By Gretchen Betts
A few weeks ago I spoke at the 7IM Summit in Celtic Manor, Newport about the importance of encouraging more women to become financial planners, for the next generation and the future of financial advice.
Lack of diversity across many categories – gender, religion, race, disability remains a key issue in many professions – but ours is sadly not a leader when it comes to attracting talent from a wider diverse group of people. I’ve not focused here on any other minority group – just the one I know and live everyday!
According to the FCA, only 17% of approved individuals are female and some of these roles will be compliance and not client facing financial planning roles (that’s not shifted much in almost 20 years).
At the 7IM Summit in Newport only 10% of the audience were women – and standing up in front of that crowd to discuss this topic – was pretty daunting – although I’m pleased to say that generally it was received very well.
Why do I feel increasing female financial planners is so important?
A study by Barclays tells us that by 2025, women will have more financial power than ever before, with more than 60% of the UK’s wealth expected to be in their hands1.
Research by Netwealth indicates that over 30% of women aged between 16 and 34 have opted against sharing financial assets with their significant other, with nearly half of them saying they feel it will compromise their financial independence2.
This research shows that the tide is shifting – in the very near future women will have more financial power than ever before. More single professional women, those choosing not to have children, more cases of divorce, more women inheriting wealth and greater longevity are all playing a part in this shift.
It’s very clear that as financial planners we won’t be able to rely on primarily engaging the husband/partner – which historically has been the case and that we have to find a way to relate to women and build trust quickly.
Is this a problem? Male financial planners can advise women!
I don’t feel the conversation should be whether men or women make better financial planners – it’s more that as a profession we’d do well to remember that the ideal service business should be aiming to have a work force that reflects our wider society! The latest census results in the UK show this is a 50/50 split between men and women.
A profession without good diversity develops a language, service and products for itself – in our case – generally developed by men and for men. Naturally, this attracts men to our profession, both to become financial planners and as clients, to take advice. Men are three times more likely to seek financial advice than women, according to FT Adviser.
The client planner relationship is built on trust and one of the quickest ways we build trust is often simply to have a shared identity. In some cases, the simplest way to do this is to be the same gender!
To do this everyone must accept that we move on from the male, pale and stale business model.
Women lack confidence and financial literacy
The Wealthiher Network’s 2019 report3 highlights some fundamental statistics:
- Over ¾ women in their survey said there felt there were fundamental differences in the way men and women consider investments and risk
- Over 1/3 of the women said they had felt patronised when seeking advice
- 36% feel they have a lack of knowledge and worry about getting it wrong
This lack of confidence and knowledge is backed up by The 2019 Women, Money, and Power Study, commissioned by Allianz Life Insurance Company, who found that, while the past several years have put a spotlight on female empowerment, women are struggling to make progress with financial literacy.
As professionals and business owners we must grasp this as a fantastic opportunity. There is 50% of the population of which a significant percentage feel they are not currently serviced by our profession. They feel we don’t get them – they feel patronised and scared to talk freely about money and take control of their financial wellbeing.
I’ve lost count the amount of times a female client has approached Magenta and in the first meeting tell us that they’ve sought financial advice elsewhere but met a male adviser and told us that they felt “patronised” or “everything was so complex” – that they were made to feel stupid – and they didn’t trust them.
So, what does all this tell us?
- We have a society which is statistically 50/50 men and women. Our profession is not even 80/20!
- Women are set to have more financial power and we will see an increased number of women needing financial advice in the future.
- Typically, women lack confidence when it comes to talking and making decisions about money.
- This segment of our society needs to take control of their financial wellbeing and need advice, but feel patronised when they seek it out.
Trust is often built quicker if you have a shared identity. For financial planning firms this means we must accept that your business will generate more business if you offer a diverse planner gender split. The reality is, some women will be more comfortable talking about their financial future and wellbeing with a female planner, some with male. Some men like to deal with a male planner, others will appreciate the female input.
Every member of our profession needs to accept at the moment, the diversity balance is way off. We all have to play an active role in correcting this. Which means, for example, insisting you have a 50/50 split of CVs from recruiters for all roles, or actively encouraging and training up female staff to financial planner level and beyond, to senior management.
Sceptics and Twitter keyboard warriors will, of course, criticise Magenta – for being all female and not diverse. To this I say, for now we are special, niche and a breath of fresh air from the norm and we won’t apologise for that. The high percentage of female clients that come to us for help and guidance prove this is needed.
When all firms accept that the balance needs to change and the FCA can report closer to a 50/50 split, reflective of our society, then we’ll worry about our in-house diversity!