Black and Latino financial advisors often do not feel comfortable or welcome in the financial industry, according to speakers at a Center for Financial Planning diversity summit.
And for those who are not already a part of the financial profession, being a financial planner is just not on theiir radar, said Peter Fondulas, president of Fondulas Strategic Research. The barriers to becoming a planner for minorities has led to a field dominated by older white males, who serve white clients who have money to invest, he said.
Action has to be taken by organizations, firms and individual advisors to make the financial planning profession more closely reflect the population of the United States, each of the speakers emphasized.
The Center for Financial Planning discussed the lack of diversity in the industry with an all-day conference Tuesday in New York City. The center simultaneously released the report, “Racial Diversity in Financial Planning: Where We Are and Where We Must Go.”
Blacks and Latinos make up only 3.5 percent of the 80,000 holders of the Certified Financial Planner designation, while they make up nearly 30 percent of the overall workforce, according the Bureau of Labor Statistics. But the percentage of wealth controlled by minorities in the general population is growing.
“Firms that ignore the changing face of wealth in this country will be poorly equipped to handle emerging markets and will ultimately end up leaving money on the table,” the center's report said.
“A mature industry looks at itself in the mirror,” noted Cy Richardson, senior vice president of the National Urban League and the chair of the center’s Diversity Advisory Group, who spoke at the diversity summit. The image that is being reflected back does not match the image of the country, he said.
Blacks and Latinos wanting to enter the profession face significant barriers, Fondulas said. Many do not feel welcome, others do not have the resources to support themselves while they are being paid on commission and building a business, and clients inherit the bias that white professionals are more skilled, he said.
There also is a lack of awareness among minorities about the opportunities in the financial planning field, even though blacks and Latinos who are planners report significant satisfaction with their job choice, speakers said.
In the study, one-quarter of hiring professionals admit they think whites are more likely to have the skills needed by a financial planner than blacks, Fondulas said, and hiring professionals want to hire advisors with rich friends, who can immediately start bringing in new clients.