For financial advisor Felicia Slaton-Young, the decision to fight one of the largest wealth managers in court came down to dignity.
Edward Jones agreed to pay
The settlement offers reason for hope of systemic change as much as a reminder of how far wealth management has to go. The vast majority of advisors from underrepresented groups report there are still substantial barriers to success. At Edward Jones, advising clients without being able “to provide financially for your family” brought a feeling of shame, Slaton-Young says.
“I didn’t walk into this thinking I would walk away rich; I walked in wanting to prove that my experience wasn’t a fallacy or dream,” she says. “I’d never been so broken before. I’d never felt like such a failure before and questioned every decision that brought me through the doors of Edward Jones. I needed to fight for my dignity back.”
The settlement, she continues, “lets every African American advisor who crossed the Edward Jones threshold know that their experience was real, that they were capable of being successful in this industry. This company would have never given them access to the same tools, programs or experiences that would have ever supported that outcome.”
St. Louis-based Edward Jones — a firm with an industry-leading
“The settlement includes measures Edward Jones is taking to report diversity progress to its leadership team, create a financial advisor council with diverse representation and reduce training cost obligations,” Stengel said. “Edward Jones takes its commitments to diversity, equity and inclusion seriously and will continue to listen, learn, take responsibility and act in accordance with its values and purpose to make a positive impact in the lives of its clients, colleagues and communities.”
The Allegations
In addition, shortly after ex-advisor Wayne Bland
When it came time to assign accounts upon a rep’s retirement or departure for another firm, the firm and outgoing advisors “overwhelmingly” chose white advisors for the new business, according to the third amended complaint. Training costs of up to $75,000 led to “higher rates of attrition and assessment” among Black advisors, the lawsuit says. And Edward Jones’ office assignment and territory practices harmed their careers as well, according to the advisors.
“The firm disproportionately relegates African American FAs to territories and offices in less lucrative locations with clients and prospects with less investable income that are less productive for the FA,” the December 2020 complaint states. “The firm also impermissibly relies on race and color in assigning territories and often steers FAs by race to match the neighborhood demographics. The firm reserves territories with greater investment opportunities for non-African American FAs.”
For example, upon her joining the firm in 2013, Edward Jones placed Slaton-Young in an office on Chicago’s South Side that “was not economically viable or capable of sustaining a successful financial advisory business” after high rep turnover, the lawsuit states. Later, it assigned her and another Black advisor to another area of the South Side that showed “very limited investment or client potential” and “could not sustain two FAs,” according to the lawsuit.
The Settlement
Slaton-Young left the firm in 2017 and has since launched her own Chicago-based RIA,
“The programmatic relief is designed to put tools and processes in place to mitigate this happening to another African-American hired by Edward Jones,” Slaton-Young says. “It also creates changes for current advisors with the hope that they’ll get access to tools designed to help them grow and be successful, like their white colleagues. For those that have moved on from Edward Jones, they’ll get some financial relief.”
Under the settlement, some 800 Black or African American advisors employed by the firm between May 24, 2014 and December 31, 2020 are eligible to have their training costs waived and receive potential additional payments based on the claims resolution process. The current and former advisors can choose to apply for an expedited payment based on a formula or an “individualized assessment” under a special master appointed by the parties, Lynn Cohn, the director of the Center on Negotiation and Mediation at the Northwestern School of Law.
Besides the payments, the settlement requires Edward Jones to reduce its training cost obligations to $50,000 for advisors who leave for other firms. The firm’s new advisor council must start a focus group of Black advisors “to explore and develop ideas and initiatives to increase representation and opportunity for African American Advisors” in meetings with management. Senior executives will also receive data on Black advisor “representation, hiring and attrition” on a regular basis.
Such committees of employees have displayed “the most meaningful and long-lasting impact” of measures undertaken by companies in recent years, according to an expert engaged during the settlement negotiations, says Bish, the advisors’ attorney. Class members can attend upcoming fairness hearings on the settlement and opt out of it if they wish. The advisors pressing the case gave up time they could have spent on their own businesses because they “felt a calling to try to reform and to achieve results and change for others, in addition to themselves,” she says.
