Recruiting Women to Small Financial Services Firms
A few weeks ago I had breakfast with a gentleman who is a friend and prior colleague of mine from our days at Deloitte. We’ll call him Matt, since I don’t feel it is appropriate to share his actual name and company information. After spending many years at Northern Trust, Matt has recently transitioned to an asset management firm, where he has taken on the roles of both Chief Compliance Officer and Chief Operations Officer. Sipping on excellent hot coffee at Lavazza, we got into a really interesting conversation about the challenges they are facing as they try to recruit women to their firm. Both he and I know they are not alone in this challenge.
For decades, women have been underrepresented in the financial services industry. In a 2013 Pershing study, “The 30% Solution: Growing Your Business By Winning And Keeping Women Advisors”, Pershing shares that only 30% of the financial advisors in the U.S. are women—and women are even scarcer in executive suites at large firms; even as women account for more than 50% of the U.S. population, and therefore a huge component of the customer base of financial services firms. In an industry that is heavily male dominated, the ability to recruit, engage and retain women is becoming a real hot button as these firms seek to place individuals in front of customers that their customers can relate to and build superb relationships with for the long-term.
The Pershing study reinforces the critical role that women have to play on this front: ‘Even if other industries choose to remain complacent about women in the workplace, financial services businesses can no longer afford to be. The reason is simple: An industry facing a massive talent shortage cannot ignore more than half the talent pool. 2007 was the last year that financial firms recruited more advisors than those who left. Sixty percent of advisors who leave do so voluntarily for reasons other than retirement, and top performers are increasingly the ones giving their notice. Most troubling of all: more than a third of all advisors are less than a decade away from retirement, and there are not enough junior advisors to replace them. Ironically, while attrition grinds away at the number of current advisors, the industry will actually need more advisors in the future. Pershing and FA Insight project that investor demand for advice will increase 28% over the coming decade. The shortage crosses business model lines. Registered Investment Advisory (RIA) firms will have to find 237,000 new advisors over the next decade. There is virtually no way to close that gap without the help of women advisors.’
Over the course of our breakfast, I gave Matt some suggestions regarding strategies he should consider using as they seek to recruit women to their firm. In their case, in addition to the challenges common across the entire industry, they also compete against the big firms and financial institutions that are vying for those talented female hires. So what would make a talented woman choose a smaller company over a large household name firm? He was thrilled with the advice I gave. So much so that I thought it might be helpful to others and decided to make it the subject of this blog post.
I broke my advice to Matt into four main buckets: Build your case differently; Source differently; Interview differently; Commit to a different future.
Build your case differently
- Support structure throughout life stages: One of the benefits of being in a smaller firm is that there often tends to be more of a focus on the long-term investment in human capital. Smaller firms can’t afford high turnover rates because it is so much more visible to your client base, so there is really strong desire to make things work so you can hold on to your talent. As such, it’s highly likely that there will be a level of commitment to provide a robust support structure to this individual through all their life stages. There tends to be a significant fallout of female advisors if they want to take time out (partially or fully) to have families. Someone takes over large chunks of their book of business, and all of a sudden they’ve lost everything they spent years building up – an unfair penalty for wanting to have some time to focus on family. As a small firm, take a long and hard look at what you can do to support women in all their life stages, without pulling the rug out from under them. Chances are you can be much more creative and flexible in your solutions on this front than many of the larger firms.
- Training: Make your training dollars count by setting realistic and meaningful dollars aside for training purposes, and let your women customize their training plans. Larger companies tend to have centralized control over training tracks – who gets what and when, and it’s tough to get the green light to do things outside the standard. Embrace a different approach as a smaller firm. Define training budgets, set clear criteria against which training opportunities must be able to hold their own, and use the fact that the women can allocate and define their own training curriculum as yet another example of how they have a greater stake in the management of their career than they would necessarily get at a bigger firm. Also, seek out and invest in development initiatives for your women – it sends a strong message about how much you are vested in their success.
- While there are many women at large firms that don’t want to go to a smaller firm, they know lots of women that do! So do something different to open up the pool of candidates. For example, host a gathering for women who work at larger firms to get insights from them about what specifically would be appealing to women about your firm, and then enlist their help in identifying women in their network that would be a great fit for your company. Women like helping women, there are lots of great women looking for the right job at the right company….you just need help connecting with those candidates.
- Don’t recruit just one. Be willing to bring in two women at once, or even a team that wants to move together. It is tough being the lone female voice at the table, so make a conscious choice to recruit in such a way that eliminates the potential issue altogether.
- Think about making your interview approach and style more of a conversation. Women place a lot of value on the culture of the organization, on how much they are going to like the people they will be working with. So instead of just firing off question after question, think about how you can set up the interview such that it becomes a two-way conversation, with both parties having the opportunity to learn more about each other.
- Take the time to have your female candidates meet multiple people and multiple levels of individuals she will be working with, so she can get a very good feel for the extended team.
- Make an actual dialog about your company culture an explicit part of the recruiting process.
Commit to a different future
- Think about what you need to do when they start working here that ensures what you sold them during the interview process is real. This most likely means some amount of culture change in the organization. If the working environment is male dominated, it’s quite possible there are some attitudes and behaviors that aren’t necessarily female friendly. You can recruit the women, but if you want to engage and retain them you also need to be willing to make sure the culture of the organization is such that they want to stay! So be willing to have open dialog and embark on a culture change process that is all-encompassing.
While written in the context of coffee with Matt and a financial services firm, this advice pertains to any firm or industry that is male dominated and seeking to do a better job at recruiting and retaining female talent. In a study by McKinsey & Company, “Women Matter: Gender Diversity, A Corporate Performance Driver” (2007), their data shows that companies with more women achieve better organizational and financial performance—including higher operating margins and market capitalization. Make yours one of those companies!
In closing, what other advice do you have to share with those seeking to recruit more female talent to their ranks?