions. According to InvestmentNews, support advisors saw the highest turnover rate, with 37 percent of firms seeing at least one such advisor leave in the past year. When coupled with the fact that 65 percent of newly hired entry-level support advisors were men, we see that the attrition rate among women in the industry is currently too high to make up for the loss.
Women financial advisors also are not advancing at the same promotional pace as their male colleagues. While women are being promoted at a higher percentage than men at most phases of their career, there is one exception that lies at their five- to-nine-year career stage. InvestmentNews found that men are being promoted at a 16.5 percent rate over women, who were promoted at a 10.3 percent rate. In many cases, the promotion that occurs at the nine-year mark is the most crucial – one that takes them to the top rung of lead advisor.
There could be a few explanations for this discrepancy. Women with a bachelor’s or master’s degree tend to have their first child at the median age of 28 to 30. As advisors tend to start their careers right after graduating from college, the timing fits. The women surveyed pointed to the fact that at this stage, they are looking for networking and mentorship opportunities that seem to be available to men, but are out of reach to them.
Action Item: Create a work environment that is more supportive of women
The effort to create a more supportive work environment for women does not mean it will become a more toxic environment for men. In fact, creating an environment that is more supportive of women will grant benefits toward other genders as well.
Firms must foster an open, transparent, and supportive work environment. In meetings, do men tend to talk over women? Do your female employees feel heard and appreciated by their male colleagues? Are there other microaggressions that are occurring under the radar that you might not be aware of?
At that crucial nine-year mark, do you see your female employees reach for a lead advisor role only to fall short for some unknown reason? Encourage managers to reach out to them at this point in time and ask if there are any resources your company can provide in order to ensure their success.
Simply hiring more women won’t solve the problem. After the recruiting process ends, women need to work in an inclusive environment that will support their voices and contributions in the long term.
2. Work-life Balance
In the InvestmentNews study, personal balance between career and family was chosen by 20 percent of all female respondents as one of the main barriers to professional advancement. This is a logical obstacle since the beginnings of building a family tend to coincide with the most crucial point in a female advisor’s career. If there isn’t any support available, firms risk letting their female employees fall behind.
Action Item: Prioritize work-life balance and flexibility to support not only women, but competitive top talent
The InvestmentNews data shows that women tend to value flexibility more than men do. They want flexible work arrangements, help after returning from an extended leave, and transparent compensation practices. Since flexibility is one of the top reasons that people pursue a career in financial advisory in the first place, being more flexible will ultimately contribute to an overall improved working environment for all employees, not just women.
In order to attract the next generation of young women to your organization, strive to compete for talent with other businesses and industries and create a culture that respects work-life balance.
Stay tuned for part two of this series analyzing InvestmentNews’ study of gender diversity in the industry and what firms can do to solve it.
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