Women and members of minority groups are gaining ground in being better represented among financial advisors, but it has been slow going so far, according to Dawn Harris, diversity and inclusion director at the Certified Financial Planner Board of Standards.
“Although efforts to raise representation are working, we want to speed the process up,” Harris said in an interview.
As of the end of 2022, only 23.6% of CFP professionals were women, fewer than 3% were Hispanic or Latino, and less than 2% were Black, according to the CFP Board.
Although there has been improvement over the years, the numbers have not moved as much as those in the financial industry would like, but more improvement is seen for the future, Harris said. For instance, one-third of those who received the CFP designation in 2022 were women. In addition, new racially and ethnically diverse CFP professionals grew to 763, which represents 15% of new CFPs.
The representation of women in the profession has been increasing over the past few years, but in very small increments, according to CFP Board figures. As of the end of 2020, women made up 23.3% of CFP certificants, according to the board. The percentage rose to 23.4% in 2021 and to 23.6% in 2020.
For 2021, the number of Black and Hispanic CFP professionals increased to 4,196, an increase of 13.8% over 2020. This increase in minority representation was nearly four times the growth rate of all CFP professionals, according to the CFP Board.
In a press release in January, the CFP Board said its class of 2022 certificants was the most diverse in its history.
The CFP Board is “excited to see strong increases of women, Black and Hispanic individuals pursuing a career in financial planning, as diversifying the financial planning profession is one of CFP Board’s core strategic priorities and central to the work of our Center for Financial Planning,” Kevin R. Keller, CFP Board CEO, said in a statement at the time. “While we are proud of our growth, there is much work ahead of us as we develop initiatives to further strengthen the talent pipeline for years to come.”
Women and minorities have expressed dissatisfaction with speed of the progress that is being made, according to Harris. Although there are no statistics to show the level of dissatisfaction women and minorities feel because of their underrepresentation, there is a lot of anecdotal evidence that reflects their frustration with the lack of movement, the CFP Board said. Historically, women have continually felt dissatisfied in the financial planning industry, and specifically, Hispanic and Black women have felt dissatisfied, the board said.
“Research shows that women are the biggest beneficiaries of the great wealth transfer, an event that will radically impact many industries, including financial services. This is a great opportunity for financial advisors to take steps to address the unique challenges women face in the financial planning profession and to drive meaningful improvements to make them feel more confident when working with financial advisors to plan their assets,” the board said.
The CFP Board Center for Financial Planning was established specifically to promote diversity in the financial industry, and works closely with the Financial Planning Association. As part of its annual conference, the FPA is holding its first diversity summit in Phoenix in September. The event is known as SER, which stands for Support, Education and Recharge and means ‘to be’ n Spanish. The event is designed to unite and support Latinos in the financial services industry.
"Embracing diversity and inclusivity strengthens our ability to effectively serve a broader client base. By working alongside other organizations and professionals, we can learn from each other, share experiences, and create an environment that supports and empowers financial planners from all backgrounds," James Lee, FPA president, said in a statement. "By collaborating, we can help ensure our profession reflects society and we are positively impacting all communities that can benefit from financial planning."
“The event is an important step towards increasing diversity within the financial services industry,” the FPA said. “As Latinos become increasingly important consumers in the United States economy, it has become even more essential for increased Latino representation in our industry and for advisors to have access to resources that help them better serve the community.”
One thing advisors, both male and female, have to learn if they are to successfully serve women clients is that “women are not one dimensional,” Harris noted. That was one of the imperatives that came out of the fifth annual CFP Board Diversity Summit held last year. This year’s Diversity Summit will be held in Arlington, Va., on Nov. 9.
The summit will feature thought leaders financial services firms, academic institutions and think tanks who will showcase initiatives and best practices that advance racial, ethnic and gender diversity in the financial planning workforce, the board said.
Part of the effort to draw women and minorities to the field is focused on attracting young people. That effort is concentrated on high schools, colleges and universities. The CFP Board has created a career guide that illustrates 12 different paths that can be taken once a person embarks on a career in finance planning.
“Not everyone has to be a client-facing advisor. There are a lot of other roles that need to be filled, including in tech,” Harris said. Young people and career changers need to know about the many roles that are available.
“The sheer numbers of women and minority members who could benefit from careers in financial planning, and the numbers in those communities who could benefit from financial planning advice means the demographics of financial advisors is going to change – we just want to hasten the process,” Harris said.