The times are changing

The Mad Men television series’ world of workplace sexual innuendo and harassment was a reality. And women generally were seen to be lacking the drive and toughness to succeed in business.

Since then, strides have been made that would have been unthinkable 50 years ago. Today, women make up the majority of students in leading medical and law schools, and we have begun to see women leading top law firms as managing partners. Women represent 40% of students at the Harvard Business School, which saw its first eight women graduate 50 years ago, along with their 678 male classmates. Harvard Business School, founded in 1908, took almost 60 years to admit its first women; today, it has the goal of women comprising 50% of enrolled students.

Still, more progress can be made. Women have yet to crack the CEO glass ceiling widely and still are dramatically underrepresented on corporate boards. Women still struggle to crack engineering, technology and the sciences. There has been considerable commentary about the fact that just 20% of Google Inc.’s engineers are women and there is only one woman among Google’s top 12 leaders.

And despite progress, the financial services sector still lags. The U.S. Department of Labour reports that women make up just slightly more than 30% of financial advisors in that country, and there is no reason to believe that the number is any higher in Canada.

Yet, the case can be made that female advisors represent the future of financial advice and that some characteristics that held women back in the past now will work to their advantage.

– How male and female advisors differ

In 1992, American relationship counsellor John Gray published Men are from Mars, Women are from Venus, a book in which he explored how the two genders communicate and interact. This book, which sat on the bestseller list for more than 120 weeks, was among the first to address explicitly the differences in how men and women generally differ in their relationship roles.

A word of caution here: we buy into stereotypes at our peril – and the key word in the previous sentence was “generally.” That said, there are broadly accepted patterns about the ways in which men and women typically differ in their approach in a business setting.

In preparing this column, I talked to six successful male advisors and six successful female advisors about the differences they see between men and women at their firms. Of course, not every male advisor and not every female advisor fits these patterns; but, in talking to advisors of both genders, I heard consensus on the different ways that men and women tend to work.

While recognizing that there will always be exceptions and at the risk of treading into the gender wars, here’s what I heard from both genders about five general differences in how many successful male and female advisors operate:

Male Advisors:

– are competitive and focused on individual success;

– excel at telling a persuasive story;

– are impatient for results and are action-oriented;

– are great at communicating data, facts and figures.

Female advisors:

– are co-operative and focused on team success;

– excel at listening and picking up on nuances;

– are more patient and willing to let clients talk at length;

– are great at empathizing and developing deep bonds.

– The key to success

Regardless of your gender, you are unlikely to see all of these general guidelines as applying to you. No stereotype will ever be 100% accurate; there will always be exceptions. But as a thought experiment, imagine what the implications might be if these differences did generally apply to the two genders in their roles as financial advisors.

The answer is that the stereotyped “female” behaviour is much better aligned with what will be required to be successful in the future than is the male equivalent. That doesn’t mean that being results-oriented and analytical aren’t important, or that there isn’t value in being persuasive or communicating facts and figures. But the “female qualities” in the above list will lead to success as a financial advisor. Listening, empathizing and developing deep bonds will be pivotal to success, not only in attracting and retaining clients, but also in getting clients to stick to their financial plans.

The other key to success will be the ability to attract, motivate and manage a team. Historically, the model of the successful financial advisory team was an “alpha” advisor supported by one or two assistants. Until 10 years ago, one of the bank-owned dealer firms discouraged associates, taking the view that associates represented expensive overhead that would be costly to downsize in the next market downturn.

Today, there is universal agreement that only advisors who are supported by a strong team will excel. This is especially true as the most successful advisors morph from being “investment advisors” and into “financial advisors” for whom a written financial plan is the foundation of client relationships and who touch on every aspect of their clients’ financial lives. In this new world, taking a co-operative, team-based approach is critical to success. Again, these attributes have been the strengths of many women.

– Two final barriers to success

When we talk about why there aren’t more female financial advisors, two final issues arise. The first is the historical perception in the industry about the willingness on the part of women to put in the long hours to build a business – even though the women who did enter the business typically worked every bit as hard as their male counterparts. The second barrier relates to the industry’s perception of the preference by some clients for dealing with male advisors.

On the issue of being able to make the time commitment, there is no question that women who want to raise families face challenges that men often don’t. Studies show that on average, working women still take on more responsibility for child rearing than their male partners do. That said, the world is changing in this respect, as in so many others.

More and more advisors are entering the business as part of a team rather than as solo practitioners, meaning they have backup in managing clients. Technology allows advisors to work remotely in a way that wouldn’t have been possible even 10 years ago. Finally, and perhaps most important, a new generation of younger male advisors are asking the same questions about an 80-hour workweek commitment as many women have.

With regard to client resistance to dealing with women, there is anecdotal evidence that this indeed was an issue in the past. But now, not only are more and more clients open to dealing with advisors of either gender, new research suggests that being a woman may actually be an advantage. Every advisor is familiar with the data that predicts as much as two-thirds of assets will be controlled by women in the future.

New research indicates that, given the choice, 60% of women prefer to deal with a female advisor; among women over 65, this number rises to almost 80%. So, we may see a role reversal from the past, in which male and female advisors will compete on an equal playing field for male clients, but in which women have an advantage among female clients.

Clearly, I’m not suggesting that women advisors will come to dominate the financial advisory industry as men did 50 years ago. But I do believe that gender will become much less important than how advisors interact with their clients and how advisors manage their team. As you think about the future, consider whether some of the traits historically associated with women may be critical to the success of advisors, male and female alike.

© 2016 Investment Executive. All rights reserved.