7 wealth management takeaways from Arizent's 2023 DEI research

October 10, 2023 12:28 PM

For Query Capital Founder Landon Tan, evidence of a clear and consistent plan to bring more diversity to the wealth management industry isn't just a nice thing to have.

It's a necessity that has been long overlooked and something that can greatly alter the career trajectories of underrepresented financial planners who want nothing more than to make an impact.

"When choosing a firm, the fact that LPL had a DEI team influenced my decision to move. I have become a firm believer in the importance of having a DEI team at a big company," said Tan, a trans-masculine former spoken-word poet who has been a Brooklyn-based CFP since 2014. "I have brought important concerns to them twice and had it taken seriously and resolved because of the DEI team's relationships within the organization.

"You need to have people whose job it is to care about diversity, equity and inclusion, or else issues that affect minorities would be missed by the majority."

Despite the power of having that kind of plan in place, there are still hurdles to clear. Houston, Texas-based financial planner Steve O. Oniya said firms have long been aware of the business benefits of true equity.

Yet so many are unwilling to go all in for one reason or another.

"Many companies know the facts and value of having an inclusive environment," Oniya said. I'm concerned that it is due to many insiders' beliefs and values that prevent them from fully implementing accountability of inclusion for the business and even before profit, let alone integrity."

The third annual DEI study from Arizent — the parent company of Financial Planning, Accounting Today, American Banker, Bond Buyer, Digital Insurance, Employee Benefit News, and National Mortgage News — explores the state of inclusion across industries, the impact a dedicated DEI strategy can have on business and how leaders in financial services can continue to champion diversity.

The goal of the research is to understand how a genuine commitment to inclusion and diversity in leadership can impact employees' experiences, regardless of their demographic characteristics.

While DEI efforts have become a top priority at many organizations, the ability to measure and track their impacts beyond just counting the kinds of people in the room is difficult. Without data to back up calls for greater inclusion, both leaders and employees are left to question the value of the initiatives.

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And following the murder of George Floyd in May 2020 — as well as the subsequent promises from industry leaders to make things better — the call for companies to take action and create equity in professional settings is louder than ever.

The insights gathered and shared in Arizent's report aim to bring data points to DEI metrics not easily quantifiable and identify areas that need the most improvement.

Arizent's online survey, conducted in July and August 2023, polled 669 respondents across the wealth management, banking, accounting and insurance sectors. It included employees from both small and large companies, varying age demographics as well as from various positions, ranging from nonmanagement roles to executives.

Here are seven wealth management takeaways from the research's findings. The entire report can be found here.

The majority of wealth managers say they feel valued and seen by their higher ups

Nearly 7 in 10 respondents (69%) either agree or strongly agree that they feel valued and belong at their organization.

Survey participants had a similarly positive response when asked if their managers demonstrated empathy toward them. About 23% of respondents strongly agreed, 50% agreed, 22% were neutral and 5% disagreed.

Most wealth management employees also feel that their peers are working to make them feel like they are part of the team

Just 16% of all wealth management respondents said they felt isolated and not included by their coworkers. Meanwhile, 41% disagreed with that statement, and 25% strongly disagreed with that statement.

When it comes to making significant contributions at work, 78% of respondents said their teammates value their ideas, while just 4% disagreed.

Banking, insurance and other industries were more likely than management or accounting to take steps to get better

Wealth management lagged behind banking and insurance when it comes to efforts like providing diversity at all levels of the company; creating employee resource groups; examining pay structures to ensure equal compensation; and implementing recruiting policies to ensure that an equitable number of applicants are from underrepresented groups.

However, wealth management was found to outpace efforts seen in the mortgage and accounting industries.

Respondents think their companies are doing better than everyone else

When asked to rate their own organizations, wealth managers say they work at places that are inclusive for women, older employees and working parents. But perception of the overall industry is less rosy, with most thinking their industry is less inclusive of all groups than their company is.

For example, wealth management respondents gave their own firms an inclusiveness score of 7 out of 10 when it comes to women, but the industry at large received an inclusiveness score of 5 out of 10.

Across financial services, respondents who believe their companies have genuine commitments to inclusion report feeling safer at work

They say they are able to take time off, worry less about job security and are more able to focus on important tasks.

As a result of these positive workplace experiences, they report healthier behaviors outside the workplace as well, which benefits companies directly through lower absenteeism and health care costs, and indirectly through maximizing their investment in the workforce.

Employees at firms that are "getting it right" when it comes to DEI are more likely to report having opportunities

Respondents say they can freely share their input on meaningful projects and are comfortable disagreeing in meetings. Such employees also say that curiosity is encouraged and honesty and integrity are displayed at all levels of their organizations.

These qualities are more likely to lead to positive business outcomes and to help firms adapt to changing business conditions, as well as support a physically healthier and more productive workforce.