About a year after
In a lawsuit filed on March 9 in St. Louis federal court, brokers Katie Dixon and Jaime Gaona accuse the firm of a “centralized, company-wide policy and practice of delegating critical compensation decisions to senior white male financial advisors.” The practices of the wealth manager’s “Goodknight Program,” in which senior advisors transfer a portion of client assets to less-tenured brokers, denies equal access to clients and opportunities for advancement among “female, non-white and other diverse” advisors,” according to the lawsuit.
It comes as wealth managers
“That is what leads to success at those types of companies is that client relationship. The ability to be brought into that client relationship is really going to determine how successful that employee is going to be,” Bireda said. “That is where we often see a lot of problems.”
One of many cases
As only the latest wealth manager to
"Edward Jones is committed to creating a place of belonging for our associates and our clients and making a positive impact in our communities,” spokeswoman Catherine Stengel said in a statement. “We strongly deny the allegations in the lawsuit, which are inconsistent with the values of our firm. Edward Jones takes its commitments to diversity, equity and inclusion seriously, and we condemn any instance of racism, discrimination or bias. We will continue to listen, learn, take responsibility and act in accordance with our values and purpose to make a positive impact in the lives of its clients, colleagues and communities.”
AdvisorHub first
The firm paid out the fourth-largest settlement of 2021 to any private plaintiffs in employment discrimination class action lawsuits,
“In terms of private plaintiff employment discrimination class action litigation, employers can expect this area to remain an area of focus by the private plaintiffs’ bar in 2022,” according to the report. “Publicity from the Black Lives Matter movement likely will continue to drive litigation, as well as settlements on this front as companies strive to avoid publicity associated with allegations of discrimination and to avoid incurring the ire of social media.”
The allegations
Dixon, who has worked for Edward Jones since 2017, identifies as pansexual and informed the firm in September 2020 that she is a member the LGBTQ+ community, the lawsuit states. Gaona, a first-generation Mexican American, worked for Edward Jones from 2013 until a “constructive discharge” in January, according to the lawsuit. In addition, the two Kansas City-area advisors filed complaints with the U.S. Equal Employment Opportunity Commission.
“The expectation that there would be some real and meaningful change was created and then not fulfilled,” said their attorney, George Hanson of the Stueve Siegel law firm. “The steps that were taken, it's our belief they were really window dressing, were really marketing rather than actual change, because those same issues persist. We certainly have had that confirmed anecdotally by financial advisors.”
Gaona and Dixon allege that the firm’s Goodknight Program sets up white men for success with Edward Jones in a way that’s not available to aspiring advisors who are women or Black, Latino or other minorities. The inherited clients and assets make a significant impact on pay.
“Through the Goodknight Program, Edward Jones has all but delegated its compensation decisions for FAs to a group of overwhelmingly white men primarily of United States national origin or ancestry,” according to the lawsuit. “This has the predictable result of concentrating assets under management and the corresponding compensation in the hands of the next generation of white male FAs to the exclusion of female and more diverse FAs.”
The firm’s significant settlement last year with a particular group of Black advisors won’t necessarily make it more difficult for the new case to be successful, according to personal injury and employment discrimination attorney G. Oliver Koppell.
“If they can show they were excluded from benefits the same way that the Black employees or former employees did, they may still have a good case,” he said.
Next steps
After exhausting their possible remedies through the EEOC claims, the plaintiffs intend to seek certification of both a class and a collective action, according to Hanson. Since the lawsuit alleges systemic gender discrimination under the Equal Pay Act in addition to the civil rights claims, the plaintiffs can create an “opt-in” group among advisors seeking to join the litigation besides an “opt-out” class of brokers during a particular period who have to remove themselves in order to not be members, legal experts say.
If the court grants “conditional” certification of the collective action under the Equal Pay claim, that means the plaintiffs can then proceed to send notice to prospective members, said Bireda of Sanford Heisler Sharp.
Amid the so-called racial reckoning since the many Black Lives Matter protests of 2020, the focus should be on which firms are being transparent about identifying and addressing disparities in hiring and promotion after the many pledges made in corporate America, she said.
“We have not seen a decrease in people coming to us and alleging they have seen workplace discrimination. We like to be in business, but would also like to see that not happen in workplaces and would like to see significant change in the experiences of women and people of color,” Bireda said. “It's really about assessing the seriousness and the commitment of those promises that are being made.”
