Why DEI is particularly important in wealth management

April 4, 2023 10:07 AM

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Companies throughout the country are increasingly pledging to improve diversity, equity and inclusion at their firms — 441 publicly traded companies now disclose EEOC data and 70% of S&P 500 firms share or have committed to share data.

But DEI challenges remain, especially in the wealth management industry, where the number of female CFP holders sits at an all-time high of 21,504, but represent just 23.6% of all CFPs. Just 1.9% of CFPs are Black, and 2.9% are Hispanic.

As the industry continues to grapple with its lack of diversity, we highlight five stories that touch on the ways firms and organizations are trying to make headway.

Remote, yet inclusive — the industry’s new DEI challenge

Remote and hybrid work are part of the new reality in wealth management, with 73% of advisors seeing no change in their ability — or desire — to work partly from home in the coming year.

This transition to less work in the office and more work from home has created new challenges when it comes to women and people of color in an industry where imbalances already exist before factoring in the potential downside of being seen in the office or not.

Adapting to create an equal environment is key, according to Chelsea Williams, founder and CEO of Reimagine Talent Consulting. "We're still in a period of change — three years is not that long — but we need to be open to always change," said Williams.

Read more:

How to manage remote teams while retaining talent and improving diversity

Top asset managers swim against ESG tide

For firms like BlackRock, Vanguard, Fidelity and State street, who are caught between anti-woke conservative investors and ESG progressives, long-term shareholder value is currently the deciding factor when voting on proposals seeking more racial equity justice. But for how much longer?

According to Whitney Shepard of Majority Action, a nonprofit shareholder advocacy group, "corporate performances are not matching the rhetoric," with research showing "why racial justice and racial equity need to be considered within our investment strategies and across the board."

While some firms remain skeptical, others are already on board. "There are really good business reasons behind it," said Jimmy Lee, founder of The Wealth Consulting Group. "No matter what's going on right now, the overall trend for ESG is not going to stop."

Read more:

BlackRock, Vanguard, Fidelity and State Street hit for racial equity votes

Wanted: more partners for BLX Internship Program

Extending the deadline for the BLatinX Internship Program by a month earlier this year to allow more Black and Latinx candidates to apply is a mark of success in how far the organization has come in a little over two years.

"It just shows the amount of interest there is in the Black and Latinx community to become part of the profession overall," said Luis Rosa, co-founder of BLX.

The challenge now is spreading the word to extend the program and help bring the industry more into line with the country's demographic make-up, where the population is 13.6% Black and 18.9% Hispanic compared to CFPs at 1.9% and 2.9%, respectively.

Read more:

Why the BLX Internship's supply and demand problem is one worth celebrating

“Don’t believe the hype” on DEI myths

Wealth management may be lagging behind other industries in terms of diverse representation relative to U.S. Census data, but many of the apparent reasons why women and people of color are not making a mark in the industry have little foundation.

That's the considered opinion of four diverse women panelists from the industry at the sixth annual Diversitas Symposium, where myths such as needing an Ivy league education received short shrift.

"It's a wonderful business for women to be in," said Fanci Worthington of Cetera Investors. "And for anybody that's ever experienced barriers, you overcome those yourself. There's no one stopping you from overconfidence."

Read more:

Busting myths around wealth management's DEI problems

Breaking barriers beyond baseball

Baseball legend Jackie Robinson is famous around the world for his exploits on the field of dreams, but fewer people know about his achievements off the field and in the world of finance.

Robinson co-founded Freedom National Bank in Harlem, New York, to help the Black community, and his commitment to challenging racial wealth disparities continues to inspire a new generation of Black entrepreneurs and advisors.

"It makes me so proud," said Anna N'Jie-Konte of Dare to Dream Financial Planning. "I have a soft spot in my heart for people who lift as they climb, and I think it's just a really great example of that."

Read more:

How Jackie Robinson's financial legacy lives on in the industry today