12 stories about race, diversity and inclusion from 2022

December 20, 2022 6:59 PM

When discussing the push for greater diversity in wealth management, many leading the way are quick to remind anyone listening that while progress is always worth celebrating, they're just getting started.

There is still a need to recruit a more diverse workforce and serve a wider base of clients. Fewer than 5% of planners are Black or Hispanic, and less than a quarter are women. Discriminatory practices and discrimination lawsuits are still too common for comfort.

That's probably why interviews with leaders and trailblazers recognized for DEI efforts in financial services often include quotes like "we've got a long way to go" or "the work is far from over." As a result, 2022 saw more work being done to shift the industry's older, whiter status quo toward something a bit more reflective of the population it aims to serve.

Scroll down to see how the Financial Planning team has covered matters of race, diversity and inclusion in 2022.

Establishing industry best practices

CFP Board

In mid-February, the CFP Board's Center for Financial Planning published a new thought leadership report that aims to serve as a resource for those committed to greater diversity. The 69-page document, titled "Metrics That Matter," is a compilation of five articles written by industry pros and academics covering best practices when incorporating metrics into DEI work.

Included in the report are articles from Ella Bell Smith of Dartmouth College; Stefanie Johnson of the University of Colorado; Crystal Cox and Laura Barry of Wealthspire Advisors; Lisa Shalett, Emily G. Thomas, Adriane Parris, Steve Edwards and Emily M. Feczko of Morgan Stanley; and Rachel J. Robasciotti of Adasina Social Capital.

The articles focus on topics like self-awareness when establishing leadership metrics, creating a framework for DEI metrics, what a firm's diversity efforts look like from the inside, monitoring progress, and reevaluating due diligence processes through a DEI lens.

Read: CFP Board report highlights best diversity and inclusion practices

Does what an advisor looks like really matter?

Pexels

A study analyzing the correlation among gender, race and trustworthiness in the financial services industry found that race doesn't play a significant role in how much clients trust advisors. But women garner more trust than their male counterparts.

The research, led by CFP and Texas Tech University assistant professor Miranda Reiter, presented Black and white respondents who had no history of working with a financial advisor with a hypothetical money-management scenario.

After inheriting an imaginary $250,000, the respondents were given one of four financial planner profiles: a white man, a Black man, a white woman or Black woman and asked to rate their trust in those planners.

For individuals worried about their backgrounds impacting success in the industry, the results were encouraging. Advisors also spoke to Financial Planning about what findings like these could mean for the rest of the industry as firms work to improve.

Read: How a financial advisor's gender and race affect client trust

An advisor network for underrepresented planners gets its launch

Onyx Advisor Network

In late 2021, Dasarte Yarnway and Emlen Miles-Mattingly announced their plan to boost marginalized planners through an advisor network that aims to level the playing field. In 2022, that effort went from mission to material with the launch of the Onyx Advisor Network in May.

The advisor duo leading the charge says Onyx was created to address the nation's wealth gap while providing discounted access to technology tools, custodial access, investment management resources, coaching support and an inclusive community to financial pros who often feel overlooked by the industry.

People of color, women, members of the LGBTQ community and other groups historically excluded from the financial services industry can join the comprehensive support platform for a $549 monthly subscription. The subscription cost comes with a bundled technology stack including Altruist, MessageWatcher, Envestnet|MoneyGuide, RightCapital, Synergy RIA Compliance Solutions and Wealthbox.

Miles-Mattingly said the goal was for underrepresented advisors at all stages of their careers to be able to join Onyx and not need to spend another dollar to get their businesses going or catapult their existing business to the next level.

Read: Onyx sets launch date, pricing for tech stack to support to underrepresented planners

A new network for LGBTQ planners

Financial advisor Laura LaTourette picked Ramona Maior as the successor of her practice

Ramona Maior

Over the summer, a lesbian financial advisor found her practice's eventual successor as part of her plan to launch a new network for LGBTQ wealth management professionals.

Laura LaTourette of the Dahlonega, Georgia-based Family Wealth Management Group picked advisor Ramona Maior to take over the practice, which uses LPL Financial as its brokerage and The Wealth Consulting Group as its hybrid RIA and office of supervisory jurisdiction.

LaTourette and Maior, who is bisexual, announced the practice's succession and the opening of the firm's Rainbow Network for LGBTQ advisors and allies on the first day of Pride Month 2022.

Maior and LaTourette met last year when Maior, then working on a specialty investment research and management team at the wealth management arm of MUFG Union Bank, reached out in search of mentorship after noticing LaTourette's influence in the profession. Maior is a Navy veteran, just like LaTourette's son; both women also lived in foster homes as teenagers and say they've navigated challenges in the profession as members of the LGBTQ community.

Maior's family emigrated from Romania to Chicago when she was an infant and she says she experienced abuse as a child and prejudice growing up in a Pentecostal immigrant enclave. Maior said moving to LaTourette's practice enables her "to help people who need representation to be intentional with where I'm focusing my energy and resources on, and to provide financial literacy and counseling to others."

