Outlining why women are still underrepresented in advice and what needs to change in the industry to tackle that problem
For all the valiant efforts made at the industry, firm, and practice levels to encourage more women to become advisors, only around fifteen per cent of financial advisors in Canada are women. It’s a glaring gap that is beginning to impact the industry’s ability to operate. The great wealth transfer will disproportionately put more assets in the hands of women than we have ever seen in history, and various surveys have shown that female clients prefer to work with female advisors.
Jenny Chen believes that every stakeholder in the industry can play a role in fixing this issue. Chen is currently the CEO of Catalais Consulting Ltd. a workplace consultancy. She was previously the North American director of inclusive business enablement for the private wealth division of BMO. Having spent a career in diversity work she outlined some of the steps that can be taken by the industry now and why it’s in the industry’s interest to continue to encourage women to make careers as advisors.
“I think these disparities are often perpetuated by outdated recruitment practices. We still have very male dominated workplace cultures. There’s also a lack of mentorship opportunities and sponsorship opportunities. A lot of people want to give us advice, but sponsorship opportunities are something that we can do a better job of. A lot of the roles today are still modelled around the traditional family model, and that doesn't really accommodate work life balance. Women still hold heavier caregiving responsibilities in your normal nuclear household. So I think all of these factors play a huge part in why we still can't get that parody gender parity across the landscape.”
Chen sees this problem cutting across all sides of the financial services business. Whether a firm is bank-owned, manufacturer-owned, or independent she believes the same conditions deter women from making careers in financial advice.
She believes, too, that the framing of women’s careers in advice has done a disservice to the men currently working as advisors. By positioning women’s gains as a zero-sum game, she believes it puts men’s backs up and discourages the kind of ongoing change that the industry needs.
“A lot of the men in our industry are strong advocates to change and ant to see it evolve,” Chen says. “We can frame this conversation better, as more of a partnership. Until we do that we miss the opportunity to build an industry where everybody thrives.”
Despite the preference female clients appear to have shown for female advisors, Chen notes that the most important thing for these clients is the demonstration of value, trust, and competence as well as the establishment of a strong relationship. She argues that the preference for advisors of the same gender is overstated. She argues that the goal should not be about winning one gender or another in your business, but reflecting the broader makeup of society. Achieving that, she argues, is a good in and of itself and a good that should allow a firm to better understand the society it serves and therefore better serve it.
One of the immediate ways Chen believes the industry can encourage more women to become advisors is to embrace flexibility. Because traditional domestic work still falls disproportionately on the shoulders of women, even in dual-income households, she believes more flexibility can quickly remove a legacy barrier to women’s career advancement in advice.
These changes, though, don’t go as deep as Chen would like to see. She believes that societal norms discourage women from having careers in finance from a very young age. Similar to the issues seen in STEM fields, the lack of representation can become self-reinforcing. Career paths, she notes, are becoming increasingly specialized and firms are recruiting from smaller and smaller streams of student populations. If, however, firms looked to recruit from more unconventional educational streams they might be able to recruit more women to them in the process. Chen uses the example of psychology undergrads, who may be equipped with unique insights and advantages as advisors, and who might happen to have more women enrolled than a traditional business school.
Working to remove these barriers and encourage more women to become advisors is a business decision, in Chen’s view. Rather than working to capture the female client, however, Chen believes it’s simply a matter of ensuring there are enough advisors to serve clients in the future.
“Increasing gender representation in the investment advisory industry isn't just a diversity issue, it's actually a business continuity imperative,” Chen says. “We know a significant portion of our advisors across Canada are approaching retirement, and this poses a major challenge for sustainability of established client bases. Without proactively addressing this, and really only using half of the labour force and half of the population out there, we really risk, as an industry, facing a huge talent shortage that could undermine all of the long term growth and client relationships we've established.”
Jenny Chen is currently in the process of authoring a book profiling women in leadership roles in the financial services industry. If you would like to contribute your story to her work contact her at [email protected]
