The advice profession has improved in so many ways in the past two decades; greater professionalism, better use of technology and fairer client charging to name a few.
But in other areas progress has been limited. One of the most glaring examples is the lack of female representation in advice roles.
A freedom of information request submitted last year by FTAdviser found that only one in six financial advisers are women.
It's a stat that doesn’t make for great reading but will have raised few eyebrows in advice circles. We’ve seen little to no improvement on this front for the best part of two decades.
In 2019 the Financial Conduct Authority said: “Gender diversity is low at the industry level overall with women making up just around 17 per cent of FCA-approved individuals. Despite several regime shifts, this figure is remarkably unchanged since 2005.”
In defence of the UK advice sector, albeit a tenuous one, male dominance is evident throughout financial services. And it’s not just a UK problem. The situation across the Atlantic bears striking similarities.
A study by State Street Global, the investment manager, found that women comprise 16 per cent of the US adviser population, and only 23 per cent of Certified Financial Planner designees are female - a figure that's remained static for more than a decade.
So why do we need more female advisers? Some may argue that the gender split among planners is irrelevant - consumers just want someone who will give them honest and fair advice.
But achieving gender parity would bring several benefits.
First, creating a diverse adviser population is essential to having a financial system that functions in the right way to support those who seek its services. Gender balance is not a tick-box exercise.
Second, as the ongoing advice gap underscores, the sector desperately needs to find ways of engaging a wider range of consumers, and the lack of diversity, while not the core problem, can’t be helping. A broader mix of views, ideas and strategies will help to deliver advice on a larger scale. Recruiting more women into advised and other senior roles is central to this.
There are other reasons, too. As many have said before me, women are well suited to a career in advice.
In decades gone by, it was often the slickest salesperson who secured the client’s business. And while it would be naïve to suggest sales skills are redundant in a post-RDR world - far from it, advisers may no longer sell products but must still sell themselves and their proposition - other traits have arguably become more valuable.
Two of these are a strong capacity for empathy and good listening skills. And there are countless studies that show women outperform men in both these areas.
It’s also inevitable that some people will prefer to work with a female adviser. This might be particularly true for those recently widowed or divorced, who often feel more comfortable entrusting their financial future with someone of the same gender. A study in the US found that 70 per cent of widows fire their late-husband's adviser within a year.
During difficult times, women may feel a female adviser will closely relate to what they’re going through. Especially if the adviser has a shared experience, which could help foster the necessary compassion and trust to build a strong, long-term relationship – an essential element of any sound financial plan.
And with the number of wealthy women is set to rocket over the coming years, increasing female headcount could open-up a fantastic opportunity for the advice profession. Many of these may seek female advisers to manage their affairs.
Research by Centre for Economics and Business Research in 2005 estimated that women will own 60 per cent of Britain’s personal assets by 2025. While it’s unclear whether this prediction is on track, other research has unearthed eye-catching shifts.
A report by Wealth-X, published in 2019, found that the number of ultra-wealthy women (those with $30m or more) around the globe increased to nearly 39,000 - a record-high share of almost 15 per cent.
Given that women now account for almost one in five of ultra-wealthy individuals below the age of 50, combined with their longer life expectancy, this share should only get bigger over time.
The sector has already made the crucial first step, which is accepting the problem exists.
In 2015 the Treasury launched an initiative to boost female representation in prominent roles across financial services. Called the Women in Finance Charter, as of last year over 400 firms covering one million employees had signed up to it. And more than two-thirds (78 per cent) are either meeting or are on track to meet their targets.
Firms are pledging to promote gender equality in various ways such as setting internal targets for gender diversity in senior management, linking senior executive team pay against these targets, and publishing progress annually.
Initiatives such as this, which have clear and identifiable goals to track progress against, are essential to address the problem.
As Romany Youell, financial adviser at needingadvice.co.uk and once the UK’s youngest qualified adviser commented in a recent interview with Unbiased, in order to attract more female advisers, the sector needs more female role models.
“The main thing is showing that there’s a place for women in the profession and they can thrive at the same time,” she told us.
One of the best opportunities to solve the gender imbalance is during the recruitment phase.
And we’re seeing some positive developments on this front. For example, a third of cohorts from one the UK’s largest adviser academies, the Quilter Financial Adviser School, are female.
Furthermore, women are better represented in other financial planning roles. Some 54 per cent of paraplannners are female, according to report by Research in Finance, and Fidelity published in 2021.
As it's common for advisers kickstart their careers in paraplanning, this seems an obvious route to recruit more females into advice. However, a survey by Quilter found that only 6 per cent of female paraplanners want to become an adviser, compared to 41 per cent of men.
We can't rule out the lack of female advisers as a factor here but there are other drivers. None more so than paraplanning becoming a career in its own right - not everyone who obtains a financial advice qualification aspires to work in a client-facing role.
But those who do, whether switching from paraplanning or diving straight into advice, key to attracting and retaining women is to create an environment where they can flourish.
The flexible working practices ushered in during the pandemic, coupled with shifting gender stereotypes, presents a great opportunity. Parents who are afforded greater choice over working hours will find it easier to balance their careers with childcare duties.
Whatever the solutions turn out to be, the aim is to reach a point where gender imbalance in advice is no longer a talking point. We shouldn't kid ourselves that this will happen anytime soon, but the growing and widespread recognition of the problem, and resulting initiatives, suggests things are moving in the right direction.
