The under-representation of women as independent financial advisors – A 20-year trend

Addressing advisor challenges to create a better environment for all.

Financial advisors are the main intermediary for Canadians accessing investments and insurance. The importance of these professionals in Canadians’ lives is all the greater given the relatively low levels of financial literacy and empowerment in this country. Recognizing advisors’ essential role in the Canadian financial services industry, Environics Research regularly conducts research with independent financial advisors to monitor demographics and firmographics, examining how professionals in the field run their practices and what’s important to them when working with clients. Environics also speaks directly to Canadian investors to understand how they manage their finances and how they approach their relationships with advisors.

Canadian investors tell us it’s critical that their advisor be knowledgeable, trustworthy, approachable, supportive and reliable. Canadians look to advisors for honest guidance and for education on financial products. One thing many Canadian women won’t find in a financial advisor is someone whose age, background, and gender is similar to their own. For the last 20 years, the proportion of female independent investment advisors has remained unchanged: a depressingly low 17%.

Since financial advisors play such a critical and trusted role in guiding people on their financial journeys, it would be reasonable for some Canadians to seek an advisor with similar identity and lived experience to their own. To make that possible, the industry will need to foster better representation of all genders, diversifying the field. On the insurance side, we’ve seen some positive movement. The proportion of female advisors increased from 17% in 2013 to 20% in 2022. Although the 2022 figure is still far off 50% – a level that would suggest women face no barriers to entering the industry – any progress toward parity is worth noting and celebrating.

In order to encourage more women to enter and remain in the profession, gender-specific obstacles need to be addressed proactively.

Ultimately, all advisors are likely to benefit from increased support in areas such as childcare and flexible work arrangements as these steps tend to produce a more engaged and efficient workforce. Such measures may also empower advisors to devote more energy to building their practice and helping investors. Moreover, making the industry more welcoming to women will likely support a culture shift that will increase all dimensions of diversity, not just gender.

Important actions for the industry to take:

Promoting the advisor profession to all genders.
Use imagery showing diverse faces in the industry to help younger Canadians see themselves as advisors.

Providing compelling incentives.
Beyond financial compensation, many workers are looking for flexible work options and sources of meaning and purpose, such as developing connections with investors and helping investors meet their financial goals.

Educating candidates about how to become independent financial advisors.
Share information about the various advisory channels (mutual funds, securities, insurance) and the education and credentials each one requires.

Defining success more broadly than just assets under management.
Finding additional ways to define a successful practice can help to broaden the industry’s practices and appeal.

Promoting supportive workplace policies, taking diverse family configurations into account.
Offer equal maternity and paternity coverage, childcare assistance, and family-friendly benefits.

Helping young advisors tackle key challenges.
New entrants may be interested in how to successfully launch an advisor practice, manage work-life balance, set personal priorities, etc.

Supporting strong team environments.
Mentorship, guidance and peer engagement can help younger advisors find their way in the industry and deepen their commitment.

Offering supportive environments that provide opportunities for career development.
Young advisors can benefit from information on career pathways and the availability of multiple avenues for reaching their goals.

Offering equal pay and compensation regarding transparency.
Simple, powerful steps to signal that equal work is equally valued.

 
Working actively to disband the “Old Boys Club” culture.
Many still describe the industry this way.

As with any relationship, the fit between client and advisor is critical. Trust is especially important given how clients’ financial choices are shaped by their values, hopes, fears and closest relationships. Building a more diverse profession will help more Canadians see part of themselves in their advisors, strengthening the foundations of trust that are vital to the industry’s success. To encourage the right fit between investors and advisors, the pool of financial advisors needs to be broadened to include gender diversity as well as diversity of age, race, cultural background and ability. For too long, the industry has ignored the low proportion of women working as independent advisors – and with little concerted effort, little has changed. It’s time for action: the face of financial advice in Canada should look a lot more like Canada.

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