'The threat is existential,' but these leaders are staying the course on DEI

Actions by President Donald Trump's administration aimed at what he calls "the tyranny of so-called diversity, equity and inclusion policies" are reverberating across wealth management.

Leaders at four professional development organizations interviewed by Financial Planning expressed varying degrees of concern about the impact of Trump's executive orders and political rhetoric on programs supporting current and aspiring financial advisors who are women, Black, Hispanic, LGBTQ or members of other minority groups. To opponents of DEI, Trump is pushing back against liberal policies they see as emanating from "woke" corporations.

Others are expressing fear as investors about the effect to shareholders, as citizens on the implications to civil rights and as professionals relating to previously noncontroversial efforts to provide opportunities, networking space and other resources to people that the financial services have historically excluded from rewarding careers and wealth-building. They are wondering whether the firms that are removing references to DEI in their annual reports will follow that up by backing away completely from commitments in 2020 in the wake of the murder of George Floyd or even from long-running programs dating back further.

"We're under attack, and I feel that the threat is existential," said Troy Prince, founder of Wall Street Bound, a nonprofit training, mentorship and education organization seeking to "help underrepresented youth achieve more" in wealth management and other areas of finance.

"I am concerned with our ability to operate legally or as a growing concern," Prince added. "No one has explicitly said, 'Hey, we're out of here, we're pulling back.' But multiple conversations have been, 'We're putting our engagement on pause, we're taking directions from legal and we're all afraid,' particularly those that have any business or contact with the government."

READ MORE: Amid DEI abandonment, what progress can firms show?

Staying the course as politics spill over

The federal government under Trump has acted quickly in recent months after a conservative blueprint for his second administration targeted "offices at financial regulators that promote racist policies (usually in the name of 'diversity, equity, and inclusion')" and other programs it described as "discrimination based on immutable characteristics." 

Court cases will likely decide the ultimate fate of Trump's executive orders, including those aimed at "ending radical and wasteful government DEI programs and preferencing," "ending illegal discrimination and restoring merit-based opportunity" and "defending women from gender ideology and extremism and restoring biological truth to the federal government." In the meantime, the administration's moves are stoking anxiety in industries that have always had minority visibility and representation problems.

Near the beginning of his first speech to a joint session of Congress in his second administration, President Trump specifically mentioned DEI and the 2023 Supreme Court case that ended affirmative action in college admissions.

"We've ended the tyranny of so-called diversity, equity and inclusion policies all across the entire federal government and indeed the private sector and our military," Trump said. "And our country will be woke no longer. We believe that whether you are a doctor, an accountant, a lawyer or an air traffic controller, you should be hired and promoted based on skill and competence, not race or gender. You should be hired based on merit, and the Supreme Court in a brave and very powerful decision has allowed us to do so."

Amid that backdrop, corporate sponsors of the Association of African American Financial Advisors (Quad-A) have nevertheless maintained their strong support for the organization, CEO Sheena Gray said. The ranks of Quad-A supporters include some of the biggest names in finance: Bank of America's Merrill, JPMorgan Wealth Management, UBS, RBC Wealth Management, Ameriprise, Citi, Empower, Edward Jones and Baird. Some of those firms, however, are among those that removed DEI language or entire sections related to diversity from their annual reports or ended professional development goals or programming around inclusion.

Many companies across finance "recognize the value that diversity adds to the industry and to their firms," Gray said. "We're going to remain steadfast in our mission and continue to advocate for Black and African American professionals regardless of any political changes. Our goal is to stay the course."

READ MORE: Wells Fargo scraps diversity policy for senior-level recruitment

Having the expected impact

Still, the political environment has "negatively impacted" the work of the BLX Internship Program, an organization that connects Black and Hispanic interns with advisory practices across the country, according to planner Luis Rosa, a co-founder of the group and the founder of Henderson, Nevada-based Build a Better Financial Future. Some firms in the industry seem unsure about "how to move forward from a legal standpoint," Rosa said.

"They don't want to be singled out, whether that's legally or just backlash on social media," he said. "I'm hoping that it's an overreaction, so we went from one end to an extreme on the other side."

Financial support for low-cost membership options and for "freemium" access for finance students in college and other potential next-generation planners in Females and Finance has taken a hit after the election last year and the first months of the new administration, according to Sheryl Hickerson, founder of the 5,500-member networking community promoting inclusive practices for women and diverse professionals.

"I've given great thought on how to tackle these shortcomings," Hickerson said in an email. "I refuse to reframe our Females and Finance messaging to make it more palatable to those who do not support DEI. And instead, I'm doubling down on our advocacy and looking at alternative funding sources."

Wall Street Bound

The companies are simply displaying "rational behavior" as they try to avoid legal matters, said Prince, who said that he is striving to put any "personal feelings" aside in advancing Wall Street Bound's efforts at this time. To that end, on the organization's website his team has switched out some images, removed most race-related statistics and emphasized words like "inclusion," "under-resourced" and "underrepresented" over most references to "diversity."

"It's clear that we have to change the way we speak about the mission, about the work," Prince said. "'Diversity' is now a bad word and, the work we're doing, I wonder if, by executive order, may any day now become illegal."

READ MORE: Citi diversity U-turn signals retreat under Trump

Misunderstanding the moral and business cases?

Efforts to hire, retain and promote diverse professionals who can expand the client base remain important to many companies, though, because they help the firms keep their "competitive edge," Gray said. Quad-A will host its second annual "Women's Impact Initiative Network" conference this summer, and support from Edelman Financial Engines will provide 25 students with a scholarship toward passing the Securities Industry Essentials (SIE) examination. In addition, Quad-A's membership has increased over the past month.

"Equity and inclusion are a business and economic imperative for this industry," Gray said. "It's not going to go away, so that's why we can't go anywhere. There is a need to increase diversity, and it's part of the strategic priorities for our partner firms."

DEI critics often fail to see that the efforts are "about opportunities," rather than "something being given to someone who's not qualified," Rosa said. The BLX Internship Program has focused on creating those opportunities in partnership with registered investment advisory firms, but its challenge today remains the same as it was before Trump's second term: There are far more qualified applicants than there are spaces available at RIAs. 

While no one has said directly to Rosa that they're not looking for interns from the BLX program simply because of the Trump administration, the political rhetoric may be discouraging some firms from participating, he said.

"I hope it blows over at some point," Rosa said. "That's where the meat and bones of it is really, just creating more opportunities."

In the current political environment, the industry is facing a risk that wealth management may be "missing out on the talent, perspectives and innovation that a more inclusive workforce brings," even though the "demand for inclusive financial planning, advisory services and leadership isn't going away — it's growing," Hickerson said. "While broader 'DEI' efforts face scrutiny and legislative roadblocks under the current administration, the fundamental need for diversity, equity and inclusion in wealth management hasn't changed — it's still essential for business growth, client engagement and industry innovation."

The DEI opponents may be missing that "greater prosperity for your neighbor is greater prosperity for us as a nation and a more stable union," Prince said. Building pathways toward more diversity in financial fields doesn't amount to being "anti-anything," he said.

"There's no zero-sum game when it comes to internship and full-time opportunities," Prince said. "Labor-force participation can only be a good thing for the economic growth of this country."