For Female Advisors, A $32K Pay Gap

April 23, 2014 by Rachel F. Elson

Want to know why there aren’t more female CFPs? Follow the money.

Even with the same experience, revenue production and ownership status, female financial advisors make$32,000 a year less than their male counterparts, according to newAite Group research for the CFP Board. The real-world discrepancy is probably even greater: Female advisors are also younger than their male peers, less experienced and less likely to have equity in their own practice.

Women are seen as less likely to be hired as advisors, according to a report that the CFP Board unveiled Tuesday as part of its Women’s Initiative. More than 40% of advisors of both genders believe men are favored over women when it comes to firms hiring a planner; only 6% to 8% believe women get preference.

And just 9% of the financial advisors surveyed for the report believe that women have an edge over men as successful financial advisors, the report finds, while much larger groups felt either that there was no difference or that men held an edge.

The research stems from an ongoing CFP Board project aimed at increasing the number of female CFP registrants. Women have been stalled at 23% of CFPs for about a decade, noted former CFP Board ChairwomanNancy Kistner — and current chairwoman of the Women’s Initiative advisory panel — during a daylong event inNew York rolling out the new report.

“We’re falling short as a profession,” Kistner chided listeners.

Worse news, added CFP Board Consumer Advocate Eleanor Blayney, is that women are dropping out as planners even after being certified; they make up only 20% of CFPs who are practicing financial advisors.

STRONG PERCEPTION OF BIAS

The new report identifies several challenges, which largely fall into two areas: bias, both perceived and actual, and awareness of the profession.

The perception of bias is strong, notedPeter Fondulas, whose research firm conducted focus groups and surveys that tapped roughly 1,800 advisors, students, non-CFP financial professionals and financial services executives.

When asked about the way the financial services industry treats male and female advisors, respondents said firms are more worried that women will leave to start a family than that men will, he said; they were also far less likely to find that office culture makes women feel welcome or respected, or that women get strong support from colleagues.

Meanwhile, the vast majority of financial services executives — the people in charge of hiring advisors — believed either that there was no difference between the genders or that men were better suited, Fondulas said.

Yet these same executives showed a “double standard,” Fondulas noted: When asked about gender differences in traits associated with the planning profession, these same executives were actually more likely to say that women have the characteristics — training, ethics, skills and so on — associated with the profession. (And one male financial services executive told researchers — apparently in jest — that a good way to recruit more female advisors might be to put more hair dryers in the firm’s bathrooms.)

BAD IMAGE

Yet the gender disparity can’t be chalked up entirely to bias. The planning profession also suffers from a broad lack of awareness among female financial professionals, Fondulas said: “One of the key requirements for getting more women into this profession is just getting it on the radar for them.”

Female CFP holders reported high levels of job satisfaction — well above their non-planner peers. Yet among those non-CFP financial professionals, the research found, women were about half as likely as men to know what financial planners do, half as likely to be familiar with the CFP certification, and far less familiar with the specific aspects of the credential, such as the ethical standards, continuing education, educational requirements, exam and work experience.

Meanwhile, when compared with female CFP certificants, other female financial professionals were more likely to believe in what the report characterized as “misperceptions” — that advisors need both sales skills and strong understanding of financial markets.

Non-CFPs were also less likely to associate planning work with communication, listening and relationship building skills.

The awareness gap makes it harder to recruit female advisors, said Fondulas and other speakers, because greater familiarity correlates with higher interest in the profession.

“The inside story is not being communicated to the outside,” Blayney told attendees. “Women do not know about financial planning as a viable, real career.”

Originally Posted at InsuranceNewsNet on April 23, 2014 by Rachel F. Elson.