Traditional wealth management is overwhelmingly male dominated, with Wealth Manager recently uncovering that over 85% of client-facing roles are held by men, but this does not appear to be the case when it comes to the new breed of online investment managers.
The new kids on the block seem to be much more representative, and this notion does hold up to scrutiny.
Out of the six major digital wealth managers, four were founded by women: Wealthify, Netwealth, Moola, and Scalable Capital.
Given the difficulties the investment industry seemingly has when attracting female staff, why is this segment of the market so ahead of the curve?
One reason may be that robo advice is breaking up what is seen as the traditional boy’s club status quo of wealth management.
‘Why is [robo advice] attractive to women? From my perspective it offered a chance to confront the impenetrable club of traditional managers,’ said Netwealth co-founder and chief executive (CEO) Charlotte Ransom (pictured).
‘They have very much continued to do things the way they always have. As a consumer of the services, I was never serviced by a female adviser or by a female portfolio manager and I really didn’t enjoy the experience of what seemed like a pretty rigid male culture.’
Ransom is by no means alone in this view and Wealthify co-founder and chief investment officer (CIO) Michelle Pearce shares a similar outlook.
‘It is about culture,’ she said. ‘Traditionally, a lot of what I’ve seen in the stockbroking world in particular, but also in the discretionary world, is that there are so many egos involved and big personalities, and you have to shout louder than everybody else to get to the top of the pile.
‘I think naturally that is something women struggle with, probably more than men – not all women, of course, you can’t blanket a whole gender.’
Pearce also noted the majority of client entertainment has long centred around drinking and golf days, which for many women are not appealing, given the all too often laddish culture.
‘I think that what we’re trying to do with robo is say that investing doesn’t have to be like that.’
Robo advice strips out some of this for Pearce by using technology to streamline the process and in doing so having less reliance on expensive client entertainment.
Ransom thinks it is too early to say at the moment whether digital wealth management will, in the long run, turn out to appeal more to women, although the early signs are encouraging.
‘It’s a difficult one to say in what is a reasonably early stage in the industry, but I would definitely say that our gender balance probably has more women amongst it than traditional wealth services.
‘I can say categorically from the feedback we have had from women in terms of the services, it is absolutely clear they have preferred it.’
Ella Rabener, Scalable Capital’s co-founder and global chief marketing officer, believes one reason why women are setting up more robo companies is a greater connection to the concept of the democratisation of wealth.
‘Robo advice is fundamentally solving a really big issue for people and democratising something that was previously only available to a very wealthy group of people,’ she said.
‘So maybe that is something that excites women more than men. Maybe that’s what lead myself and [Moola founder] Gemma Godfrey, to leave corporate roles and do something on our own that helps people get more out of their lives and be better prepared.’
There are still challenges
However, people must be careful not to over-hype the gender balance in online wealth management as there are still significant challenges to be faced, as Ransom explains.
‘One of our challenges is that I don’t know whether a higher percentage of women work in this area compared to traditional wealth management [beyond the founder and senior director level].
‘Finance is a place that we still struggle with gender equality and technology is even worse. So if you’re in fintech combining those two things you’ve really got to work hard to try to ensure that the gender balance is there from as early on as possible.’
However, Pearce says that running the business like a tech firm can also be an advantage.
‘What we do, specifically at Wealthify, is much more of a tech company than a financial services one.
It’s much more of a modern culture in the way we present ourselves to customers and the way we act internally, so I think that appeals to women.’
Beyond this, Rabener points out that the sample size for robo is so small and the industry so much in its infancy that it could just be down to happenstance that there are so many women in the field. Time will tell if this is the case.