V olatile markets sometimes spark conversations that make investors realize they don’t really click with their financial advisors. Case in point: Advisor Cheryl Holland gained a client recently after an advisor at another firm dismissed the woman’s anxiety about this year’s market turmoil. “She felt patted on the head and mansplained,” says Holland, owner of Abacus Planning Group in Columbia, SC
Many women work successfully with male advisors, and vice versa. In this case, the woman had recently taken over the investments after her husband became unable to manage them. Holland was the fit she was looking for. “As a female advisor, I naturally take other women’s questions, concerns, and worries as valid and important to them,” says Holland, who has $ 1.7 billion in assets under management and places 91st in Barron’s Top 100 Women Financial Advisors for 2022. (See the full list here.)
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Many clients feel more comfortable with advisors who reflect them in terms of age, gender, race, or sexuality, Holland says. Being at ease with one’s advisor may be all the more important as inflation and interest rates climb and equities drop. A big part of an advisor’s value is the ability to keep clients calm and talk them out of impulsive decisions that can drain resources over time.
It stands to reason that if you click with your advisor, you’re more likely to heed their advice. And as advisor diversity grows, it’s becoming easier to find wealth managers with strong skills and experience who also provide a good demographic fit.
For readers looking to find their match, our Top 100 Women ranking is a good place to start. The list reflects assets under management, revenue the advisors generate for their firms, and quality of their practices. Investment performance isn’t an explicit criterion because clients pursue a range of goals, and achieving the highest returns isn’t always first on the list. In many instances, asset preservation is the primary goal.
Although the financial advisor industry remains overwhelmingly white and male, younger advisors entering the field are slowly changing that. Women hold just under a quarter of the respected Certified Financial Planner designations. Out of 92,055 CFP holders at the end of 2021, 21,504 were women, up 4% from 2020. The number of Black CFPs increased by more than 10%, and they now make up 1.8% of all holders. Hispanic CFPs now make up 2.7% of all holders, and their ranks grew by more than 15%.
Such progress could help to attract clients who had avoided working with an advisor because of the industry’s homogeneity. One reason the industry is growing more diverse is its shift in recent years away from the traditional single-practitioner model and toward teams. Earlier this year, Andy Sieg, president of Merrill Lynch Wealth Management, predicted that 100% of Merrill advisors would be on teams by 2030.
Teams allow wealth management firms to bring in advisors from different backgrounds, show them the ropes, and set them up to succeed. And firms have good reason to do so. There’s a huge opportunity in the female demographic alone, says Kristin Lemkau, CEO at JP Morgan Wealth Management in New York. Women will inherit a big chunk of the tens of trillions of dollars expected to move from baby boomers to millennials over the coming two decades. “It’s something JP Morgan is laser focused on,” Lemkau says.
“If you look at the statistics, money is becoming browner,” adds Merrill Lynch advisor Aleeza Singh, in Davenport, Iowa. “And women’s assets are rising 1.5 times faster than men’s assets.”
Singh says many of her newer clients are widows in their 70s and 80s, whose husbands had overseen the finances. “I’m much better suited to have those gentler, more approachable conversations than a 35-year veteran in the industry who’s a male,” she says.
It isn’t just older women who need financial advisors they trust on a gut level. The ranks of wealthy younger women are growing, as well, though data suggest that the makeup industry may have deterred them somewhat. “Roughly 80% of women say they want some kind of financial advice, but only a third have an advisor,” says Lemkau. “So, either the advisors aren’t what they are expecting or the industry isn’t geared towards the needs and concerns of women, particularly single women.”
What’s the best way to find a great advisor who reflects you? Consumers tend to be most confident when they’re referred to an advisor from a personal contact, says Erin Scannell, CEO of Ameriprise’s Heritage Wealth Advisors in Mercer Island, Wash. “I would ask a few of my closest friends, family members, and colleagues, ‘Who do you work with, and do you really trust them?’ Says Scannell. “Then, I’d do a Google search and see if that person or anyone on their team matches the demographic I’m looking for, whether it’s gender, ethnicity, or an area of focus, such as advice for LGBTQ clients.”
Scannell also recommends consulting respected publications that rank advisors, then emailing a few of the ranked firms to ask whether they’re accepting new clients, and whether anyone on their team matches the demographics you’re seeking. “While the CEO of the wealth management firm might not be in the demographic, there’s a good chance they have a team member who is,” says Scannell.
Scannell’s own business exemplifies this: He founded the practice in 1999 and has made diversity a priority. Of its 70 employees, Heritage has five female private wealth advisors, four color advisors, and two LGBTQ advisors, as well as five female executives.
Another good example of a diverse team headed by a middle-age man is Merrill Lynch’s Singh Group of advisors. The leader, Tony Singh, is a 34-year industry veteran with a gray beard. But his daughter, Aleeza, is a millennial and a senior advisor on the team.
“There has always been value to the concept of diversity and different vantage points,” she says. “I think the industry is starting to catch up with that.”
As the industry evolves, it’s becoming more common to find firms where the traditional demographics are flipped. Abacus’ 30 employees, for example, include 21 women, five people of color, and 18 who are younger than 40.
If you’re clear that you want to work with an advisor in a specific geographic location, look at firm websites, industry veterans say. If team photos don’t include diverse personnel in senior-level positions, move on. “You can always make phone calls and just be very direct about what you want and why,” says Holland. A good firm will appreciate the directness and be able to pair you with the best advisor more quickly. Some firms, like Abacus, will even refer you to competitors where they sense you’ll be a good fit.
Industry associations also have resources to help you narrow your search. For those seeking younger advisors, Holland recommends XY Planning Network’s search tool. The Association of African American Financial Advisors offers a Find a Financial Advisor tool.
In an earlier era, financial advisors were authority figures, issuing take-it-or-leave-it guidance. Today, decisions are more collaborative, says Singh. And when it comes to something as personal and sensitive as money, she says, “there has to be some type of kinship that you develop with the person that you’re sitting across from.”
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