NerdWallet Study Shows Women Shut Out of Financial Advisory
A NerdWallet study shows that despite financial advisory’s rosy future, women are not making gains in the profession. Although women’s involvement in the industry has increased—women now comprise 36% of the industry, up 6% from 2003—the gender pay gap has also grown over the past decade. Women advisors make only 61.3% of what men in the field make, according to the latest data from the Bureau of Labor Statistics. Financial advisory was even cited this year by blog Think Progress as on of its top 10 jobs with the biggest wage gaps. The wage gap for women advisors has hovered around its current level over the past decade, peaking at 75% of male counterparts’ wages in 2009, and hitting a bottom of 53% in 2006.
Why is that?
A 2013 whitepaper from advisor service provider Pershing pointed to the lack of women at major wirehouse firms, where incomes are typically higher and client account sizes are larger, as a key driver of the disproportionate pay gap. The study added that the disparity is likely also due to cultural attitudes about money and power: men are less likely to want a woman to manage their money for them.
Another likely culprit is the late entry of women into the field. Women financial advisors are a minority in 2013, but they were practically unheard of (especially in investment advisory roles) 20 years ago. That gives men a major head start on reaching the higher echelons of management at bigger firms, as well as typically having put in the years amassing significant client bases in smaller firms.
Expanding to the female talent pool
Some in the industry see women as poised to take over the field. The BLS projects that from 2010-2020, personal financial advisory will grow by 32%, versus an average growth rate of 14% for all professions it tracks. Pershing found that the profession is expanding so rapidly that it will create a gap between the existing talent pool and the demand for new entrants into the profession—a gap that can’t be bridged without turning towards recruiting and retaining female advisors. Beyond a need for more advisors, women investors are both quick to hire financial advisors and more interested in working with a female advisor.
|2010 Employment of FAs (in thousands)||Projected in 2020||Employment change, 2010-2020|
The Bureau of Labor Statistics (BLS) sees financial advisory adding 66,400 jobs before 2020.
Female investors are becoming more prevalent, another trend which may be a driver of change for female financial advisors. A 2013 study from Allianz found that 49% of female respondents have a great deal of responsibility for household financial decision-making, and over half say they are the primary financial decision makers. As the client pool for financial advisory becomes more stocked with women, this will help shift traditional preferences for male advisors.
While trends such as an expanding field and a shift towards female clients make for boosts to female advisory, the numbers seen for women over the past decade paint a grim picture. The growing presence of women in the field combined with a steady and disproportionate wage gap show women have been pushed out of this lucrative and dynamic profession.
Read more about financial advisory and learn how to locate a female financial advisor on NerdWallet’s Ask an Advisor. The Ask an Advisor platform aims to empower consumers with the information they need to make good financial decisions and connect with advisors who can guide them through their unique situations. Our tool aims to save people time in accessing professional advice, connecting with advisors and building trust in those individuals by asking questions and seeing them in action. Advisors will enjoy the opportunity to enhance their web presence and connect with a group of individuals seeking their expertise.
Woman financial advisor image via Shutterstock