For years, the financial advice industry has been trying to attract more women and minorities. The numbers are still lacking.
No one is ready to admit defeat, however. Everyone involved with the effort to diversify the field knows that systemic changes take time. But they also know that more progress is needed and that it needs to be faster.
“We need to create new social networks that allow more people to explore opportunities in financial fields,” says George F.A. Parnell, founder of Parnell Law in New York City and chief administrative officer of Ellavoz Impact Capital. “The financial industry has gotten better, but we need to change the way jobs are sourced so that those without extensive networks of well-off associates” can get a start in the business.
“What you have seen historically is that the people who have gone into the financial business have connections” with those who can invest, he adds.
Providing more diversity in the financial industry will benefit clients and advisors alike, Parnell notes. “The numbers tell us what exist but they do not tell us why it is so difficult” to diversify. “It is because many people do not have the networks necessary” to succeed in the financial industry.
Shundrawn A. Thomas, president of Northern Trust Asset Management in Chicago, has written extensively about racism and the need to include all members of society in all industries. That means women and minorities need to have equity in a profession to have influence, he says.
“People are getting more comfortable talking about inclusion, or the lack of it. If you don’t address the issue head-on, you cannot make progress,” he says. “We have fallen short of our goals—sometimes well short—when promoting diversity, equity and inclusion. We have to change the nature of the dialogue to be successful.
“Firms also have to start at the top to successfully diversify,” Thomas says. “An organization has to start at the board level and senior leadership in order to have the moral authority to talk about diversity.”
In that vein, Northern Trust has committed to increasing its trade execution services to include work with broker-dealers owned by minorities, women, veterans and people with disabilities. The execution target for its Minority Brokerage Program is increasing from its previous goal of 10% to 15% of firms.
There is still a lot of work left to do. Women now make up nearly 51% of the population, Hispanics 18.5%, Blacks 13% and Asian-Americans 6%. And yet according to some statistics, women make up only about 20% of financial advisors, while Blacks and Hispanics together make up only about 6%.
There have been some increases in the number of certified financial planners. Nearly 89,000 advisors have earned the CFP designation; 23.3% of those are women, as of the end of 2020. The number of Black and Latino CFP professionals grew to 3,688, an increase from 2019’s 3,274.
The CFP Center for Financial Planning was created in part to promote diversity in the field. The center recently appointed Dawn Harris to the newly created position of director of diversity and inclusion to direct the center’s diversity expansion efforts. “The increase in the number of CFP professionals of color reflects the strong efforts by CFP Board and the Center for Financial Planning to create a more diverse and sustainable financial planning profession,” says Kevin R. Keller, the CFP Board’s chief executive officer.
D.A. Abrams, managing director of the center, says the goal of expanding financial firms to include female advisors and advisors of all races is “strictly a matter of good business for the firms. Personally, I work with a large financial advisory firm, and I would not work with one that did not have a diverse workforce, and a lot of others agree with me.”
“The number of women and members of diverse races is growing but too slowly,” says Skip Schweiss, president of the Financial Planning Association. “As a profession, we need to put our foot on the accelerator to draw in a more diverse population. The white males who dominate the field will be retiring over the next decade, and the industry is going to need new blood. More people are looking for financial help, and many want advisors who look like them.”