Baby or Business? Challenges Persist for Aspiring Women FAs

Despite industry efforts to recruit more women advisors, obstacles persist, making it difficult for women to become advisors and find success at the same rate as their male peers. This story is the second installment in a series about women advisors. Read the first.

The financial advisory field has traditionally been difficult to crack for aspiring women, who have had to overcome not just its heavily male-dominated ranks but the nature of a business that makes it more difficult for many women to build and sustain a practice.

Progress toward leveling the field has been slow, and an industry facing a shortage of fresh talent needs to address longstanding barriers to entry, according to women advisors who spoke to Financial Advisor IQ.

“It needs to be more approachable for women,” said Alli McCartney, managing director and private wealth advisor at UBS’ Alignment Partners. “There were cultural and systemic things that made it more challenging.”

McCartney, a 22-year industry veteran, said better accessibility, marketing, and training could help bring more women into the advisory business, where she said clients tend to gravitate toward advisors with whom they have common experiences. She said that 70% of her clients are “women who control their own money,” whether that be from starting a business, going through a divorce, or inheriting wealth from a parent or spouse.

“I feel very strongly that clients work with people they like, they trust, and that make the money, in that order,” McCartney said, adding that, generally speaking, women investors “have not been well served by traditional brokerage houses and by the 40-to-70-year-old men who run those practices.”

Although many firms until recently have championed diversity initiatives, estimates from McKinsey & Co. suggest women make up only about 23% of financial advisors in the U.S. And some think that number is too generous.

“When I look around, that seems really high,” McCartney said. “I’d love to think it’s one in 10.”

To Jill Zucker, a senior partner at McKinsey who advises financial institutions, the gender gap is indicative of a workforce that is “quite tenured” and has not yet attracted the next generation of talent.

“If you think about the aging advisor force and you roll back the clock of how long they’ve been in the industry, I think it’s somewhat indicative of the number of women who were in the workforce at the time that many of those men started,” Zucker said.

The lack of visibility for women advisors — much less successful women advisors — can become a negative feedback loop for women trying to get started in the business, said Kristi Mitchem, a cofounder at &Partners and a former executive at Wells Fargo.

“They don’t see other women succeeding in the same numbers as they see men in the financial services industry, so it becomes a bit of a self-fulfilling negative prophecy,” Mitchem said. “There are so many studies which show that women get promoted on actual results. Men get promoted on promise. Men tend to get their first promotion much more quickly than women. They get much more positive affirmation and feedback.”

Women also face unique challenges in trying to get an early-career start toward building a book of fee-based business, McKinsey’s Zucker said.

The “eat what you kill” structure of the advisory industry is high-risk, high-reward, but it can make it difficult for women to grow their books while also having young families, UBS’ McCartney said. Finding workarounds is possible, but “it does put you off track with your male peers,” she added.

“I wanted to make babies, and I couldn’t do that as a commissioned salesperson, so I, as most women I know, either had to work at a private bank, which is not as entrepreneurial, or had to start later in order to have any sense of control,” McCartney said. “To be a mom and to be a broker in one’s 20s or 30s is, in a sense, mutually exclusive.”

“To get started in this industry, historically, has been pretty tough. You have to build your own book of business,” Zucker said, adding that she has noticed a higher percentage of women in private banks, where the compensation is a salary-plus-bonus model that is more “predictable” than a commission-based structure.

“Women can certainly do it. The question is, do they want to?” Zucker said. “I don’t think we’ve created good on-ramps for people to come in laterally from outside the industry. Yes, there’s lots of advisors moving firms all the time, but you don’t find as many people entering as a second career, which would have allowed, I think, more women to come in.”

Strong mentorship also plays a role in helping women — and young professionals in general — get ahead in the business.

Kathy Entwistle, a private wealth advisor at Morgan Stanley who first registered at the firm in 2002 after raising her children, said she was mentored by an advisor who started her business alone in the 1970s. The coaching helped Entwistle build her own practice mid-career and stay resilient, she said.

“You want to make sure it’s somebody that understands what those challenges are that women face in this career path … the confidence, the tools, the resources, how to get credibility, especially younger women,” Entwistle said. “How do I add clients into my practice if they’re looking at me like, ‘Oh, it’s just a 28-year-old?’ How do you get that credibility?”

The mentorship made such an impact on Entwistle that she now makes time to speak with college students who are considering becoming advisors.

“If you can see it, you can be it,” Entwistle said. “We all have reasons why we do what we do, but one of the things that I think we probably all have in common is it wasn’t easy. Somebody stepped in and helped us in one way or the other; [it] could be different for everybody.

“So part of it is paying it back, and part of it is just the pure satisfaction of helping somebody else succeed.”

Reprinted with permission.