Women are significantly under-represented in the US wealth management sector, and boosting their numbers could help head off a serious shortfall in talent in the years ahead.
The US wealth management sector must cast its net wider to deal with a looming talent crunch and in particular, must bring in more women, who at present are under-represented in the industry, according to a study by Cerulli Associates, the analytics firm.
"Women represent only 15.7 per cent of the 310,504 financial advisors in the industry," Marina Shtyrkov, analyst at Cerulli, said. "Women remain outnumbered in financial advisor communities despite efforts to recruit more female advisors; only 16 in every 100 advisors are women,” she continued.
With the Baby Boom generation entering retirement, there are concerns that with many financial advisors being middle-aged, there will be a dearth of talent to handle inter-generational wealth transfer issues in coming years. For example, in 2015, it was reported that a poll – taken at Fidelity Institutional’s Executive Forum in Arizona - found that most organizations are using “standard” methods of recruiting. However, more positively, many of them are starting to recognize the need to cast a wider net when looking for candidates, and 72 per cent believe their industry's talent pool is shrinking, that study said.
Family Wealth Report, in talking to US wealth managers in recent months, has been made aware of how significant an issue this talent crunch is. One senior manager in New York told FWR that it is one of the most serious challenges the sector faces. There were industry concerns over an aging advisor workforce. In 2014, another report by Cerulli, its Advisor Metrics 2014: Optimizing Distribution Channel Resources report, said RIA and dually-registered channels were the only segments to have increased headcount during this time.
Cerulli’s Shtyrkov, meanwhile, noted in in the latest study that almost 40 per cent of advisors plan to retire within the next 10 years, leaving the industry scrambling to groom replacements.
“Women present an untapped talent pool that offers a solution to the industry's recruiting problems. By expanding their focus and altering their recruiting strategies to appeal directly to female candidates, broker/dealers (B/Ds) and RIA custodians can help fill the gaps left by retiring advisors,” she said.
The reasons driving women to become advisors can differ from those that inspire men to enter the industry, Cerulli said.
"Nearly all female rookie advisors consider the desire to help people reach their goals to be a major factor for becoming an advisor," Shtyrkov added. "