The wealth management industry seems to have all the markings of being a “natural fit” for women. Women tend to be more nurturing and relationship-driven than their male colleagues. They thrive on their innate abilities to connect and be empathetic — key traits that power their delivery of an exceptional experience to clients.
Yet the age-old question remains: Why aren’t there more women in wealth management?
Equally curious is why — with the tremendous momentum of the adviser movement toward independence — there aren’t more women-led independent firms.
According to InvestmentNews, so far in 2019 only 13% of breakaways were women; in the last three years, only 7% of breakaway deals that my firm facilitated included females at the helm.
As a recruiter, I spend my days speaking with both men and women in the financial services space. Based upon many conversations with women advisers in particular, here are my observations:
• Women tend to be more fiercely loyal to their firm than their male counterparts.
• They typically think less about building their business and more about being laser-focused on serving their clients’ needs.
• While everyone struggles to deal with work-life balance, women tend to stress more about their competing priorities than men.
• Ultimately, women are more risk-averse and typically need to “feel more pain” than their male counterparts before deciding to make a major change — and that change needs to come with a greater sense of certainty before they jump in.
None of these traits are negatives; they do, however, paint the first strokes of a much bigger picture that answers the question “why?” Many of the very qualities that make women great financial advisers are also the very same ones that keep them from making a change.
One top female wirehouse adviser illustrated many of these points when she told me, “I don’t jump into something until I know I can be perfect at it — that I can get an A-plus — while the men I know are completely comfortable jumping in and figuring it out as they go along. I don’t think women are wired to think that way.”
Then there are women who have made the leap. What’s different about them?
Being an independent financial adviser is defined by the ability to deliver customized service to clients, unencumbered by a big firm agenda. This freedom to prioritize client needs would seem to be naturally appealing to women — yet many remain stuck because a move to independence is the ultimate test of the very things that keep women from moving in the first place.
In speaking with women who’ve made the leap, I found that they share a common thread. Essentially, they still had all of the same concerns about being disloyal, upsetting their work-life balance and fear of the unknown, but they were driven to action by something more powerful.
For example, Michelle Smith broke away from Wachovia in 2004 when she “hit the world of ‘no’.” The founder and CEO of New York City-based Source Financial Advisers, an RIA managing more than $400 million in client assets and focused on divorced women, felt she had “no other choice” but to start her own firm.
The realization the traditional brokerage world could not offer the flexibility she needed to serve her sophisticated and unique client base was a powerful driver — far stronger than the risk she knew she’d be taking.
After seven years at Wachovia, she had a choice to make: Continue to offer what she described as a “sub-optimal experience” for her clients or do something radically different. “I believe the best time to take a risk is when your gut instinct first tells you to take it,” Ms. Smith said. “I just knew I had to build my own firm.”
Another top woman breakaway said, “Based upon my experience, women and men seem to be equally terrified of the prospect of breaking away and potentially compromising their financial well-being.”
This adviser, Margaret Dechant, CEO and founding partner of Wichita, Kansas-based 6 Meridian, a $2.5 billion RIA, saw past the fear when she and her partners broke away from Morgan Stanley in 2016.
Her motivation was similar to Ms. Smith’s: The limitations at Morgan Stanley stood in the way of her deep commitment to serve as a true fiduciary to her clients.
Having a clear vision and the ability to see it through is what made the move worthwhile, Ms. Dechant said. “Once we got to the other side, we found a true level playing field — one that we had only ever dreamed of and where we can be as successful as we want to be.”
Emily Sanders, a managing director for United Capital Partners in Atlanta, Georgia, came to independence from the corporate world.
“I had a tremendous personal drive to prove I could do it.” she said.
Ms. Sander’s drive was indeed tremendous. She started an RIA from scratch in a home office (her spare bedroom), was independent for 18 years and then sold her business to United Capital Partners just over six years ago.
Managing more than $400 million in client assets, she was driven to build a business that would allow her to always put her clients’ interests first. Like others, she struggled with the fear of failure and the unknown, yet found a way to see past that.
Ms. Sander’s advice to other women advisers: “Have the courage to make the leap to independence if serving as a fiduciary is important. For me, it helps me to sleep better at night knowing I am.”
Finding the common thread
Fear is often at the core of what prevents many of us from making major life changes. Yet some, pulled by a vision that they believe is worth taking the risk for, fear often takes a back seat to the greater potential of what could lie ahead.
In speaking with these women and others who’ve made the leap, their pull to independence was guided by a common thread:
Each of these advisers believed they couldn’t serve their clients in the best way possible from within the confines of a brokerage firm. Their passion and conviction to do what they saw as “right” far outweighed all of what makes many of their colleagues stay put.
One adviser told me that her leap to independence was much like her first experience sky diving: “It’s incredibly frightening when the door first opens. But once you look down and see the world through an entirely new lens, you feel the fear and make the choice to do it anyway.”
No doubt the move can be scary. But those who’ve gone before you agree: It’s the best jump they’ve ever made.
Mindy Diamond is founder and CEO of Diamond Consultants, a financial recruiting firm.