The Drive Toward Gender Parity in Financial Services

Transcription

1 The Drive Toward Gender Parity in Financial Services Firms may need to recruit and retain additional female wealth managers to meet the evolving needs of a new generation of investors. International Women s Day on March 8 provides an opportunity to advocate for and celebrate parity for women on the world economic stage. It s also an opportunity to shine a light on the relative dearth of women advisors in the wealth management industry. As thousands of global leaders gathered in Davos, Switzerland, for the 2018 World Economic Forum last January, it was clear that men still disproportionately dominate the financial services industry. Only 630 out of approximately 3,000 attendees (21%) were women. These numbers actually reflect a significant improvement over previous years. This disparity becomes even more glaring when one analyzes the gender makeup of the U.S. financial advice industry. Cerulli Associates reports that only 16% of all advisors are women, equating to just 48,600 women out of a total universe of 310,500 advisors 1. Diversity Benefits the Entire Industry Previous studies have demonstated that the unique experiences and backgrounds of a diverse workforce often result in better decision-making, problem solving, creativity, innovation, and flexibility. As the chart below demonstrates, the stock performance of firms with at least one woman on the board of directors has outperformed that of firms with no women on their boards. Companies with boards comprised of 25% or more women performed even better.

2 2 WHEN WOMEN ARE WELL REPRESENTED IN LEADERSHIP ROLES, STOCKS HAVE OUTPERFORMED Women CEOs at S&P 500 Companies 94.4% Men 5.6% Women Sources: Catalyst: workplaces that work for women, Still Missing: Female Business Leaders, CNN Money, 2015, Impact of Women in Corporate Leadership: the Relative Stock Performance of Gender-Diverse Boards, Investments & Wealth Monitor, July/August Past performance is no guarantee of future results. Despite these results, women continue to be underrepresented in leadership positions. At S&P 500 companies within the financial services sector, women made up 54% of the labor force in Yet only 29% of executives and senior-level managers and 2% CEOs were women. In fact, only 14% of S&P 500 companies had a woman in at least one of the top five leadership positions at their companies. 2 In January 2017, only 26 S&P 500 companies had women CEOs (5.6%). 3 Signs of Progress During the second annual Advancing Women in Leadership Workshop at FSI s January One Voice Conference, both female and male executives met to network, exchange ideas, and gain insights on professional development and issues important to women in today s workforce. In her presentation, Fidelity Clearing & Custody Solutions senior vice president Samantha O Neil cited some encouraging data. According to Cerulli Associates, females constitute approximately 24% of rookie advisors, compared to the industry average of 15% for established advisors. 4 From Fidelity s recent RIA Benchmarking Study, O Neil showed that the proportion of female full- time employees in female-led RIA firms is 64%, much greater than the 33% in male-led RIA firms. As more women enter the profession and move into leadership roles, we can expect or anticipate total gender composition of firms to evolve. However, that will only happen if firms do a better job of retaining female advisors. We re bringing more women into the industry, but it s a leaky bucket. Men and women need to work together to solve some systemic issues to attract and keep women in the profession, said O Neil. Changing Demographics Bode Well For Female Advisors Women have different motivations for pursuing a career as an advisor when compared to their male counterparts, according to the 2016 Fidelity Financial Advisor Community, Future Ready Study. 4 Women were more likely to cite intellectual gratification as a top reason for becoming a financial advisor. They were less likely than men to cite the ability to earn high income as a primary motivator. 2

3 Top 3 Reasons for Becoming a Financial Advisor 69% 56% 46% Women advisors propensity to incorporate technology into their practices appears to leave them well positioned to meet the next generation of investors needs. FEMALE ADVISORS UTILIZE TECHNOLOGY TO ENGAGE AND COLLABORATE WITH THEIR CLIENTS 35% 28% Women advisors more often believe that recent advances in technological devices, communication channels, and the availability of digital information 19% Improves their ability to effectively communicate/ engage with their clients 82% 74% Makes them more accessible to their clients 82% 74% Provide High Income Allowed Me to Help People Seemed Intellectually Gratifying Male Female Source: The 2016 Fidelity Financial Advisor Community, Future Ready Study. Allows them to showcase their value to their clients Enables them to spend more time with their clients Enhances the services they provide to their clients 50% 50% 62% 61% 73% 63% They strongly agree that Female advisors motivations appear to be aligning well with the coming wave of wealth and the next generation of investors. By 2030, members of Gen X/Y will surpass Baby Boomers in terms of holding the most wealth in the U.S. They will also represent a more diverse group of investors, with significantly more females and multicultural backgrounds. In fact, the generation that is currently younger than 10 years of age will be the first U.S. generation that is more multicultural (50.8%) than Caucasian (49.2%), according to a report from Nielsen 5. According to Fidelity s 2017 Millionaire Outlook study, Gen X/Y millionaires unique needs play directly to female advisor s strengths 6. Gen X/Y millionaires expect their advisors to deliver services that are more comprehensive. Increasingly, this emerging group of investors is demanding a more holistic approach to financial planning. Those desires may pair up well with female advisors stated reasons for becoming advisors in the first place. Gen X/Y investors also expect technology to be at the forefront when interacting with their advisors. More than half (53%) say they d find a new advisor if theirs wasn t utilizing technology to enhance service. Almost a quarter (23%) considers the use of technology for collaboration as a top three factor in choosing an advisor. An effective online strategy is essential to remaining competitively differentiated Male Female Source: The 2016 Fidelity Financial Advisor Community, Future Ready Study. Recruiting Women Advisors As the Gen X/Y generation s unique set of demands for advisors plays to female advisors strengths, recruiters will be tasked with finding ways to engage female talent. So, how do recruiters reach and retain female talent? Fidelity s 2017 Financial Advisor Community-Advisor Movement Study asked women what top benefits they d hope to realize by switching firms. Female advisors were much more likely than men to cite the ability to provide greater value and a higher level of client service to their clients than men were. They were more likely to cite having greater control over their clients investing strategies and having a more client-friendly and transparent pricing model as reasons for switching. When it comes to the emotional benefits that they realize or perceive from switching firms, women wanted more control over their own future or destiny, the ability to realize their own business vision, and the ability to be their own boss. 72% 84% 3

