The numbers tell the story.
While the number of Black certified financial planners grew by 10% from 2020 to 2021 and the number of women grew just over 4%, the industry remains overwhelmingly white and male, according to
And in 2021, 83% of financial planners were white. About three-quarters were male, CFP Board figures show.
A panel of executives from Merrill Lynch Wealth Management, UBS and Ameriprise Financial Services examined the situation at last week’s SIFMA Private Client Conference in Miami and concluded that there must be changes in recruiting, training and mentoring. Failure to change the composition of the industry, they said, could mean missing out on advising the next generation of high net worth individuals, who are more diverse.
The lack of diversity may be a national problem, they agreed, but it will have to be solved locally.
“The rubber meets the road in the branch offices,” said Lindsay Hans, division executive for the mid-Atlantic division of Merrill Lynch Wealth Management. “There’s a gap between what we say and what happens in our decentralized structure. That’s why progress has been slower than we would like. How does any associate feel when they walk into work in any zip code in the country if they are 'the only one?’”
Demographics underscore how local the problem is, said Melinda Hightower, managing director and head of multicultural strategic client segments at UBS.
“Look at the demographics and define what diversity means for that market,” she said. “The demographics in Green Bay (Wisconsin) are different than (Los Angeles).”
She linked this to the subject of recruiting and achieving more diversity by bringing new people into the business.
“We have to do this a different way,” said Hightower. “We are recruiting people who are existing advisors, and we don’t ultimately move the needle by having the same population move in and out of various firms.”
She said UBS is expanding recruitment with programs aimed at veterans, and people who have left the workforce for one reason or another and are returning to work.
Ameriprise is trying to achieve diversity by getting people at the beginning of their careers, said Rudy Rodriguez, vice president for diversity and inclusion. The firm has been reaching out to historically black colleges and universities with mentoring programs.
Those students will eventually have to be hired, though, and Rodriguez said current approaches to diversity training seem to be falling short.
“A lot of research shows the millions we spend on this training doesn’t work. Unconscious bias training,” he said, as he asked for a show of hands for how many advisors had undergone this training. “You go to class, OK. So you find out you’re biased. One and done. Then what the hell do you do with that?”
Hightower said she has seen the most significant results from informal mentorship and sponsorship programs.
“How do we create connections?” she asked. She said something as simple as “coffee chats,” where mentors and mentees met once a month to talk for a half hour, took on a life of their own, with those involved meeting more often than once a month, and continuing to meet after the six-month program was over.
Mentoring is not easy, said Hans. Sometimes, she said, uncomfortable conversations have to be had over that cup of coffee.
“The biggest ‘aha!’ for me over the last five or 10 years is that it’s important to be really truthful,” she said. “If you’re mentoring someone and maybe dancing around some core issues, sometimes you have to say, ‘Do I have your permission to be really honest about some of the things you may not realize you’re doing that may be holding you back?’ We have to not be afraid to be direct. Oftentimes people don’t receive that."
And you can’t be afraid to say that it starts with being excellent,” Hans said. “You have to get results.”
Hightower cautioned that there is no time to waste when it comes to achieving diversity.
“The future of wealth has arrived — the generational wealth transfer,” she said. “Four in 10 of these individuals, the inheritor generation, are racially and ethnically diverse. But we don’t have to wait for the transfer. There are at least 2 million people of color who could be high net worth clients today.”
