’The Right Thing to Do’
Why independent advisories need to have family leave policies that are similar to what large companies offer.
Why independent advisories need to have family leave policies that are similar to what large companies offer.
Three days after giving birth in 2011, advisor Nina O’neal left the hospital, dropped off her newborn son with family at home and returned to work. An independent advisor who had launched her practice 18 months earlier, she had clients who needed tending and referrals to follow up on. Her body, however, wasn’t quite ready. “My pregnancy was horrible. It was debilitating,” she says. After O’neal left the hospital, she couldn’t sit comfortably. Her hands hurt. She was in “excruciating pain every day.” Her plight reflected a growing problem in a male-dominated, aging profession that traditionally has required newcomers to devote themselves to building a client roster but now finds itself needing to attract more women and fresh talent. That means it must find ways to be more supportive of advisors who want to start families. “The industry has not done any favors to young advisors,” says independent advisor Douglas Boneparth. In 2017, planners overseeing roughly $40 billion in client assets moved to RIAS or IBDS, seeking greater flexibility and freedom to structure their practices as they saw fit. But generally, that freedom offers fewer benefits — including those that might be particularly attractive to younger advisors thinking of building families. At the same time, many large American companies, including Merrill Lynch and some competitors, are moving to offer more
“Historically, firms that offered financial support did it through disability insurance, and they counted being a mother as a disability,” says Sarah Kaplan, of the University of Toronto.
robust maternity and paternity leave benefits. That might leave many breakaway advisors responsible for paying for benefits that Mother Merrill would have covered. Merrill Lynch offers 16 weeks of paid leave and an additional 10 weeks of unpaid leave to men and women in cases of birth or adoption, a spokeswoman says, for all employees working at least 20 hours weekly and at the firm for at least one year. This policy, introduced in 2016, improved upon an earlier one that offered 12 weeks paid and eight unpaid. “I feel the benefits at Merrill were, by and large, good,” says Sarah Keys, a former Merrill advisor turned independent. She and her three fellow advisors at Cardan Capital Partners, a $700 million RIA in Denver, are currently developing their own maternity and paternity leave policies. “It would be hard for people to come with us if we had said, yeah, we’re going to give you less benefits,” Keys says. Data on wealth management firms’ family leave benefits are hard to come by. Cerulli Associates, a leading industry researcher, doesn’t keep track of such policies, for example. But based on interviews with advisors, wealth management does not appear to be outperforming national trends. Nationally, 15% of all U.S. workers have access to paid leave and 88% to unpaid leave, according to 2017 data from the federal Bureau of Labor Statistics. This does not include disability leave. Workers at large firms are more likely to have access to paid leave than those at smaller firms, according to BLS data. A quarter of the workers at companies with 500 or more employees had access to paid leave, compared with 10% at firms with fewer than 50 employees. A big part of the problem is cost, says Sarah Kaplan, a professor and director of the Institute for Gender and the Economy at the University of Toronto’s Rotman School. “If you have a lot of smaller firms in wealth management, then it will be financially harder for them to make it work,” Kaplan says. “And then there’s the logistics of it. When you are a small firm, you might not have the resources to hire someone temporarily.” The situation is complicated at firms that have both independent and employee channels. Ameriprise and Raymond James have policies that cover their employee advisors, which numbered 2,176 and 3,053, respectively, at the end of the first quarter. But both firms have far more independent advisors: Ameriprise has 7,705 and Raymond James has 4,551. All of them are technically independent contractors. While these brokers get higher payouts than their counterparts on the employee side, they’re responsible for providing their own maternity and paternity leave, as well as for other expenses associated with running a business, including real estate and office equipment. A federal law, the Family Medical Leave Act, guarantees employees the right to 12 weeks of unpaid leave each year. But many people don’t take advantage of it because of financial constraints. “Historically, firms that offered financial support did it through disability insurance, and they counted being a mother as a disability,” Kaplan says. State laws vary. Some require nothing of employers. In New York, a new law that took effect in January requires employers, regardless of size, to offer eight weeks of paid leave to their employees, capped at $652 per week. Some independent advisors are determined to create their own family