Read: Financial advisor launches Rainbow Network for LGBTQ planners

Turning frustration into inspiration

Michelle Tran, senior vice president and head of enterprise sales at Vestwell and co-founder of NYC Fintech Women

Provided by Michelle Tran

Michelle Tran, the senior vice president and head of enterprise sales for digital 401(k) recordkeeper Vestwell, says she has a problem sitting still. But those who know the 15-year industry veteran best say that quality is a boon to many.

Tran is also the founder of NYC Fintech Women, an organization focused on empowering women in the space that she co-founded alongside Fin Capital Principal Sasha Pilch in 2017. The group now has more than 8,000 members from all over the world. But it all started with Tran sending out a frustration-fueled social media invite after a difficult client meeting.

"There was one meeting in particular where we were working with a multibillion-dollar wealth manager … and I was the only female in the room. And there are probably 10 other people in the room," Tran told Financial Planning. "And I kept on experiencing the things you hear about — the mansplaining and the interrupting from both sides. You could tell it was subconsciously happening, and I'm sure if I spoke to any of them today, they would say they didn't mean to do that."

She responded by going home, logging into Meetup.com and starting what would become NYC Fintech Women. Just 16 women showed up for that first meeting on a rainy workday night at a now defunct bar in the Flatiron District, but the seeds of community planted then continue to grow.

Read: 

Vestwell's Michelle Tran rarely rests, which is making a difference for women in fintech

Changing the conversation and the industry

Renée Baker of Raymond James, 2022 CFP Board Chair Kamila Elliott and 401 Financial Founder Tyrone Ross.

Tobias Salinger

With the need for inclusivity a theme of last September's Future Proof Conference, financial advisors at "the world's first wealth management festival" received a reinvigorated roadmap for how to change the industry.

In a panel, Renée Baker, Raymond James' head of advisor inclusion networks for the Private Client Group; 2022 CFP Board Chair Kamila Elliott; and 401 Financial Founder Tyrone Ross shared how advisors and firms can alter the industry's painful legacy of exclusion and entrenched lack of representation of minorities.

Despite advances such as Elliott becoming the first Black chair of the CFP Board and significant investments in diverse hires by wealth managers like Raymond James, fewer than 5% of planners are Black or Hispanic and less than a quarter are women, according to the CFP Board.

Panelists said that advisors should start from the simple principle that it's wrong to exclude people and block access to wealth-building tools, then acknowledge that America's shifting demographics signal a multicultural future that's accelerating every year.

Read: How financial advisors can create a more inclusive future for the industry

Why being seen is not a buzzword

Annie Jean-Baptiste, Google's head of product inclusion

Justin L. Mack/Financial Planning

The Future Proof event also included a keynote speech delivered by Annie Jean-Baptiste, head of product inclusion at Google, who discussed the importance of "being seen." While discussing wealth management's ability to create more inclusive tools, she explained that feeling like someone cares has a powerful impact.

"We all want to be seen — by our pets, our partners and definitely our products," Jean-Baptiste said. "It's really about allowing everyone when they use a product or service to feel like they were thought of in the moment and throughout the product design and development process."

That impact is even bigger when applied to the world of financial services. If fintech can extend access to the overlooked while making them feel included, there is an opportunity to transform people's lives and shift the balance of power, Jean-Baptiste said.

Called "Building for Billions," Jean-Baptiste's Future Proof presentation broke down how a more inclusive approach to tech is good for the soul — and the bottom line.

"Who else's perspective do we need? [Because] we're going to unintentionally exclude," she said. "We all have biases. That's OK. We all have to make mental shortcuts to move through the world. But what you want to do is make sure that you're intentional about understanding the naming in your biases and figuring out how in critical points of the product development and design process you can bring those perspectives that have historically been at the margins into the center."

Read: 4 ways fintech can build more inclusive tools for advisors and why it's good for business

Quad-A's big comeback

Association of African American Financial Advisors Chairman Christian Nwasike

Tobias Salinger

After two years as a virtual event, the industry's largest gathering of Black financial advisors returned with hundreds more attendees than before the pandemic.

The Association of African American Financial Advisors, which often goes by the nickname of "Quad-A," drew more than 450 registered guests and 20 corporate sponsors to its Vision conference in Atlanta. The numbers rose from 253 guests at the last in-person Vision gathering in 2019 in Detroit.

Chairman Christian Nwasike said the nonprofit organization led by volunteers has doubled the size of its board and tripled its full-time staff this year, in part by raising more than $1 million in the first half of 2022.

Quad-A's event reflects a growing focus among giant wealth managers on hiring and supporting more Black advisors. Because only 1.8% of certified financial planners are Black, experts say the industry will need to boost its representation in order to serve a changing demographic base of clients across the country. Quad-A aims to help Black advisors' careers through professional development, foster more prospective planners' paths into the field and close the racial wealth gap in the process.

"If you feel the tug in your heart and you want to serve your fellow brothers and sisters in wealth management and financial services, we ask you to sign up for any committee that you think can leverage your talents, because we are growing," Nwasike told the group at the Hyatt Regency hotel in Downtown Atlanta.