4 HOW CAN YOUR FIRM ATTRACT FEMALE ADVISOR TALENT? Top benefits that Female Advisors say they have realized, or would hope to realize by switching to a new firm underscores their client-centric focus: Ability to provide greater value to their clients Being able to provide a higher level of client service To have more control over their clients' investing strategies To have a more transparent pricing model Personally, as a result of switching firms, Female Advisors also report having experienced, or believe they would experience More control over their future/destiny Ability to realize their business vision Be their own boss Avoid having to deal with the bureaucracy imposed by others Achieve signficant personal growth What does all of this mean for recruiters who are looking to attract women advisors? It may not be the best approach to start your pitch by discussing compensation. Instead, recruiters should consider highlighting their firm s client centricity and focus on personal growth when they present their firm s strengths to potential women recruits. A More Diverse Talent Pool Benefits All Male Female Source: The 2017 Fidelity Advisor Movement Survey. Diversifying the talent pool to recruit more women can only benefit the advice industry as it moves towards becoming more future-ready and meeting the needs of the next generation of investors. Ultimately, diverse teams of men and women need to have purposeful and deliberate discussions to drive meaningful change. Diversity will not happen in a vacuum. Responsibility for achieving a better gender balance rests with all players in the industry. According to O Neil, addressing the lack of women in financial services isn t just a feel-good step toward gender parity it s smart business. It s a win for our industry, it s a win for advisors, for firms, and ultimately, it s a win for clients. 43% 47% 48% 54% 55% 66% 55% 52% 56% 58% 64% 62% 68% 66% 66% 70% 68% 87% Learning from SunTrust Bank A Case Study Gender diversity in the workplace provides diversity of ideas, creates an inclusive culture, and can have a positive impact on performance. While diversity in the wealth management industry remains a challenge, SunTrust Private Wealth Management has made significant progress toward increasing the share of female advisors in its workforce. During a recent panel discussion, Leah Wehinger, a senior vice president with SunTrust Private Wealth Management, shared some of the strategies her firm uses to attract and retain female advisors. Today, SunTrust Private Wealth Management boasts one of the highest percentages of women advisors in the industry 30 percent. Below are excerpts from the discussion. What have been the key drivers behind SunTrust s strategic initiative to recruit and retain female advisors? Ten years ago, we looked at the data on our firm vis-à-vis the industry and discovered we had a relatively high percentage of women in our advisor ranks. However, with women representing half of the population, there was still opportunity for us to have an advisor workforce that better represented the clients we serve. We believe that our teams are most successful when our advisors (as well as our teammates in all roles throughout our business) can bring their full selves to work, and reflect the diversity of clients we serve. These beliefs have driven our efforts over the past decade. It s also important to understand the dynamics of our clients are changing, too. Today, women control more than half of the wealth in the U.S.; by 2020, it s expected that women will control 60 percent of the wealth in this country. Our research and experiences shows us that many women, and even some men, prefer working with a female 4

