But demographic shifts in the
workplace don't happen overnight
Strong
representation at junior level advisory positions could drive future growth in
female adviser headcount.
The financial
advice industry has long been known for being heavily represented by male
employees, but there are some signs in the latest InvestmentNews adviser
benchmarking study that the gender gap may be on the verge of tightening.
Large demographic
shifts in the workplace don't happen overnight. It often takes multiple years,
if not decades, for industries to reflect trends in recruiting practices.
The 2019 InvestmentNews
Compensation & Staffing Study, sponsored by Pershing Advisor Solutions,
highlights this slow change in gender representation at independent financial
advisory firms.
Turtle's pace
The study shows
that female employment at advisory positions within these firms has grown at a
turtle's pace from 2017 to 2019.
The percentage of
female practicing partners has slightly dipped over the last three years from
18% in 2017 to 15% in 2019. But slight increases in the percentage of women
holding support adviser roles, 46%, and lead adviser roles, 25% suggest that
increased female representation is imminent.
Over the last few
years, an increasing number of firms have instituted an advisory career track.
These plans have proven to be a valuable tool for recruiting, developing and
retaining advisory talent.
While it differs
from firm to firm, the career track outlined in the latest 2019 InvestmentNews
Compensation & Staffing Study, shows that it typically takes an individual
four to five years to advance to each rung in their career ladder.
While an adviser
can begin his or her career as a paraplanner, providing mostly support to their
more experienced colleagues, he or she may not be promoted to service adviser
until they have multiple years of experience and a demonstrated ability to manage
client relationships.
Similarly, a
service adviser may not be promoted to lead adviser until he or she learns how
to develop new business and formulate and implement financial advice.
Because there are
more women at the lower levels of the advisory career track, it may mean that
gains in female representation at the higher up advisory positions are upcoming
and partially dependent on firms hiring and promoting experienced female
talent.
Career Track
Positions
Recent hiring data
from the study showed that some of these trends are starting to come to
fruition.
Per the research,
females entered advisory roles in slightly greater numbers last year than in
2017. While only 31% of all advisory positions are currently held by females,
34% of roles that firms hired for or promoted last year fell into that
category.
In short, there is
a slightly greater percentage of women in new advisory positions than there are
a percentage of women in advisory positions overall, which indicates a minor
shift in hiring practices.
Firms can be
intentional in hiring women, and that without a doubt immediately affects the
overall demographics of their firm and to a lesser degree the industry. But it
is likely that many future promotions will also be influenced by the growing
number of women waiting in the wings.
Some of these
promotion trends at the upper ranks of firms are already taking place. For
example, of lead advisers promoted last year, 42% were women.
There has been just
minor growth in the number of women holding advisory positions, but there are
encouraging signs that firms may be positioned to implement and benefit from a
more diverse workforce.
Greater
representation by females at the less experienced advisory positions could mean
that slightly tightened gender gaps are on the horizon. It may just take some
time for these shifts to be realized.
James Gallardo is a
research analyst for InvestmentNews.
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