Read: Quad-A Vision conference draws hundreds of Black financial advisors

New Arizent DEI research tracks value, support and toxicity

Michael Nagle/Bloomberg

The latest DEI research from Financial Planning parent company Arizent was released in the fall and attempts to quantify the complicated feelings that come with feeling excluded.

According to the study, non-white employees are less likely than their white counterparts to report feeling valued at work. Just 60% of people of color say their input is regularly requested on meaningful items compared to nearly 80% of white respondents.

Non-white women say they encounter the most unhealthy work environments and are the least likely to receive help or support from people with power in their organizations, according to the study. Women of color are twice as likely (24%) as white women (12%) to report a workplace as unhealthy or toxic. In addition, 23% of non-white women disagree with the statement that their white colleagues are using their power to uplift and support their colleagues of color.

Overall, DEI efforts garnered a positive response from nearly half of all employees surveyed. But others worry that the issue is overblown and outweighs a "merit-based approach" to hiring and promoting. These respondents dismiss DEI as "a performative fad," and sentiment about DEI is particularly negative in wealth management, where only 33% of respondents had positive things to say about these efforts.

Thirty-five percent of wealth management respondents had only negative things to say, 24% had a mixed reaction and 8% remained neutral.

Read: Why wealth management's diversity issues go deeper than demographics

Bringing financial advisors and diverse asset managers together

Founder Devon Drew and President Bilal Little run DFD Partners

DFD Partners

What started as a passion and hobby for an industry veteran has blossomed into a vehicle to connect financial advisors with diverse asset managers.

Earlier this year, DFD Partners founder and former Vanguard wholesaler Devon Drew made his startup software firm his full-time focus. Just last month, he tapped former Blackrock exec Bilal Little as president of the startup that aims to disrupt the asset management industry.

The tech powering the DFD platform enables advisors to find companies led by women, Black, Hispanic, Asian American or other underrepresented groups. Currently, companies owned by women and minorities make up only 12.2% of asset managers.

Together, Drew, Little and the DFD team want to help that number grow.

"If you're a smaller, diverse manager, how in the heck do you cut through the noise and punch above your weight class if those are the companies you're going up against?" Drew told Financial Planning, noting that wealth managers are facing challenges from the nation's changing demographics. "Large institutions are losing business because, quite frankly, they don't represent the values, the morals and the culture of the end client."

Read: Ex-BlackRock and Vanguard veterans launch software connecting financial advisors to diverse asset managers

Historic CFP Board chair looks back

CFP Board Chair Kamila Elliott

Dean Stevenson

After making history by becoming the first ever Black CFP Board chair, Kamila Elliott, CEO and founder of Collective Wealth Partners, said improving industry diversity was one of her primary goals for 2022.

Looking back on a very busy 12 months, Elliott believes the seeds of change have been planted. She said the response she got while leading the organization was both rewarding and humbling, and her hope for the future is bright.

In an interview with Financial Planning as both the year and her time in office wound down, Elliott said the next 12 months will see her pushing even harder. She wants to see the number of diverse-owned firms increase, more engagement with communities of color and more programs that provide pro bono services to those who need it.

"I spoke with someone the other day, and it's a shame that I could rattle off pretty much most of the Black-owned RIA firms in the country. And I just felt, oh, here are the like, 15. Why are there only 15? There should be more," Elliott said. "A lot of it is the economic aspects. We tend to serve Black households. Black households or Hispanic households typically don't have the same wealth as white households. We're already not in a position of strength. So how do we help diverse firms get the right technology and scale to be able to serve diverse communities in a more formal way?"

Read: Kamila Elliott, first Black CFP Board chair, reflects on 2022

Questions mount as a discrimination lawsuit is dismissed

When two Black financial advisors who accused Merrill Lynch of discrimination dropped their case against the company, there were questions about what caused the change in trajectory.

Ravynne Gilmore and Lucinda Council had sued Merrill over "discriminatory policies, patterns, and/or practices" due to its "minimum threshold production credit requirements, lack of support, and inequitable teaming opportunities," all of which resulted in lower pay and fewer promotions for Black advisors than for their white counterparts, they alleged.

In a filing two days before Thanksgiving in Detroit's federal court, they quietly asked for dismissal of the case. A week later, the judge dismissed the case, which was filed last year nearly a decade after Merrill agreed to pay $160 million to settle an earlier discrimination lawsuit filed by Black advisors.

Experts said it's not immediately possible to say that Gilmore and Council received a settlement of their potential class action case from Merrill. The "without prejudice" dismissal enables Gilmore and Council to re-file their case, a provision that the parties may have agreed to if Merrill doesn't abide by the terms of a potential agreement. But the dismissed case underscores the complexity within the industry's frequent pledges to hire more diverse talent and evolve into a more welcoming place for historically excluded groups.

Many large brokerages and wealth management firms have reached eight-figure settlements over discriminatory practices in recent years, including Edward Jones ($34 million), Wells Fargo Advisors ($35.5 million), MetLife ($32.5 million) and J.P. Morgan Chase ($24 million). In 2021, a former global head of diversity at Morgan Stanley dropped a race and gender discrimination case against the firm.

Read: Dismissal of Merrill discrimination lawsuit highlights industry's mixed record