Demographics of the Financial Planning Industry Must Change Before Women Can Recover from Disproportionate Economic Damage Resulting From COVID-19
Women have been disproportionately affected by COVID-19 in many ways, but perhaps most drastically in terms of their finances. Prior to the pandemic, women already had lower net worth, on average, compared with their male counterparts, and now women have reported disproportionately high unemployment. But before women can achieve financial equity post-pandemic, the financial planning industry must first shift its practices.
Avani Ramnani, a financial advisor with New York City wealth management firm Francis Financial, shares, “Women can bounce back from the pandemic’s economic fallout, but there are many barriers in the way that need clearing. The male-dominated financial-advice industry still struggles to meet the needs of women, in part because of the underrepresentation of women financial advisors in the field.”
To heal the financial wounds borne by women during the pandemic, experts agree that women must prioritize increasing their financial education and seeking out financial advice. Yet studies have shown that women often feel intimidated and uncomfortable when working with a financial advisor or seeking financial advice. According to a research study conducted by Age Wave, 70% of female participants said the finance industry has traditionally catered to men. This statistic has stayed relatively constant for years, despite the decades-long conversation about gender representation in the field.
As more and more women realize the importance of planning for their future and working with financial and wealth management professionals, the demand for a more diverse financial-planning workforce will grow. However, this need will go unmet unless the demographics of these financial experts start to reflect the population of those who seek their support and advice.
The male-dominated financial management field is still considered unwelcome to female clients and employees alike, with statistics showing that women working in the industry are less likely to be promoted to high level positions. According to the CFP Board, a non-profit organization that fosters professional standards in personal financial planning, the percentage of women with the top industry qualification of Certified Financial Planner™ has remained flat at 23% for at least a decade. The numbers are even lower for women who have achieved top C-suite roles, and the percentage of female business owners in the financial planning field hovers around a paltry 1%.
Ramnani, one of those few female Certified Financial Planner™ professionals, advises, “Financial-service firms must face their workforce gender imbalances in order to meet the needs of all their customers. Making more room for women in the financial-planning profession is key to promoting inclusion and helping women recover and rebound from the pandemic, and from economic challenges, in general.”
Perhaps some financial-planning companies are not swayed by altruistic motives; however, they would be remiss to ignore studies that show increasing women’s visibility in client-facing roles in financial services increases both client satisfaction and profits. Further evidence from India suggests that working towards gender parity in financial services is good business. According to a recent study, Employment Opportunities for Women in India’s Growing Financial Sector, women use financial services more often and more effectively when they are served by female bank employees. The research also shows that female banking agents have higher transaction volume compared with their male counterparts.
Ramnani concludes, “By taking these first steps, the financial advice industry will significantly make financial advice more accessible to women, and be the catalyst for change. Women need to survive, and eventually thrive, financially, after the pandemic.”