More women advisors could be solution to industry’s succession crisis

“Close to 40% of advisors plan to retire within the next 10 years, leaving the industry scrambling to groom replacements,” says Marina Shtyrkov, analyst at Cerulli, in a statement. “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 and RIA custodians can help fill the gaps left by retiring advisors.”

Although brokerage firms have tried to recruit more women in recent years, those efforts are seemingly still falling short. According to the report, a lack of familiarity with the brokerage industry, coupled with concerns about work-life balance and a reliance on variable compensation models are all seen as barriers to young women entering the business.

Moreover, women who do enter the industry often have different motives than their male counterparts, the report finds.

“Nearly all female rookie advisors consider the desire to help people reach their goals to be a major factor for becoming an advisor,” Shtyrkov says. “[Firms] will have better success recruiting prospective women advisors and safeguarding against a future headcount shortage if they accentuate the social impact that an advisor has when working with people to achieve their financial goals.”

At the same time, brokerage firms can make the business more appealing to women by altering their compensation models for rookie advisors to increase base salaries and reduce the perceived instability of a commissions-heavy structure, the report states.

Existing female advisors are one of the industry’s best recruiting tools for other women, the Cerulli report notes, suggesting that “established women advisors can dispel negative perceptions about the industry that deter some women from considering advising a career option. By sharing their experiences, these women can address misconceptions about what it means to be an advisor as well as offer transparency into the profession.”

The report also suggests that the profession may become more appealing to women as digital advice grows and full-service firms focus increasingly on offering more comprehensive financial planning services.

“Softer services, such as evaluating personal objectives and explaining trade-offs, will become more important than ever in this technology-enabled environment,” the report says. “Women’s interest in a goals-based approach engenders a proclivity for holistic advice and development of the necessary soft skills implicit in a planning process.”

Photo copyright: gaudilab/123RF