The financial advisor career is open to everyone, but equal opportunity it is not.
Only one-third of financial advisors are women, according to the Bureau of Labor Statistics. The CFP board put the number of female CFPs at closer to 23% in 2014. And the numbers only get worse the higher up the ladder you go.
Women account for 67% of support staff in financial services, but only 15% of executives, according to research by Mercer. Diversity has been a hot topic in the financial industry but in name alone.
"You have to acknowledge the progress has been very slow; glacial in fact," says Sallie Krawcheck, CEO and co-founder of Ellevest. "As of a few years ago, gender diversity in the industry has gone backwards since the financial crisis."
In 2008, of the 430,000 financial advisors accounted for by the Bureau of Labor Statistics' Current Population Survey (CPS), 34.3% were women. In 2018, that percentage had dropped to 33.5% female financial advisors of 537,000 total.
Not only are financial firms hiring more men than women, but women are also exiting the industry at higher rates. Female executives in financial services are leaving the industry at a rate of 15.8% compared to 7.7% for executive men, according to Mercer.
Oliver Wyman found that female executives in financial services are 20% to 30% more likely to leave mid-career than any other industry. Left unaddressed, these trends could result in a 3% decline in women leadership in financial services by 2025.
Why Women May Struggle to Advance.
Part of the problem is an industry so predominantly male, with 85% of financial industry executives and 74% senior managers being men, doesn't understand how to support women throughout their careers, according to Katie Burke, co-founder of Equita Financial Network.
"These men can't relate to the challenges that women planners face, because they have never experienced them," she says. "They have been paid fairly; many of them have been promoted into the higher ranks at their respective firms; they have not had to choose between family and career; and they have had the resources they need to succeed."
Women, meanwhile, are often left trying to juggle career with household and child care responsibilities, which they typically do more of, a particular challenge in an industry that is not accommodating to such competing priorities.
"Many women advisors fear that using flexibility programs like maternity leave might hinder their advancement and job stability, and for good reason: Many larger firms don't offer solid re-entry paths for those who take leave," Burke says.
"I've always said that if I'd started as a trainee at Merrill Lynch, I never would have run it," Krawcheck says. There's "a zillion reasons for this," but one of them was that "in order to advance, you have to move your family a lot, which in our society men still do and women do not."
Even when women do stick it out in the industry, they're held down by a glass ceiling that is far lower for them than for their male counterparts.
In 2018, the median weekly earnings among female personal financial advisors was $1,207 compared to $1,647 for men, according to the CPS. That amounts to the median male advisor earning $22,880 more annually than the median female financial advisor.
"It's natural to think you'll be rewarded for hard work, but unfortunately that's not the case for everyone," says Chloe Moore, founder of Financial Staples. "Being a woman, particularly a woman of color, definitely affected the height of that ceiling."
As dire as the ratio of women to men financial advisors is, it's even worse for people of color. In 2018, only 5% of financial advisors identified as black or African American, less than 7% as Asian, and 6.6% as Hispanic or Latino, according to the CPS.
Women Entrepreneurs in the Financial Industry.
Faced with having to choose between family and work in an industry with low glass ceilings and barriers to advancement, many women are choosing to leave the industry all together. Others opt to start their own financial services firm.
"Based on my personal experience, I would say the best path to success is for women to run their own firms," Burke says.
Carol Wildermuth, co-founder and CFO of Wildermuth Advisory, who has co-founded six financial services companies and owned her own business for over 20 years, wouldn't go back to working for someone else.
"I personally love starting and owning my own companies," she says. "I love being able to succeed on my own merits without that requirement of getting promoted or whatever endorsement is laid out before you."
When you run your own company, "you can charge what you're worth," Moore says. "You can also build your business to support your lifestyle."
She points to working moms in the industry who have successfully "built a business that allows them to prioritize time with their families."
Moore says that now being her "authentic self" works to her advantage "as clients are actively looking to work with more diverse financial advisors."
But starting your own business isn't for every woman.
The Challenges of Starting a Business.
"Every single day, (we) I have conversations with women who want to take the leap and start their own financial planning businesses," Burke says. "Every woman we speak with has her own hesitations and challenges, but the underlying concerns are often similar: How can I leave a steady paycheck and support my personal and business expenses? Will my clients still want to continue working with me once I leave my existing firm?"
Bridget Venus Grimes, co-founder of the Equita Financial Network, recalls how scary it was to walk away from her former employer without knowing if she'd have a single client the next day. Despite that fear, she's never regretted it, not for one day.
Wildermuth says its important for women entrepreneurs to take risks. She also advocates starting your career in a larger company where you can get your licenses and learn how the financial industry works.
And make no mistake, running your own business is time consuming and labor intensive. You'll work long hours, especially in the beginning, and have tremendous responsibility. But the upside is those hours will be on your schedule.
While interviewed for this article, Wildermuth was vacationing in Toulouse, France, with her husband. Note the Catch-22 here: She was on an extended vacation, but also making time to check-in with her company.
Starting a Business Isn't the Cure-All.
Even female financial advisors who do take the entrepreneurial plunge still face prejudices and barriers to growth.
"As an RIA you're losing those internal political battles, the 'This is the way it is because it's always been that way,'" Krawcheck says.
But just because you've stripped away "some of the burnt on, baked on mess" in the industry, "doesn't mean you won't face societal expectations and biases that can be positive or negative."
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