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July 21, 2022
The phenomenon of high employee turnover in the financial services industry, especially among advisors new to the business, has been the subject of much discussion in recent years–but a new study from the American College Center for Women in Financial Services is pointing to the possibilities of a new way forward.
With FINRA statistics finding that just as many advisors enter the business as enter it every year, the perception of financial services as a field that’s hard to break into and even harder to find success in has become embedded not only in the minds of the public, but also within financial services professionals themselves. Newcomers to the business comment on the competitive nature of the field and how they are sometimes encouraged to outdo, rather than collaborate with, their fellow professionals to “get ahead.”
When it comes to improving retention rates of strong talent in financial services, such focus is put on how advisors can become successful that attention is not often paid to what it takes for financial advisors to feel successful. This emotional validation is just as important as data-reinforced evidence, as multiple studies have shown employees who feel a sense of professional accomplishment and achievement in their jobs are happier at work in the long run. Because of this, the industry’s usual benchmarks for success – assets under management (AUM), increased production numbers, or higher premiums – are only a small part of the equation and insufficient to justify the challenging nature of joining the field.
In early 2022, the American College Center for Women in Financial Services surveyed over 800 financial advisors, asking them to self-evaluate their level of success based on both objective criteria and their subjective, personal definitions of success. The results showed that while most advisors consider themselves “successful,” the factors that drive that belief differ across demographics and require specialized and thoughtful approaches for recruitment, development, and retention of those advisors.
Perceptions of Success: An Overview
Encouragingly, 7 in 10 advisors surveyed by the Center for Women in Financial Services self-identified as “successful,” indicating a confident workforce mostly meeting employers’ business goals. 60% of respondents also indicated they primarily entered the financial services industry “to serve/help others,” showing a genuine desire to provide valuable guidance and benefit society.
Among the most important influences in achieving professional success, respondents cited “trust,” “individual effort,” and “specialized knowledge” – especially that gained through designation programs like The College’s – as key factors. However, the implications of these factors begin to diverge when looking at the demographic data.
The Demographic Divide
Among those surveyed by the Center for Women, major differences arose between male and female advisors' perceptions of success. Despite consistently meeting established business goals, more women than men (34% to 22%) identified as being “less successful,” demonstrating a potential lack of confidence among women in financial services as to their professional progress.
On the flip side, however, women were much more likely to view themselves as successful in the first 4-10 years of their practice than men (72% to 57%). This divergence could be explained by a greater emphasis on competition in the socialization of men compared to women, which could make men feel less successful than they really are when using their peers as a benchmark for their success.
When asked what factors were most instrumental to their success, men and women once again seemed to diverge. Men emphasized the importance of individual effort; women, meanwhile, assigned higher importance to communication, community support, and marketing.
Business Impacts and Implications
Overall, the results of the Center for Women’s survey indicated larger teams of advisors might enjoy more widespread feelings of success than smaller ones or individual advisors. This belief also varies by gender between different types of firms.
Women respondents tended to draw much of their strength from the support of smaller, more dedicated teams they could work with on a personal level, generating a sense of shared community that seemed key for women to be satisfied with their business and their own professional development. By contrast, men in financial services appear to derive a sense of success from overcoming the very challenges associated with working in larger, more competition-driven business models. With that said, however, individual women advisors testified to a much higher rate of success than their male peers (83% to 54%). This could indicate that despite their focus on the power of individual effort, men in the industry may also desire the same support systems women in the industry prize, including mentorship opportunities.
From the results of this study, it seems clear the financial services industry has room for continued growth and expansion of professional development programs for women – and their male counterparts. It will remain up to industry leaders to meet the moment and invest more time, money, and effort into making these important resources available to developing financial professionals of all demographics.
Download the research here.