Financial Advisors: Take Action to Create More Diverse and Inclusive Teams
Wealth management is among the least diverse industries in America. According to the Government Accountability Office, less than 20% of financial advisors are people of color. This is despite the fact that companies with the most diverse executive teams are 33% more likely to outperform their peers on profitability, as reported by The CFP Board.
In The CFP Board’s 2018 study on racial diversity, aspiring Black financial advisors cited “prejudice from firms,” “firms’ beliefs about clients and ethnicity,” and “fewer opportunities” as some of the main reasons why people of color are underrepresented in financial planning.
In a piece for Financial Planning magazine, Zaneilia Harris, CFP®, president of Harris & Harris Wealth Management Group, offered this powerful perspective on the topic of diversity in the financial services industry and her own experiences:
“It feels like our industry measures who we are as minority and women advisors based on standards set by white men. Also, when I look at pictures promoting diversity in our industry, I only see white women as success stories or one token person of color to represent diversity and inclusion. As a black woman, I constantly feel dismissed, even among those who come together for the purpose of unity. I’m forced to question if I‘m truly valued or if these public conversations are just a smoke screen with no urgency for change.”
Steps You Can Take to Make Your Team More Diverse and Inclusive
We all need to commit to making a change and taking real action to create a more inclusive industry — one that is actually representative of our society and of the clients we serve. At this current moment, so many of us are asking ourselves, “What can I do? How can I help?” The CFP Board has made it easy by outlining some tangible steps you can take to make your advisory team more diverse and inclusive. We’ve outlined some of their recommendations below and also linked to their research report, “Racial Diversity Among Financial Planners,” for more information:
- Facilitate conversations in your firm to develop a shared understanding of race, diversity, equity, and inclusion.
- Encourage top firm management and owners to make transparent commitments to racial diversity by specifying measurable diversity, equity, and inclusion goals and monitoring progress toward those goals.
- Educate firm owners, senior leaders, and managers about the value of a diverse workforce beyond working with clients of color.
- Evaluate the impact of your firm’s compensation structure on hiring and onboarding people of color. Develop models to allow employees to learn the ropes without the pressure to produce immediately. Ensure that any compensation structure is fair and equitable.
- Proactively recruit diverse candidates — and highlight aspects that are most satisfying to current financial planners including helping others and building wealth in communities of color.
- Partner with business associations geared toward people of color and help create internship programs for students.
- Build and sponsor networks focused on recruiting diverse financial planning professionals among communities of color.
- Develop and support mentorship programs for people of color — internally and externally.
- Value and support pro bono efforts to support communities of color.
- Develop leaders of color by providing funding for leadership training.
- Test and evaluate pilot programs to determine which diversity initiatives work best for professionals of color and allies.
Our industry is long overdue to build teams and foster firms that are representative of our world. The time to take action is now. To read The CFP Board’s full research report, click here.