“It's a big role, and it also requires you to relive experiences that have been painful to you,” Bish says. “There's an emotional cost and a financial cost and time away from your family as well.”
Large wealth managers are no strangers to discrimination lawsuits. The current docket includes race discrimination cases against
The 2013 settlement by Merrill Lynch covered more advisors over a longer period, according to Bish, who says cases that don’t get settled often go through a “procedural quagmire” of motions, filings and appeals. In terms of the size of the payment, Edward Jones would have placed third in 2020 behind only Google parent Alphabet’s
Can wealth management change?
Questions about the ultimate impact of Edward Jones’ settlement go far beyond the amount of the payment, though. The fact that Black advisors are still reporting discrimination and other barriers to advancing early in their careers is “just tough to watch and it's sad,” says planner Dana Wilson, the founder of
Her website connects potential clients with Black or Latino advisors, and Wilson says she launched Chip last year to increase their visibility and let them know that they can be successful in wealth management. Organizations like hers,
“We know that, siloed, we can't make the change,” Wilson says. “Now we're at a point where we're working together and building this dynamic ecosystem that is going to make change in this industry and outside this industry.”
It’s an industry ripe for change, if the available data is any indication. Just 3% of advisors are Black, 4% are Asian American, 5% are Latino and 18% are women,
Their other answers suggest why the efforts have failed to be effective. Presented with a list of potential obstacles to success, more than two-thirds of Black, Latino and other minority advisors selected limited visibility of BIPOC executives, insufficient mentoring, implicit bias such as microaggressions, feeling disconnected from colleagues, lack of opportunity for advancement and — especially relevant to the Edward Jones case — limited access to prospecting networks.
I needed to fight for my dignity back.
Although Cerulli Senior Analyst Marina Shtyrkov declines to discuss any individual firms, she said in an emailed statement that wealth managers should re-evaluate how they find talent, explore solutions to the barriers cited by advisors and create spaces for advisors to express concerns that are specific to underrepresented groups.
“Taking responsibility, however, is just as important,” she says. “It requires that firms do the hard work of self-examination and reflect on the role they play in perpetuating inequities. This has to go beyond paying lip service. Firms have to proactively identify and dismantle discriminatory policies, processes, and norms. Lawsuits and settlements regarding discrimination by wealth management firms highlight the fact that firms have an obligation to not only work to create equitable, inclusive spaces, but also take responsibility when they fail to do so.”
Edward Jones is following other wealth managers that have
“My very first step in launching both employee and advisor equity and inclusion efforts was to gather diverse communities to understand their perspectives, hear their experiences and identify specific examples where bias and inequity lies so we could tackle it head on,” Zemaitis said in an email. “Ongoing inclusive collaboration with DEI advisory committees or diversity councils is key to making progress and systemic change. I don’t know how to lead this important work any other way.”
Edward Jones has unveiled other efforts that could foster a long-term shift. Earlier this month in disclosing its first-quarter earnings, the firm announced it’s
On May 4, U.S. District Judge Andrea Wood ruled preliminarily that Edward Jones’ settlement is “fair, reasonable, adequate, and the result of extensive, arm’s length negotiations between experienced counsel and parties.” The plaintiffs must file a motion for final approval by June 28, ahead of a scheduled date of July 12 for a fairness hearing on the settlement.
With the case moving into its final stages before the claims resolution process, Slaton-Young can now focus on building her independent practice after more than a decade with Edward Jones, JPMorgan and Wells Fargo. She had largely “placed it on hold” last year amid helping small businesses navigate the pandemic and serving as executive director of her community’s Chamber of Commerce during the summer of racial unrest across the country, she says.
“I had to regroup and pivot a bit and relaunched this year,” Slaton-Young says. “I want to grow slow, organically and with purpose.”
