While there’s no evidence to suggest female investors are best served by female advisors, it’s a telling fact that many female investors who were widowed opt to leave their husband’s advisor.Maryna Andriichenko/iStockPhoto / Getty Images
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“Where are the women?” That was the observation that struck me when addressing a gathering of highly successful advisors at one of Canada’s largest full-service brokerage firms in early 2000. It was clear I was in the distinct minority.
Yet, the audience’s gender imbalance – symptomatic of the composition of the broader Canadian advisor industry at the time – didn’t impede business success. Twenty-three years on and three market bears later, the story is more nuanced.
For starters, the demographic makeup of Canada’s investing population is undergoing nothing short of a seismic shift. Consider these two key facts:
- Female leadership of Canadian households is on the rise. The main reason is the persistent longevity advantage of women relative to men. According to 2018 data from Statistics Canada (StatsCan), the life expectancy at birth for women was 84.1 years of age compared with 79.8 years of age for men. Other contributing factors include the dramatic rise in single-person households and growth in “grey divorces.” In 2020, StatsCan reported that 44 per cent of females are single by choice, widowed or separated or divorced.
- Female wealth is also on the rise. A CIBC Capital Markets report published in 2019 estimates that Canadian women will control $3.8-trillion in financial wealth and more than double that number if real-estate assets are included, up 73 per cent from $2.2-trillion when the report was produced. An important factor is the significant rise in the number of females with annual income above $100,000. While gender parity remains elusive, the number of females with income exceeding $100,000 grew roughly 50 per cent faster than the corresponding growth rate for males between 2000 and 2020, at an average compound annual growth rate of 12.3 per cent compared with 8.1 per cent for males, according to StatsCan data.
These demographic shifts point to the growing opportunity for advising Canada’s female investors. Yet, a recent survey of the current Canadian advisor landscape suggests its makeup is lagging the more dramatic changes in the gender composition of the demand curve.
According to a Women in Brokerage report released on July 24 by ISS Market Intelligence, female representation in Canada’s advisor workforce has grown but remains a work in progress. Despite industry initiatives, recently collected data peg the share of female advisors in the full-service brokerage channel at 18 per cent, three percentage points above when it was last measured in 2015. That lags several other wealth management channels, such as branch advice or private banking, at 51 per cent and 47 per cent, respectively, according to the 2015 report.
However, a deeper look at various data points reveals several encouraging trends. First, the rise in female representation is evident across all advisor industry tenure cohorts. Particularly encouraging is the almost one-quarter share in the least tenured (less than three years) advisor cohort. That suggests firms are attracting more new female advisors into the business – a process that will support greater gender balance over the long term.
Another area in which full-service brokerage firms have made significant advances is the percentage of female branch advisors in their networks. For the Big Six bank-owned firms (BMO Nesbitt Burns Inc., CIBC Wood Gundy, National Bank Financial Wealth Management, RBC Dominion Securities Inc., ScotiaMcLeod Inc., and TD Wealth Private Investment Advice), the share of female branch managers has increased sharply to almost 30 per cent in 2022 from 11 per cent in 2015. Similarly, female branch managers lead 32 per cent of branches at other firms (non-Big bank-owned brokerages), up from 20 per cent seven years ago.
These bright spots suggest that determined action by firms – and our interviews confirm the resolve for greater gender parity – is beginning to bear fruit.
But does it matter?
Just as when I stood in front of the largely male advisor audience more than two decades ago, there’s little evidence that the persistent female underrepresentation in Canada’s advisor ranks has impaired the growth of the overall book-of-business in the full-service brokerage channel or the growth of individual advisors’ books of business. The channel ended 2022 with $1.7-trillion in assets under administration, for a 20-year average compound annual growth rate of 7.5 per cent.
Yet, the demographic shifts highlighted earlier point to the fact advisors will face a vastly different investor audience, and one with vastly different needs, in the years ahead.
While there’s no evidence to suggest female investors are best served by female advisors, it’s a telling fact many female investors who were widowed opt to leave their husband’s advisor. Various industry studies and anecdotal evidence from advisors suggest that four out of five female investors might defect from their advisors following the demise of their male partner.
Furthermore, there’s anecdotal evidence that female advisors exhibit traits well aligned to the changing financial priorities and objectives of the aging and increasingly female-led households. Older households are more likely to demand greater focus on financial and estate planning as well as a multi-generational and multi-discipline approach to family wealth management.
Goshka Folda is global head of research at ISS Market Intelligence in Toronto.
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