The future of the financial advisory profession is female, according to a new study from Aite Group, Building a Diverse Practice: The Value of CFP Certification to Female Advisors.
The study, which was commissioned by CFP Board, “underscores the strengths and distinctive characteristics female CFP professionals bring to wealth management practices and clients.”
The study also concludes there is an urgent need for firms to recruit more client-facing female advisers who are CFP professionals.
Key findings of the study include:
Female CFP professionals are particularly invested in the financial planning process. They provide written and comprehensive financial plans to more of their clients compared to male CFP professionals and other female financial advisers. They are also more likely to give retirement and estate planning advice compared to male CFP professionals.
Female CFP professionals' focus on financial planning does not detract from their investment management responsibilities. Female CFP professionals are also as likely as male CFP professionals to derive a majority of practice revenue from assets under management (AUM) and financial planning service fees.
Female CFP professionals present themselves as more confident than male CFP professionals with their ability to build client trust and their approach to financial planning. They are also more satisfied with their careers than other female advisers.
CFP certification has played a role in helping female advisers grow into confident advisers. Female CFP professionals are more likely to recommend CFP certification to colleagues than are male CFP professionals (64% of females strongly recommend versus 52% for males).
Female CFP professionals are also more satisfied with their careers compared to other female financial advisers. Fifty-three percent indicate strong satisfaction with their careers, while 35% of other female financial advisers and 42% of male CFP professionals report the same.
These findings make a compelling business case for increasing the number of women in the financial planning profession," Kevin Keller, the CEO of CFP Board, said in a statement. "The study confirms that financial planning is a rewarding career opportunity, and that CFP certification is a must-have designation for women."
“We really see females gravitating (toward) and demonstrating deeper and broader adoption of financial planning within their firms,” Keller said in an interview.
So what do female financial planners have to say about the study?
“Yes, I totally agree with it,” said Cary Carbonaro, a CFP Board ambassador. “I would go one step better and say we are better planners in general. We plan our vacations, weddings, etc.”
Carbonara said she believes female financial planners also naturally have more empathy.
Another female financial planner had similar observations regarding the study’s key findings.
“My reaction is that I don't find the study surprising,” said Stephanie Bruno, a certified financial planner with Sea to Peak Advisors. “Many of the female advisers I know really enjoy the holistic planning approach with clients.”
Bruno tells the story of when she was in college her finance curriculum was all about portfolio management. “Studies show, however, that people with good relationship skills make better advisers and women are often more relationship oriented,” she said.
She also noted that when she was looking to start her firm, “it was to help people bring meaning to their money so I incorporated life planning.”
Not a lot of firms were doing this even 10 years ago, Bruno said. “There are many of us who want to serve the entire client and not just manage their money, although it goes without saying that it is still important to provide a sound investment strategy,” she said. “The study also shows that females are, in fact, delivering on investment management as well.”
The holistic work, she said, both provides a higher level of service and provides more fulfillment to the adviser. “Of course, I know many male advisers who are doing great planning work as well,” said Bruno.
As for the urgent need for firms to recruit more client-facing female advisers who are CFP professionals, Carbonaro said it’s a challenge. The percentage of CFP professionals who are female has been “static for decades,” she said. “So, it’s the same pool of people competing for the few that has not been growing.”
For the record, the number of CFP professionals in 2020 was 88,726, a 2.7% increase over 2019 and the number of women CFPs increased by 3.1% over 2019 to a high of 20,633, or 23.3% of all CFPs, according to this report. Meanwhile, the number of Black and Hispanic CFPs grew to a total of 3,688, a 12.6% increase over 2019. Blacks and Hispanics still represent just a fraction of CFPs, with Blacks comprising 1.68% (1,493) and Hispanics accounting for 2.46% (2,170).
For her part, Bruno said the industry needs to create more career paths for people to enter and not have to sell products, and the industry also needs to do a better job communicating that there are these career paths.
“There has been a lot of improvement in this over the past 25 years in firms adding paraplanning positions and diamond teams structures to allow for someone to be paid a salary while learning the business,” she said. “This will add to making financial planning a true profession. “Once more people realize that you can have a career and maybe even your own business in service to people and not just selling them financial products, I think you will see more people seeking the profession.”
Bruno also said firms need to ensure that they are giving women equal opportunities to advance to the adviser role and not leaving them in para or operation positions in firms.
“I also think the evolution of impact investing can help attract more women and younger people in general to the profession,” she said. “People are now more interested in how their investments are making a difference.”