leave policies. In Douglas Boneparth’s case, it goes beyond what’s required by law. Boneparth’s New York practice, Bone Fide Wealth consists of him and one assistant. Still, he is offering his assistant, who is pregnant, two months’ leave at full pay, plus one month to work from home. He has had the policy since founding Bone Fide Wealth in 2016. He says he knew from the get-go that “I would want to accommodate that. No. 1, it’s the right thing to do. No. 2, it’s about taking care of your people and letting them know you want them to grow,” Boneparth says. He was motivated in part by firsthand experience; Boneparth and his wife have a 2-year-old son. When his assistant is on leave, he intends to handle her work himself. “I know I can cover this by working a little harder,” he says. If more firms were to offer family leave, it might boost the number of women in a profession with far more men. Only a third of all advisors are women, according to BLS data. “It’s not one of those issues that would stop a woman from getting into this profession, but it might prevent a woman from staying in the profession,” says Jocelyn Wright, managing partner at Ascension Group and an adjunct professor at the American College of Financial Services. “We have to think about those types of concerns.” This issue goes beyond compensation. “I still received pay. We have recurring revenue,” says O’neal, a partner at Archer Investment Management in Raleigh, North Carolina, and a Financial Planning contributing writer. When she resumed work three days after giving birth. she says, “it wasn’t so much about it being paid; it was that there was no one to do the work.” This is not a problem just for advisors at small RIAS, which sometimes number two or three employees. Solo advisors at large firms can face the same dilemma. Yet some help might be on the way. An increasing number of advisors work on teams, and technology makes it easier to work remotely via email, Skype or another tool. “I worked right up until I had my son, and I made sure when I was home with him that I was always available for a call,” notes advisor Liz Weikes. “Sometimes that’s all a client needs.” Weikes, who works at J.P. Morgan Securities, the bank’s high-end brokerage unit, took six weeks’ paid leave when she had her first son. Its parent, Jpmorgan, which has roughly 250,000 employees, offers 16 weeks of paid family leave to the primary parental caregiver and two weeks paid to the non-primary parental caregiver. This is on top of other benefits, such as a mentoring program for mothers returning to work, according to a spokeswoman. Weikes is due to give birth to her second child this summer and plans to take six weeks off, she says. “Obviously, I’m not looking for new business opportunities while I’m at
“When you are starting a family, you refocus on how you are building your business,” says J.P. Morgan Securities advisor Liz Weikes.
home with a newborn,” she says. Instead, Weikes and other new parents in wealth management say they have rethought their approach to client acquisition. “When you are starting a family, you refocus on how you are building your business. So instead of going out for drinks after work, you reshuffle, and you say, I’ll go out one night a week, and I’ll do luncheons instead,” she says. When O’neal gave birth to her second child, she focused on delegating more tasks and easing her way back into work. “Our second time around, I would check my emails in the afternoon,” she says. “Our operations person sent me a daily update to let me know what was going on. I responded with whatever input was needed. I think we were overall better prepared. We actually joke that our business grew more that quarter, so maybe I was better off at home.”
‘Not a Piece of Cake’
Management also needs to assure employees that they are welcome to take advantage of available benefits. “Coming back to work when you have a little one at home is not a piece of cake,” says John C. Abusaid, president and COO of Halbert Hargrove. In addition to the four months of leave mandated by the state government, the firm, based in Long Beach, California, offers two weeks’ vacation at the beginning of maternity or paternity leave, as well as flextime for employees. “We believe that, if you invest in people, you’ll more than get your return in the long run,” Abusaid says, noting many of the firm’s roughly three dozen employees are at the age at which they could be starting families. Still, the efforts of a few small independent advisors who are forward thinking might not be enough. “It requires leadership from the larger players who can generate the most impact because they have the most dollars,” Boneparth says. He acknowledges that it is a complex issue: Is there a one-size-fitsall approach for an industry with a wide spectrum of business models and firm sizes? But tackling this problem, Boneparth says, would go a long way toward helping independent firms attract and retain young, diverse talent. Should more advisors have access to such benefits, they might have experiences similar to that of Parker Trasborg, who took two weeks’ paid family leave plus two weeks of vacation after the birth last year of his daughter. A planner with CJM Wealth Advisers in Fairfax, Virginia, Trasborg says he loved those four weeks. “I took her out for walks because it was the end of August through September. It gave my wife a bit of a break, since she was the one mostly dealing with the lack of sleep,” Trasborg says. “It was probably one of the longest periods of time I’ll get to spend with her uninterrupted until maybe I retire.”
“If you invest in people, you’ll more than get your return in the long run,” says Halbert Hargrove COO John C. Abusaid.
Advisor Nina O’neal, with sons Lowe and Emmett O’neal, focused on delegating more tasks at her practice after the birth of her second son.
After the birth of his daughter, advisor Parker Trasborg took paid leave to help give his wife “a bit of a break.”