The wealth management industry has failed to increase gender diversity although awareness has risen, according to Carson Group’s 2023 State of Women in Wealth Management Report. Women still make up about the same percentage of CFP professionals (around 23.7%) as they did when the CFP Board started tracking this data a decade ago.
The percentage of female CFP professionals has increased just 0.2% since last year, when Carson published its inaugural report of this topic. This year’s research, which builds on the previous study, took a closer look at what’s hindering women in the industry and how to better empower and elevate them, it notes.
“The findings of our 2023 Women in Wealth Management study reinforce the crucial role that female financial advisors play in today’s industry. Beyond the qualitative insights, the statistical data underscores the need for continued efforts to enhance gender diversity, promote sponsorship and create inclusive cultures,” Julie Ragatz, Ph.D. Vice President, NextGen and Advisor Development Programs at Carson Group, said in a press release.
“As we navigate the path forward, it is imperative for both men and women to commit to meaningful change, fostering true gender equity and progress,” said Ragatz. “This commitment involves conducting studies like this, building a supportive community, creating inclusive cultures, actively recruiting more women, and ensuring ongoing support for female professionals.”
Why underrepresentation matters
In its report, Carson Group pointed to a number of quantitative reasons why the industry needs more women advisors. Women are expected to control $30 trillion in wealth by 2030, thanks to wealth transfers. Women also outlive men by about five years, according to the U.S. Census Bureau. And 70% of women switch advisors within a year after losing a partner, a frequently cited statistic.
Carson Group’s qualitative analysis found that many executive women prefer working with female advisors who can “truly relate to their experiences.” Respondents also pointed to female advisors’ “heightened empathy and ability to build trust” as advantages.
Meanwhile, many advisors are adopting a “teaming approach,” where male advisors partner with a female advisor to better serve female clients, the study reported.
Some difference in perception
While the majority of men and women in the wealth management acknowledge that the industry has a gender gap, their perception of this problem is not on even ground. According to the Carson Group study, 68% of men agree that underrepresentation is a problem, compared with 92% of women.
Yet the majority of male and female advisors surveyed (59% each) agree or strongly agree that they’ve seen an increase in female advisors during their time in the industry. And both groups said more efforts are needed to add gender diversity.
Better paths needed
The study revealed that the financial services industry needs to do a better job at educating high school and college students about potential career paths. Only 39% of respondents came into the financial services industry intentionally. More than half (61%) saying they did not intentionally seek out a career in finance and 59% came from other industries.
Although the majority of respondents (93%) have found their career in financial services to be rewarding, only 41% of female respondents “strongly agree” with the statement, compared to 68% of male respondents. And one-third of female respondents said they have looked for a new role in the last 12 months, “showing a potential retention problem for firms keen on keeping female advisors satisfied in their roles,” the release noted.
Sponsors, not just mentors
Two-thirds (66%) of respondents deemed mentor relationships critical to their success, citing guidance and direction (27%) and expertise sharing (21%) as key support elements. Still, mentoring is not enough. Women also need more sponsors to help provide opportunities and propel them toward leadership roles, the study noted. One respondent expressing, “Had she not opened doors for me, I don’t know if I’d still be in this industry.”
The analysis also found that female advisors want to see women in senior leadership roles provide tangible examples of what women can achieve in this business. They also want to see leaders build an inclusive culture.
Action points for firms
Based on the insights it uncovered in its 2023 study, Carson Group has added a number of recommendations for financial-services firms:
- Designing and offering flexible work arrangements with input from female employees.
- Implementing formal sponsorship programs tied to advancement and bonuses.
- Providing education and training designed by and tailored to female employees.
- Actually adhering to zero-tolerance policies on discrimination, harassment and assault.
- Participating in, volunteer for and financially support programs that introduce wealth management as a career option to young students, including the Mu Nu Upsilon Financial Planning Fraternity, BLX Internship, Mini Money Runners, Rock the Street Wall Street and FinServ Foundation.
Carson Group’s 2023 State of Women in Wealth Management report is based on a study of 276 financial advice professionals from different industry channels. Approximately 84% of respondents were female, 14% were male and 1% preferred not to identify. The average age of respondents was 48 and their tenure in the industry averaged 19 years.