Increasing the number of financial advisors who are women and people of color can help a firm reach underserved populations with needed financial services, according to Tim Gerend, chief distribution officer at Northwestern Mutual.
Likewise, having young advisors fosters an atmosphere that draws in young clients, Gerend said in an interview.
Northwestern Mutual, a nationwide financial services firm based in Milwaukee, has created programs to encourage minority community members to become advisors, firm leaders and clients, he said.
Northwestern Mutual, like the financial planning industry as a whole, has made strides in closing some of the gaps in diversity and inclusion of advisors and clients, “but there is still a long way to go,” he said.
In 2021, nearly 50% of Northwestern Mutual recruits were diverse, compared to 28% in 2011; 25% of its leaders were diverse, compared to nearly 14% in 2011; and in an industry that is aging, 57% of Northwestern Mutual’s advisors are under the age of 40, the firm said. The financial industry as a whole is “aging and shrinking because it is not doing a good job of attracting new, diverse advisors,” Gerend said.
The current state of affairs is due, in part, to a misperception about what a financial services career entails.
“It also takes time to make changes, which is why progress feels so incremental. Making changes involves people and talent development,” Gerend said. There are business and moral reasons to move in the direction of diversity and inclusion, he said. Northwestern Mutual has launched several initiatives to increase diversity among advisors, leaders and clients, he added.
For instance, the Women’s Field Association was created to give women a voice in company policies to ensure women can succeed and stay in the financial advice industry. Similarly, the firm partners with historically Black colleges and universities to offer career opportunities within the financial services industry and to provide professional development to students, he said. “More diverse leaders are more likely to attract and retain diverse advisors,” he said.
Another effort is an initiative called Distribution Growth Ventures, which is focused on expanding financial services to under-penetrated markets – essentially places where people need financial advice, but don’t have local options, Northwestern Mutual said. The firm has opened an office in the Harlem section of New York City, and in an Orthodox Jewish community on Long Island, N.Y. In each case, communication between the firm, advisors and clients is a key.
“Promoting diversity and inclusion is part of our growth strategy,” Gerend said. “Simply put, we are twice as good now as we were 10 years ago on each of these issues. We are bringing in new, young advisors, and it is no coincidence that the average age of our advisors is about 30 and the average age of our clients is about 30."