Independent registered investment advisers may need to rethink how they are recruiting female advisers if they expect to continue growing over the long term.
In "
2016 U.S. Advisor Metrics," Cerulli Associates reported that women make up 16% of the total financial adviser population. And RIAs have even fewer on board — at just 13%.
Enrollment in college financial planning programs highlights that the gender issue starts in school. The ratio of male to female students hovers at about 3 to 1 nationally, according to the CFP Board's 2014 report, "Making More Room for Women in the Financial Planning Profession."
It appears that RIAs have hit a wall when it comes to finding women advisers who can help them grow. It's a supply problem that demands a solution different from what may have worked in the past.
For starters, more independent RIAs need to speak with young women about the career opportunities in the financial planning profession. Right now, other channels in the financial advisory business have a strong presence on campus, and they can appeal to many students with their size and familiar brands. Yet their emphasis on sales and commissions is a turnoff for female students studying financial planning.
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Independent RIAs must showcase their strengths when they compete for young female talent. They should discuss compensation models to dispel the notion that commission compensation systems are the only way to earn a living as a financial adviser. They can talk about the career balance they have achieved as an RIA, emphasizing flexibility and control over their work schedule.
In their conversations, independent advisers should also be clear about the typical career progression at an RIA firm. Female financial planning students want a clear picture of what the future holds after earning the degree and getting an internship. More than their male counterparts, women want RIAs to demonstrate that there are well-defined career paths for young planners, starting as an entry-level support adviser and moving up the ranks to become a lead planner or principal.
RIAs should also be more visible to more women on-campus — by participating in career days at a minimum, but also by being guest lecturers in the classroom and by recruiting interns.
A recent study by TD Ameritrade Institutional revealed that only one-third of RIAs hire interns. Of these, only 28% have a formal internship program in place. This is in contrast to wirehouses, two-thirds of which hire interns, according to Cerulli, and put them into formal programs. The lack of interns and formal programs is not trivial; without them, independent RIAs are weakening the talent pipeline by ceding young female (and male) advisers to competitors, often before they graduate.
Since there are not enough young women in the pipeline, women with financial planning degrees are some of the most sought-after candidates. They are first to get job offers, and they get them from multiple employers. This means RIAs need to look elsewhere for talent, and that is good for the industry.
Independent RIAs should have conversations with the young women in their circles of influence — for example, daughters, nieces and even clients' daughters — about their career options.
At the college and university level, they should go outside of financial planning degree programs to find great female candidates for their firms. According to Cerulli, the majority of young financial advisers entering the independent channel out of college are business administration, finance and psychology or sociology majors, not financial planning or investment analysis majors.
In the words of the late Fred Rogers, "Look for the helpers." For independent RIAs, this could mean accountants, psychologists and even military veterans. Cerulli found that 94% of young female advisers cite a desire to help people reach their goals as a major factor in becoming an adviser.
Many independent RIAs may be unintentionally bypassing an untapped talent pool simply because they have not adjusted their search to account for what women seek in their future employers.
Shifting the gender imbalance will require a grass-roots movement among today's RIAs. Women will only learn about career prospects at RIA firms if independent advisers get involved in conversations on campus and in the community. We can't afford to give up ground to competitors who champion their own causes so well.
Kate Healy is managing director of generation next at TD Ameritrade Institutional.
