Women are “critical” to the future of wealth management, yet the number of female advisors is dwindling from its current level of 30 per cent, according to a new survey by Pershing, a BNY Mellon company.

Women are “woefully underrepresented across the industry,” even though they account for nearly two-thirds of the US workforce, according to the survey, The 30% Solution: Growing Your Business by Winning and Keeping Women Advisors.

The report highlights several contributing factors to the decrease in the volume of women advisors. “To begin with, more than a third of advisors today are less than a decade from retirement,” it said.

There are also cultural barriers that continue to exist at the executive level, it added, citing a University of North Carolina Business School study of Fortune 500 companies in which over half of respondents said that developing women executives was “not on the agenda.”

Pershing points to figures from the US Department of Labor illustrating a “significant pay gap” among men and women, with women advisors earning just 58 cents on the dollar compared to their male peers. This costs women an average of $1.25 million over the course of a 35-year career, it said.

Interestingly, however, a report at the end of January by UK-headquartered Barclays, shedding light on how earnings patterns differ on the other side of the Atlantic, found that female entrepreneurs are out-earning their male counterparts. Among high net worth female entrepreneurs, the average annual income stands at £382,000 ($603,000), whilst male entrepreneurs earn 14 per cent less at £327,000. By contrast, the average income among HNW women who don’t own businesses is £217,000 - a considerable 21 per cent lower than the corresponding average male income of £273,000, it found.

Kim Dellarocca, head of practice management and segment marketing at Pershing, said it expects financial services firms will need to recruit “hundreds of thousands of new advisors” over the next ten years to meet growing demand.

“Financial services businesses would be well-served to better recruit and retain women advisors to help fill this need,” she said.

Opportunities   

The survey found that women investors are more likely to engage advisors than men - at 46 per cent compared to 34 per cent respectively - while nearly two-thirds of female millionaire investors and 82 per cent of female ultra high net worth investors prefer working with an advisor.

“Yet, women investors are not a one-size-fits-all category - and female advisors seem to be ahead of the curve in understanding and seizing these differences,” Pershing said.

To capture the potential of this market, the firm therefore recommends that advisors look to build broad client relationships that simultaneously address business and personal needs: “For example, many newly-divorced women seek new financial counsel because of the unequal level of attention and service they received, compared to their husband, from their advisor when they were married.” 

It added that divorce planning is now a “burgeoning specialty” for advisors, with growing numbers becoming certified as divorce financial analysts.

“Shifting demographics mean that old formulas for success no longer add up,” Pershing concluded. “Women advisors can help unlock a variety of new market opportunities, ranging from divorcing women to younger investors.”

Women may also be the solution to the industry’s persistent talent shortage - but this is only if financial organizations can learn how to recruit and retain them, it said.

The survey was conducted online and involved 357 interviews with US advisors.