Women can make the fund provider industry a better place to work said a trio of powerhouse exec-utives at Money Management Executive's Women Reshaping the Fund Provider Industry roundtable.
They offered their insight into how women have succeeded in gaining a foothold in the industry, in addition to current tends in operation, distribution and marketing.
In attendance were Joanne Hill head of Institutional Investment Strategy at ProShares and a founding member of the Women in ETFs group; Sue Thompson head of Asset Management and RIA Channels at BlackRock and also a founding member of the Women in ETFs group; and Jennifer Johnson executive vice president and chief operating officer for Franklin Resources, also known as Franklin Templeton Investments.
Do you think enough is being done to get more women in the industry, and retain them?
THOMPSON: One of the reasons why Joanne and I helped found Women in ETFs, is because a lot more could be done. One of the things that we can do, as women, is be proactive about bringing women into the industry. One recent example for me was I had an opening on my team for a very senior hire. I got a pack of resumes from our HR department. There wasn't a single female resume. That's just unacceptable. And so, I activated my informal women's network. As the founders of Women in ETFs, we started talking about it, saying we can be a lot more deliberate about these things. We can get together. We can support other women in the industry. We can make it a better place to work.
HILL: There are various points in your career where this support is needed. At the universities, where we're doing the recruiting, financial services and investment management are viewed more like the technology field, where it is hard for women to really advance. In fact, at investment firms, their career paths are in sales, in marketing, in management, and not investment decision making or analytical work. We need to get to the women in the schools, and be visible, and talk about what we did in our careers, and the different types of jobs that are available in the business. It's very important in seeing more women do well in our industry, as we've had the good fortune to do.
JOHNSON: As companies become more global, one of the challenges that you have is that your employees almost have a 24 x 7 workday. We're set up very functionally. If you have a technology team, you may have them in three or four different time zones. In some ways, that will work to women's advantage, because in the old days, you got in at eight in the morning, and stayed until seven in the evening. You were not heading out to a volunteer activity at your kid's school, or going to a soccer game, because the expectation was you were at work. In our firm, the global nature of the environment is such that you've got to let people run their own schedules, because they might be on a phone call at home at 10 or 11 at night. So, if they run off to those things that fall more on the mom to take care of then it's not an issue. Companies have to create environments that accommodate that. As that becomes more acceptable in companies, I think that plays a bit more to women's strengths.
Millennial women also demand a flexible workschedule. They're using social media and connecting differently, and not necessarily from nine to five. So that issue also relates to recruiting and retaining younger talent.
JOHNSON: It's hard on a manager, because it means a manager has to know very clearly what things you want somebody to deliver, and no longer just measure somebody as to whether they were in the office and seemed to be working hard. And so it's a lot harder, because now you're measuring on very specific deliverables.
HILL: Because you want the most talented people in your organization. As a country our colleges are graduating more women than men these days. Our organizations should look that way too in the next decade. The ratios should not be as unbalanced as they are if we're running our businesses properly.
What are some of the stumbling blocks to women advancing in their careers?
HILL: One of the challenges of being a female professional is that at the time when your career should be accelerating the fastest, in your 30s and 40s, is when the demands of a family and work/life balance issues are also the most acute. Part of the reason I am spending time now leading and developing the Women in ETFs organization at a later stage in my career is that I had that challenge when I joined Goldman Sachs and adopted my daughter in virtually the same month. I was helped in career guidance by the senior women and the women's network at Goldman Sachs who had gone through some of the same issues.
They were open to meeting with me and giving me advice, such as, 'Don't worry about all those social things that the men are doing. You don't have to do it. Just focus on your family and your work.' Having people who have had similar experiences can help you navigate these very challenging years that are so critical to your career and your family responsibilities. Sometimes it's hard to go to your boss and say, 'It is really difficult for me to deal with these other demands outside the office, because I do want to succeed; I do want to advance at the same rate as if I were a man; I have the ambition, I have the talent.' So women move to a smaller company or they leave the workforce, and then when they seek to go back, they get more flexibility in a smaller company than in a bigger one.
Should the professions that serve the public reflect the population they serve?
HILL: I remember going out and meeting people in public pension plans and saying: 'That meeting didn't go too well.' Because we had six men and one woman facing a room that was 50% women. That imbalance puts you at a disadvantage right at the start of a meeting. Our industry needs to catch up with changes and advances that are happening in our customers' industries.
Let's turn to industry issues affecting both women and men. How are advisors, RIAs, wire houses and banks changing the marketing and distribution game for mutual fund and ETF providers?
