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Wealth Management

Defining Events

Many important events—such as the establishment of professional credentialing programs; the increasing federal regulation of wealth managers; the emergence of the Internet, social media, and other technology; and the growing economic power of women and their increasing representation in wealth management—have shaped the industry.

Promoting Quality in the Profession

Investment and finance professionals have provided services to clients for more than a hundred years, but the quality of their advice has varied greatly. By the mid-20th century, many in the industry began to feel that standards were needed to increase professionalism and ensure public trust. In 1947, 11 representatives from financial analyst societies in Boston, Philadelphia, Chicago, and New York voted to form the National Federation of Financial Analysts Societies. In 1959, the federation established an independent organization—the Institute of Chartered Financial Analysts—to administer the chartered financial analyst (CFA) credentialing program. (After several name changes, the institute is now known as the CFA Institute). The first CFA exams were administered in 1963. Today, the CFA Institute has more than 154,000 members in more than 165 countries and territories, and 94 percent of its members are CFA charter holders.

The certified financial planner designation is also well-respected in the industry. Its origins can be traced to late 1969, when 13 industry professionals gathered and resolved to create the International Association for Financial Planners (IAFP) and the College for Financial Planning. In 1972, IAFP enrolled its first group of students for the certified financial planner (CFP) course at the College for Financial Planning. In 1973, this first graduating class formed a new membership organization called the Institute of Certified Financial Planners. In 1985, the College for Financial Planning established an independent, nonprofit certifying- and standards-setting organization, and transferred ownership of the CFP certification program to a new organization, the International Board of Standards and Practices for Certified Financial Planners, Inc. (now known as the CFP Board). As of 2017, more than 80,000 people in the United States had earned the CFP designation.  

Technology Changes the Industry

Over the last 25 years or so, technological developments such as the computer, the Internet, mobile devices, social media, and cloud computing have changed the way wealth managers do their jobs. For example, wealth managers no longer receive information on the financial markets from the daily newspaper dropped on their front porch, but rather digitally 24/7 through the Internet. Snail mail has been supplanted by e-mail, instant messaging, and video conferencing. Wealth managers still advertise their services through word-of-mouth and in upscale financial publications, but they also use social media and the Internet to interact with and attract new clients. Wealth managers at large firms now use customer relationship management software to better understand their clients, and large firms use proprietary software to communicate, track, and record all activities related to a family’s personal, trust, investment, and business enterprises. Blockchain technology (a distributed ledger database that uses advanced cryptography to maintain a continuously-growing list of financial records that cannot be altered) is increasingly being used by financial firms to improve efficiency and the accuracy of financial record-keeping and reporting. In summary: technology has allowed wealth managers to better communicate with and understand their clients, but it also has created increased expectations from clients, who have more access to information about financial services and products and higher expectations regarding the availability of their wealth managers due to e-mail and social media.

Another noteworthy technological development is algorithm-driven financial portfolio management software that allows customers to invest with minimal human interaction. Robo advisory firms such as Wealthfront, Betterment, and AssetBuilder have emerged to provide robo advisory investment services. In 2018, robo advisors collectively managed about $200 billion in assets, according to Forbes. Some traditional wealth management firms also are embracing the use of robo advisory software to complement their traditional offerings.

More Women Entering the Field

In the United States, women control about 60 percent of wealth, and by 2020, they’re expected to control $22 trillion, according to the Bank of Montreal’s Wealth Institute. Despite this fact, women (as well as ethnic minorities) have been traditionally underrepresented in the wealth management industry. In early 2017, just 15.7 percent of financial advisers were female, according to research from Cerulli Associates. The number of female advisers employed by wirehouses (such as Goldman Sachs, Bank of America Merrill Lynch, and Wells Fargo Advisors) is much lower. The CFP Board published a whitepaper analyzing why women were underrepresented in the wealth management industry. Here are the top reasons why they avoid the industry:

  • Compensation structures and business models may be unfair or unattractive to women.
  • There are not enough mentors and role models for women who aspire to careers in the industry.
  • Work-life balance concerns may be a deterrent.
  • There may be a misconception that one needs a strong math background to succeed in the industry. While mathematical acumen is necessary, strong interpersonal and communication skills are often cited as equally as important as math ability for success in the industry.

In the past decade, the tide has begun to turn, and the percentage of women in wealth management has slowly increased. Professional associations and many banks and large investment firms have made efforts to encourage more women to enter the wealth management industry. One groundbreaking organization is the Association of Women in Alternative Investing, which seeks to increase the number of women in hedge funds, private equity, and venture capital firms, as well as the number of women in all other areas of the financial services industry, by providing mentorship, networking, and education opportunities for women who are currently working in or contemplating entering these fields. Additionally, the CFP Board’s Center for Financial Planning created the “I am a CFP® Pro” campaign ( to encourage more women and ethnic minorities to pursue careers in financial planning.

In addition, banks and wealth management firms such as Morgan Stanley, UBS, Raymond James, and J.P. Morgan are increasing their efforts to create a more diverse workforce by launching summer internship programs that target female undergraduates, implementing more female-friendly practices and fringe benefits, hosting career days at high schools and colleges to encourage women to enter the field, hosting women-centric events (e.g., Raymond James’ annual Women’s Symposium), and launching or expanding women’s networks that provide professional development and networking opportunities.

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