Neela Hummel: On Hiring Women and Advising Female Clients

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Hello and welcome to Barron's The Way Forward. I'm Greg Bartolis, and my guest today is Neela Hummel, co-CEO of the Santa Monica-based RIA, Abacus Wealth Partners. Today she will discuss how advisors can prepare for a changing landscape in which women control ever more wealth. Welcome to the program.

Thanks, Greg. Excited to be here.

Wonderful. Well, let's start with the big picture and the premise here at work. And tell us about your firm as well.

Yeah, so the big picture here, you know, the interesting thing about being a woman in this industry is that, you know, roughly what, 18% of advisors are women. And yet at the same time, we're in the middle of a giant wealth transfer where women are about to be in control of about two-thirds of US wealth. What does that tell us? That tells us that our clients are changing, who they might want to work with is changing. And I think as an industry, we haven't done a great job of keeping up. So, you know, behind that, when I got into this industry, I was a career changer. I started as a software engineer and then turned— that turned into an unpaid internship at Abacus roughly 14 years ago. And I got started, quickly fell in love with the kind of work that advising is, and kind of worked my way through the organization. I started as a paraplanner, then became a lead advisor, relationship manager where I managed a small team. Then I ran the entire advisory department. And then about a year and a half ago, my co-CEO and I submitted ourselves to run, run the whole darn thing. But what's been really important to me throughout my career is trying to get more inclusive voices to the table. So I was the first female partner that Abacus brought on. We now have 24 partners, half of which are women. I think incredible things happen when women are in control of more money.. And I think as an industry, we can do a better job to support that.

I've read that a lot of advisory firms think that just hiring women is enough. Like, they kind of— it's almost perfunctory, like, well, we hired them, and they kind of stop there. And you used the term that you can't just paint it pink. That's a really interesting idea. Can you just delve a little deeper and explore and discuss that dynamic a little more?

The paint it pink, you know, as any woman listening here knows, that you go to the drugstore and you buy a razor, And you pay a premium for that being a pink razor. That's really the reference, is that if you turn something into pink, it's all of a sudden it caters to women. And let's not forget that women are half the global population. And so we are not a niche, right? Women, there's a lot of different types of women out there in the same way there's lots of different types of men. And so it's really twofold, is which women are you speaking to, right? Because women is not an umbrella term. And then how are you going to deliver that kind of information, that kind of advice to those women?

Yeah, as a quick digression on that, painting it pink in terms of dual pricing, if you will. I mean, it's totally anecdotal, but I sometimes would go to the cleaners. My cleaning needs are quite modest, you know, dress shirts, the occasional suit. And I'll come home and I might kvetch about the price. Oh my God, it's $3.75 to clean a shirt. And my wife will say, well, my blouse was like $45. And I'll be like, what? What?

Why? Is it that much more complicated?

I know, right?

Same thing. You know, I take my kids, I've got two boys and a girl, And I take my boys to get their haircut at a barbershop, and I pay $8. $8. I'm not going to tell you how much I pay for my haircut, but there's also a lot of it, so that's fair.

Exactly. So tell me some other things that your firm is doing on this level.

Yeah, so I'm, I'm very much all about not doing anything in a performative way. Like you mentioned, is this box-checky? Are we doing something that is checking the box? And so I think If you're really committing to being a more diverse organization, you need to design your policies around the most marginalized groups. And honestly, that is not even white women. That is women of color. And so, as you think about every level of the organization, how are you taking care of that demographic to make sure that you're not losing people in the kerfuffle of it all? And so, some of the things that we do, we've taken a hard look at our benefits. We are flexible work. We have great health insurance, 401(k) match. We have very extensive parental leave. And I say parental, not maternity leave. That's very important. 6 months fully paid, whether you are the birthing parent or the secondary parent. We're probably one of the only financial services firms that ships your breast milk if you're on a work trip. Those kinds of policies matter. Those help us get noticed, and those also attract a certain kind of employee who knows that we're thinking about them from a holistic standpoint and not just as a cost center or, you know, somebody that we can kind of squeeze more work out of.

