Why aren’t women as keen as men to be financial advisers? Dr Helen Roberts and Associate Professor Rosalind Whiting of the University of Otago and Dr Daniel Richards of the Royal Melbourne Institute of Technology wanted to know.
Working in a male-centric professional world is the reality for many women. However, female representation in the financial advising sector is significantly lower than many other sectors with the percentage of females working in the industry at 20 and 23 in Australia and New Zealand respectively.
Women choosing careers as mortgage brokers, stock and insurance brokers and financial investment advisers are a minority.
Our collaborative study between the University of Otago and the Royal Melbourne Institute of Technology investigates why so few women are attracted to the financial advice industry, and the barriers that inhibit female retention and career progression.
The results indicate that networking with industries to build a client portfolio, flexibility (or not) of work hours, options to work from home and parental leave management as well as the competitive nature of a sales-based compensation culture and balancing family commitments combined with the masculine management culture within the profession all affect female adviser retention and progression.
So, what works well for male financial advisers, doesn’t appear to work so well for their female colleagues.
An example of the discrepancy is in the way advisers are paid. Female financial advisers were generally less keen on the commonly used fees-based remuneration and bonuses than were their male counterparts. They did not like the atmosphere and competitive pressures created by this remuneration system. This is interesting as the recent Royal Commission in Australia has come out strongly against many of these remuneration arrangements.
Another challenge is in personal progress in the industry. Career breaks and working part-time are not common for financial advisers because of the need to be available to meet client needs. Specifically, caring for children, a role traditionally undertaken by women, is difficult to integrate when establishing a career in financial advice. The study reported that none of the male financial advisers worked part-time or used extended career breaks, rather these were seen as policies created for women. Australia has a flexible para-planner role, but in some ways this works as a trap for women as it is difficult to progress from there to full-time financial advising.
Particularly important at the start of an advising career is the need to network to build a client base, find mentors, get support and to manage career development. Female advisers, especially mothers, find it more challenging to maintain referral networks – many referral sources aren’t going to sit on their hands while their preferred contact is not available. Networking events also disadvantaged some females because they occurred outside normal work hours and reflected male interests. Women disliked the customary, inappropriate, alcohol-fuelled behaviour by male colleagues at organised events. Certainly, our findings point to a dislike of industry networking involving large groups of men, but to not participate can impede female adviser career progression.
We also highlight some possible practical solutions to deal with the challenges many female financial advisers are facing. Adopting a compensation/payment structure where commission-based remuneration isn’t the only option; normalising temporary part-time work for all employees; developing partnerships so colleagues can share a client list and cover absences for times like maternity leave or working on a part-time basis (more common in New Zealand); offering networking opportunities that allow females a choice of times and environments to participate; and most importantly senior managers willing to change work cultures that actively recruit and retain male and female advisers who are able to forge successful long-standing careers.
That last point on a willingness for cultural change is particularly important, given the general population is forced to take more responsibility for investment management in superannuation schemes, and may expect their advisers to reflect their own diversity. Companies needn’t stop doing what is working well, but building a larger, happier and more successful pool of female advisers has potential to increase the overall success of their operation.
One of the outcomes of our study is a challenge to the finance sector to find ways to address those factors that currently contribute to the low representation of female advisers.
The qualitative study titled; “Female Financial Advisers – Where Art Thou,” has recently been published in The Australian Journal of Management
Dr Helen Roberts and Associate Professor Rosalind Whiting//University of Otago Department of Accountancy and Finance
Dr Daniel Richards// Royal Melbourne Institute of Technology