JOHNSON: Our business has always primarily been distributed through advisors. And so that part of the model obviously hasn't changed. But like anything, there's always evolution. We're seeing the trend of more fee-based advisors, both in the RIA channel, and within wire houses. A lot of that comes from the demand for more transparency around what services people are getting. A second trend, and this comes from the environment where people had major market disruptions, from the dotcom to the financial crisis, and so this realization of it's not enough just to say, 'I have great investment returns,' but that my client actually wants investment returns with less volatility, and they want to have risk-based returns. That has evolved the business to having more solutions, and however those solutions are packaged to meet the clients' needs, the advisor is the person putting it together.
RIAs are gaining in the market, and have the most growth potential. Can you break down what you're seeing with advisors, and how some are pushing some products more than others?
THOMPSON:I've worked with RIAs now for the past seven years. We have seen the rise of more fee-based investing. If an advisor is with a wire house, and he or she has moved the whole business to fee-based, the other main consideration the advisor needs to think about is 'How entrepreneurial am I?' If the advisor is very entrepreneurial, that can be the tipping point for an advisor deciding to leave the wires and go the RIA route.
JOHNSON: We're also seeing an increase in the fee-based advisor, even within the wire houses.
HILL: It seems like financial advisors within the wire houses are segmenting into those that want to take more responsibility for making investment decisions on a more dynamic basis while adapting to market conditions, and those that don't.
How did the financial crisis change the relationship between providers and advisors?
JOHNSON: The problem with the financial crisis is suddenly the clients who you thought could sit through the storm had a crisis. They needed money in that downturn. That put pressure on the advisor to have more customized solutions. In return, they turned to the manufacturers and said, 'Help me come up with [solutions].'
How are providers using advisors and other resources to market products? Are you seeing trends or big initiatives in that space?
JOHNSON: I think we would all say that we view the advisor and its clients as sort of our clients. So we're providing tools to the advisor to help them in servicing their clients.
HILL: An analogy I like to use is if I'm sick I go to a doctor, because they're the expert in healthcare. So individual investors are beginning to appreciate that you need a financial professional for investment services. As asset managers, our clients are the financial professionals, assisting individual investors on investment services. We try to educate the advisors and help them in the education process for their clients.
JOHNSON: The reality is all the information out there makes clients better-educated and able to have informed discussions with the advisor. We're there to ensure that the tools exist for the advisors.
As investors are becoming better educated, they're demanding more from their advisors. How does that relationship impact the way that advisors communicate with fund companies?
THOMPSON: There are always some investors that are going to be doing a ton of homework, and they want their relationship with their advisor to be a collaborative one. Just as importantly, there are people that hire an advisor to do the stuff that they don't want to do, which means that they are probably not interested in an advisor talking to them about alpha and beta. They just want to know if they will be able to retire when they want. Some of the best things that we can do as fund providers is work with advisors to help them have those conversations.
JOHNSON: In general, the client is saying, 'This is what I need. If I really wanted to spend all day learning those things, I would be an advisor.'
Money Management Executive recently conducted an operational issues survey. One of the big issues among providers was cyber security.
JOHNSON: There is not a retail shop or financial firm that isn't focused every day on cyber security. When you manage people's money, the privacy of their information has always been paramount. All of us spend a lot of time and effort in thinking about how you architect your security. The reality is, there's always a chance that somebody's going to get in. The question is how quickly can you catch them before they get any information. It's a multi-tiered kind of layer of security that is always being challenged.
Do you feel that the financial industry is evolving fast enough, compared to people who are trying to hack the system?
JOHNSON: I was, at one point, the CIO at Franklin on the technology side. I used to describe the decisions around how much money you spend on security as, 'I'm going to build an eight foot fence.' Then somebody gets over the fence and people say, 'Why didn't you build a 12 foot fence?' You're constantly trying to stay ahead of anybody trying to break into your environment. I think that financial institutions are constantly talking about this to come up with best practices and to continue to stay ahead.
HILL: We should remember also that we're dependent on the efficient functioning of the financial markets in which we are transacting. This is another point of vulnerability. Our investment strategies depend on those markets being open, available and secure. That's something else that concerns investors.
What over the last three to five years are the biggest areas of innovation?
THOMPSON: Joanne and I both sit in one of the fastest innovating areas, which is the ETF world. I don't have a week that goes by, that we don't get a request to do a bespoke product. What that means is there'll be a financial advisor that has a particular interest in a product that doesn't exist. They're willing to fund it. You can almost think of it as crowdsourcing in a way, but now, in the investment management industry. That is an area that's ripe for innovation.
HILL: Some of this is due to ETFs expanding into more thematic areas, into the space between active investing and market cap indexing. ETFs and mutual fund products can be customized to specific investment goals or themes such as socially responsi1ble investing. Financial advisors are definitely using dimensions of investing that are much different from what was formerly in existence.
Would someone like to wrap up with a final comment on how women are reshaping the fund industry?
THOMPSON: The thing I always like to bring up is having a supportive work environment where women are valued - this is a business issue. This is a maximize profit, grow revenues issue.