For other firms that might want to emulate some of your policies, are there any that you might consider more universal, or might some be more appropriate/feasible only if they have sufficient amount of resources, or et cetera? I'm just trying to figure that out a little.

Yeah, so I think some of the lowest-hanging fruit that advisory firms, especially on the smaller side, can really go after is flexible work, right? I mean, we had a huge unplanned experiment with the pandemic, and it shifted everybody at home. And turns out the whole world didn't fall apart, at least in that respect, right? There were other issues. And so, you know, right now, I think it caused a lot of people, especially younger generations, to sit back and say, what do I want my life to look like? I do want— I don't want work-life balance. I want work-life kind of integration where they kind of support each other and it doesn't feel so transactional. And so that to me, I'm really surprised that more RIAs aren't turning harder into that. I think it's a huge competitive advantage. I think you get better people when you enforce RTO, return to office policies. The people that you most hit are people with young kids at home, and that is often women and minorities.

Yeah, and also just strictly from a, even just a hard-nosed self-interest and business purpose, it just seems like you're cutting off your options as well. I mean, I don't— smaller pool. Yeah, it's bonkers. Right, right. Not to mention that even hurting morale as well. And you're—

yeah, right.

Tell me what firms should be doing. I mean, clearly we talked— you mentioned about two-thirds, 67-70%. This is a giant slow tidal wave occurring. What are other things that the smartest firms are doing or should be doing?

Yeah, I mean, the best thing that people can do is really get ahead of it. I think segmenting the female population that they're actually targeting. Another piece of low-hanging fruit is honestly engaging if there is a spouse that you don't have a strong relationship. That is a really big one. I remember one of the first conferences I went to as an advisor, there was a speaker up there and they said, you know, if you're talking to a heterosexual couple, It's really important that you talk to the woman. And I cracked up because I thought it was a joke. And then I realized, I was like, oh my God, this was actually advice. And it was like, oh, wow, okay, let's rewind. Let's start there. Let's make sure that we're working with people who don't necessarily want to tell you what the answer is, but maybe want to ask. So just kind of employing some of those listening techniques, empathy, and reaching out and just knowing that people receive and digest information in really different ways. So I think who you hire matters, and I think really how you manage your practice matters, because different women— again, women are not a niche. And so which women do you think you will work well with? And target them. Are you working with divorcees? Are you working with breadwinners? Are you working with business owners? Women come in all flavors and sizes.

Yeah. Tell me a little about emerging trends that you might see, even recently, and maybe it's more anecdotal than anything backed by hard data, just which way the wind might be blowing a little more, any subthemes that that you're perceiving?

Yeah, I mean, I think women, to me, like, I feel like we really hit that hard a decade ago. And now it feels like even though the industry still has a lot of ways to go there, I think general DEI is a huge thing that people cannot ignore. And that is because there are big issues, I think, that our society faces. You know, one of the things that you had asked about, and one of the things that you're doing to help hire, retain, and grow, you know, female and diverse candidates, one of the best things that you can do are transparent salary ranges, transparent career paths, pay, you know, disclosure, all of those things so that you avoid exacerbating what we know is the truth, which is the gender pay gap, and honestly, more pernicious, the gender and racial wealth gap.

Yeah, I mean, I spoke with someone today who mentioned that there are, more CFP holders over the age of 70 than under 30. And so all of these big trends, they really seem inevitable, right? It's more of the timeline, but there's going to be a profound change. It's just interesting to see. It's kind of in slow motion real time, right? And, but it's— the issue will be forced and it's going to—

Yeah. And I love that you mentioned that because the tricky thing is the longer that you've been in control and the longer that you've held on, the harder it is to relinquish some of that control. So the longer you wait, the harder it becomes. And so the more you can start to develop trust and kind of investing in that next generation, you're actually going to make things easier for yourself.