5 advisor. We recognize that we need a team that can respond to these demographic changes and who can collaborate, listen, and engage on topics that are of interest to women. What are the cornerstones or pillars of your strategy? Our first step was to conduct a full assessment of gender diversity at the firm. Today, approximately 30 percent of our advisors are female (versus an industry average of 16 percent according to Cerulli data in 2017). This didn t occur by happenstance. We created a targeted program for female advisors. Events and conferences (both national and local) are our main avenue for connecting with these women and delivering content to them. The events are focused on education and training, networking, and sharing best practices. These events have been very powerful, especially for advisors in our smaller offices who may be the only woman in that location. The networking opportunities and energy generated at these events are off the charts. We also examined our recruiting process to enhance our appeal as a firm to female advisors. As part of this, we conducted a mock exercise with our recruiters to understand how they engage with potential advisors. We discovered our recruiters tended to emphasize attributes of SunTrust that would resonate more with men than women, such as focusing on grid rates and access to products, rather than the support they would receive, the ability to work with a team, or the advocacy of their manager. Turnover is a reality in our industry, so our sales managers are also encouraged to stay in touch with women who have left the firm (and may want to return). Expanding recruitment into non-traditional sources of talent to find female advisors, such as associates who work in private banking or as trust officers has also proven a successful channel for advisor recruitment. What can often be forgotten is that the process doesn t end when the advisor shows up for her first day at SunTrust. We leverage various SunTrust programs to develop female advisors. In addition to Private Wealth Management s associate, analyst, and rotational programs, SunTrust has programs across the bank that allow teammates to enrich their personal and professional lives. What lessons have you learned along the way? Two early lessons that we were able to quickly correct come to mind. Our first national conference for women was the hottest ticket in town and space was limited. Although we invited a number of executive women to address the audience, we neglected to invite senior male leadership to do the same. This was a missed opportunity to showcase the support of this initiative by SunTrust s male leadership. At some of our earlier events, we delivered great content on how advisors can engage and attract female clients. The sessions focused on enhancing our listening and communication skills, our engagement tactics, and our content and events. However, as soon as we rolled this out, we heard from many male advisors that they too wanted this type of training and education. Today, we maintain the camaraderie of our women-focused events, but also share the learnings with all of our advisors. What type of organizational structure did you put in place for this initiative? We approached this initiative like we would any other strategic initiative at the firm by putting a core team in place to own the initiative and using metrics and data to track our progress. Executive sponsorship is critical. Our Chairman and CEO, Bill Rogers, leads by example and delivers consistent messages about the importance of this work. The Private Wealth Management leadership team partners closely with the SunTrust Diversity and Inclusion Office on programs and training. The leadership team also encourages each business unit to be creative. There are women across the organization who are engaged which creates a nice mix of bottom-up and top-down ideas and efforts on diversity. Finally, we also made it one person s responsibility to ensure that great ideas get shared across the organization. This enables us to take a good idea or best practice from Florida and use it with clients in New York, Texas or anywhere we serve clients. 5

6 Key Takeaways FOR WOMEN CONSIDERING A CAREER AS A FINANCIAL ADVISOR The potential for women to advance in the wealth management industry has never been greater. We see a convergence of cultural developments with the preponderance of data supporting the business impact of women in the industry. This convergence creates a unique opportunity for women to achieve parity with men in the industry. Additional Fidelity Resources: Attracting Women Advisors to Your Firm. Recruiting talented women and keeping them on board can benefit your firm and its clients. Journey to the Top: Insights on Developing and Retaining Future Leaders A High-Net-Worth Juggling Act: Meeting the Needs of Executive Women FOR FIRMS AND RECRUITERS It s becoming mandatory for firms and recruiters to focus on improving the gender gap and diversity in their hiring campaigns. This focus should help them become a competitive differentiator in the industry. With the increased share of wealth in the hands of Gen X/Y and multiculturals, the future will inexorably lean toward more gender equity and diversity in the wealth management industry. 6

7 FIDELITY CLEARING & CUSTODY SOLUTIONS 200 Seaport Boulevard, Boston, MA For more information on Fidelity Clearing & Custody Solutions, please contact your Fidelity representative. 1. The Cerulli Edge, Women Advisors Issue, 1Q Still missing: Female business leaders, CNN Money, March 24, Catalyst: workplaces that work for women. 4. The 2016 Fidelity Financial Advisor Community Future Ready Study 5. Nielsen, The Multicultural Edge: Super Consumers Rising Market 2015 Report. 6. The Fidelity 2017 Millionaire Outlook Study. For investment professional use only. Not for distribution to the public as sales material in any form. The information contained herein is as of the date of its publication, is subject to change, and is general in nature. Such information is provided for informational purposes only and should not be considered legal, tax, or compliance advice. Fidelity Clearing & Custody Solutions does not provide financial or investment advice. Fidelity cannot guarantee that such information is accurate, complete, or timely. Federal and state laws and regulations are complex and are subject to change. Laws of a specific state or laws that may be applicable to a particular situation may affect the applicability, accuracy, or completeness of this information. This information is not individualized, is not intended to serve as the primary or sole basis for your decisions, as there may be other factors you should consider, and may not be inclusive of everything that a firm should consider in this type of planning decision. Some of the concepts may not be applicable to all firms. Always consult an attorney, tax professional, or compliance advisor regarding your specific legal, tax, or regulatory situation. This communication is provided for informational and educational purposes only. Unless otherwise disclosed to you, in providing this information, Fidelity is not undertaking to provide impartial investment advice, or to give advice in a fiduciary capacity, in connection with any investment or transaction described herein. Fiduciaries are solely responsible for exercising independent judgment in evaluating any transaction(s) and are assumed to be capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies. Fidelity has a financial interest in any transaction(s) that fiduciaries, and if applicable, their clients, may enter into involving Fidelity s products or services. There is no form of legal partnership, agency, affiliation, or similar relationship between SunTrust Bank and Fidelity Investments, nor is such a relationship created or implied by the information herein. The registered trademarks and service marks appearing herein are the property of FMR LLC. Fidelity Clearing & Custody Solutions provides clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC, Members NYSE, SIPC FMR LLC. All rights reserved