Right, exactly. Um, can you tell me, like, what would be for an advisor who maybe wants to do this but who admittedly is busy, but maybe just a little bit feels overwhelmed, it seems like this giant thing to tackle, and it never rises to the top of their to-do list. What would be some actionable ideas or easy ways to just get the ball moving, even incrementally, in that direction? And then maybe it's almost like writing a novel where you do, oh, just a page a day, then 2 pages a day. How do you get that ball rolling?

You know, the first thing I would probably say is start educating yourself and really understand what problem are you trying to solve. Right? And the closer you can get to really what is the biggest issue, then I think you can start focusing your actions, right? Because I think there's the inclusion piece about making sure that once you hire great people, that you don't lose those people. And then hiring. Each of those is kind of a total beast. But I think what I always tell people when they're like, how do you get women to apply for the job? I'm like, y'all, why would the woman applying for the job want to work for your firm? Make it compelling. What is your employee value proposition? And start there. What is it that makes your company unique? How are you going to support them in addition to them just, you know, helping you with your needs?

Tell me what you're hearing from women in terms of investing. What are they looking for where their needs might be different from men?

Yeah, and again, depending on the type of woman that we're talking about, I think overall recognizing that women have been talked at for a really long time. And so we're not looking for anybody else to talk at us. I don't think anybody likes that, but women I think are particularly sensitive to it because we've kind of been receiving it our whole lives. So if I'm an advisor and I want to better serve different types of female investors, I want to get a lot better about asking really good questions. I want to ask questions about purpose and meaning and values, and then let the investments kind of be the tool. I also know there are some, you know, female clients, just like male clients, who want to understand more of the details and others who don't. So how you, you know, understanding what they want and their process, again, good questions. They will tell you what they want. That's the amazing thing. But most of them are just never asked.

Yeah.

Yeah.

And then also unique things such as on balance, longer lifespans as well, right? Planning can be a little bit different.

Right. And I think women also often get this fair treatment where they say, oh, women are more risk-averse. I disagree. I think women are more risk-aware, right? Is that I'm having— I think women are oftentimes, again, a mass generalization because it depends really on who we're talking about. But it's— they say that when women are making more impactful money decisions, where they want to spend their money, they want to spend more money on their kids. They want to spend more money on philanthropy. And they're interested in investing in ESG and more impactful ways. Those are just data points that we've seen, but that overall, they're not looking to be overall, you know, in less aggressive portfolios, right? They want to understand what they're getting themselves into. Because then you have great data points that on the long term, women are actually better investors.

Yeah, I mean, there's many, many studies that show that. What else are you hearing from clients? Anything else nowadays? I mean, the market last year was brutal for stocks and bonds. Not many safe havens. This year has been defined by volatility and extreme swings. What's the kind of— what are you hearing?

I think overall, and I will slot in here from our director of compliance that nothing I say shall be construed as investment or tax advice. But I think, you know, it is a really challenging market right now overall. People are scared and it's a kind of a double whammy for advisors because that often means that as their clients' assets and money is declining, so is theirs, right? And so advisors kind of have our, everybody has their own fears and their own agendas while they're simultaneously talking their clients off a ledge. So I think this is where it comes back to really making sure that you're developing those strong relationships. You're making sure that you're sticking to a long-term financial plan and recognize that on a short term, All this stuff is really, really exciting and unpredictable, and over long term, it is extraordinarily boring.

Well, that's the thing, right? Investing should be boring. It shouldn't be like you're watching it and day trading.

Exactly.

Right. Excellent. Well, that's a great place to wrap up. Thank you so much for joining us. Thanks for having me. My pleasure. My guest has been Neela Hummel. For more advisor-specific podcasts, please check out barons.com/podcast. For The Way Forward, I'm Greg Bartalis.

This podcast was brought to you by Wells Fargo Advisors. Looking for a firm your clients can't outgrow? Wells Fargo Advisors offers financial advisors full balance sheet solutions with wealth planning, investment products, banking, and lending that meet the needs of affluent to ultra-high net worth clients. Build your practice your way and on your schedule with independent and employee model options designed to meet your needs today and tomorrow. Learn more at joinwfadvisors.com.