The profession has a diversity and inclusion problem. Look at the speakers pictured on the advertisements for financial planning conferences, and you see white men in business suits with occasional white women.
Black and Brown speakers? Asian speakers? Almost never.
And, of course, the audience at these conferences has roughly the same racial makeup as a white nationalist convention, even if the spirit is very different.
I recently authored a “Voices of Inclusion” issue of my Inside Information newsletter, where I interviewed 19 people who are addressing this issue in one way or another. One of the first things I learned is that the lack of diversity is not so much a problem to be fixed as a huge lost opportunity for the profession. Because so many advisory firms are recruiting within their own closed network, they miss out on a much broader range of candidates – at a time when so many firms are complaining of a talent shortage.
At the same time, minority communities – who will soon make up more than 50% of the U.S. population – are unaware that financial planning even exists. That means that many talented people will never move into the financial planning career path. And a huge number of Americans, currently and for the foreseeable future, will never think to access the services of a financial planner.
The exercise taught me that “diversity” is not the goal of Black, Brown and Asian financial planners; what they’re looking for in a prospective employer is ”inclusion.” Saundra Davis, of Sage Financial Solutions in San Francisco, CA, who teaches financial planning at Golden Gate University, stopped me in my tracks when I suggested there was an excellent business case for hiring Black financial planners. She said that the entire premise of the diversity conversation is flawed to its core.
“You see articles on the ‘business case’ to hire a Black person, right?” she asked me.
Right.
“When,” said Davis, “have you ever heard anybody have to make a ‘business case’ to hire a white person?”
For too many centuries, Davis said, Black Americans have been trying to get the rest of the country to see them as fully human, as people, colleagues, friends, neighbors and respected professionals. “We’re tired,” she said. “We’re tired of trying to get people to understand that our very humanity is at risk every single day. I have a 40-year-old son who I worry about every time he walks out of the house.”
But what, exactly, does inclusion look like? I talked with Marianela Collado of Tobias Financial Advisors in Plantation, FL, whose “about us” website section of staff pictures looks like a rainbow. She told me that there’s a “chicken and egg” component to achieving a diverse workforce. “If you say you stand for diversity and inclusion,” she told me, “and the folks doing the recruiting and interviewing don’t represent that diversity, then it’s fair to ask: Are you really seeking diversity?”
Collado’s firm puts detailed employee profiles on its website, to celebrate each staff member, who they are and why they love what they do. Prospective job candidates can see several things: There are people at the firm who look like them, and the firm encourages personal development. The upshot (this may be a business case) is that the most talented people of color in America are more comfortable applying to job openings at Tobias than they are elsewhere. Chances are, Tobias is getting more diverse résumés and a larger pool of candidates to choose from than you are. And the hiring process becomes easy when the candidates are encouraged to talk with the staff about their inclusive work environment.
I did ask about the firm’s clientele, and was surprised to discover that the Tobias firm works mostly with white Anglo people in the (mostly white) southern Florida coastal area. Is the firm’s staff diversity a repellant to a demographic that might carry cultural biases in the back of their minds? Collado says she has seen no sign of it. The most important issue to attracting clients of any ethnic background is the quality of advice and the confidence of the advisor.
The lack of client diversity turned out to be a very surprising theme of the articles I wrote. Over and over, when I talked with firms that have achieved inclusion of different ethnic advisors, I found that their Black and Hispanic advisors were not making inroads into the Black and Hispanic communities. In fact, the picture that emerged was that minority communities are hermetically sealed off from the financial planning profession altogether.
If financial planners were ever to start taking on minority clients, they could begin to address another, bigger issue in America: the impoverishment of minorities through centuries of systematic dis-inclusion – in workplace opportunities, housing, and even in basic access to banking.
This, of course, presents a challenge. An impoverished population is not going to produce clients with a $500,000 retirement portfolio that can be billed under an AUM arrangement. And the skills that are required to help somebody plan for a comfortable retirement are very different from the advice a person barely living from paycheck to paycheck needs to achieve a cash cushion for unexpected expenses. Many white Anglo families have had centuries to build generational wealth. Minorities – particularly Black Americans – are just now starting out on that path.
Is there a solution? I had a very interesting conversation with Louis Barajas, the author of five books on working with Latino clients. Barajas left a great CPA career to go back to Boyle Heights, the Los Angeles barrio where he grew up. He did tax returns and offered financial counsel on the side for the un-wealthy people in the neighborhood, sometimes charging as little as $10 for his services. He taught himself a different type of advice – for instance, redirecting meager college savings toward tutoring so a disadvantaged student could improve his/her grades enough to get a college scholarship. He learned to offer detailed budgeting advice.
The end of the story is that Barajas helped a certain percent of his clients become wealthy enough to pay his full and appropriate fees, and some of the children of his clients went to Ivy League colleges. He’s living proof that if financial planning services were customized to the needs of a disadvantaged community, they would address the poverty issue. And, of course, the visibility in that community would help people recognize financial planning as a career, and also expand the number of potential clients in underserved populations.
But charging $10 for advice and $75 for a tax return is a brutal way to build a business, and Barajas wouldn’t have made it through to a viable business without digging deeply into the savings from his CPA career. He recommended to me that the FPA’s Foundation and the CFP Board consider incubating planning firms, staffed by younger advisors, who would locate and provide planning advice in underserved communities – basically supporting these firms through the first 10 years of their existence, perhaps on a sliding scale of remuneration as their clients become more able to pay professional fees.
As it happens, such a thing already exists, albeit on a small scale. Davis has created a program called the Financial Planning Small Business Incubator, which received an initial $80,000 grant from the CFP Board a decade and a half ago. That was enough to incubate two advisors, assuming Davis offered her own services for free. A larger commitment would be needed to seed small planning businesses in communities around the country. But the investment would pay dividends in greater visibility, more people knowing about (and entering) planning careers, and making inroads into that 50% of the population that is currently all-but-excluded from the aggregate financial planning client base.
A recent CFP Board brainstorming session wondered how the planning profession could make inroads into these ethnic and underserved communities, apparently unaware that the solution is actually in its own grant history. Meanwhile, the session uncovered another issue which begs for a creative solution. Today, university financial planning programs are inconsistent in terms of the programs they offer and the degrees they grant. If you graduate with an English literature degree, you leave school with a BA in English literature, which makes perfect sense. But if you decide to study financial planning, your program may be housed in the agriculture department, the department of human sciences, in finance, accounting or economics. A student studying financial planning might leave with a BS in finance with a certificate in financial planning on the side, or a degree with an “emphasis” on financial planning. The situation is so confusing that the university community can’t even agree on whether financial planning studies lead to a BA or BS degree.
There is an interesting, creative solution to this curricular confusion, which plays back into the inclusion discussion. What is needed is the very first financial planning department within a university system – that is, a discrete building that houses the financial planning classes, and an endowment that would pay the professors’ salaries. Something like that is unlikely to happen at an Ivy League school, and even the larger state colleges have been somewhat reluctant to embrace financial planning as a “real” curriculum.
But what if this initial financial planning department were to be funded at a traditionally-Black university? It would become a model for other educational institutions to follow (at their own glacial pace, of course). It would offer a really good career option for the students at the university, which would translate into alumni donations down the road. At the same time, the program would immediately upgrade inclusion in the planning profession, and provide some of those students whose businesses could be incubated in the minority (disadvantaged) communities they grew up in.
My most important takeaway from talking with people on the front lines of the inclusion effort is that there is a lot more we can do beyond the usual wringing our hands. We can be doing more to bring financial planning services to underserved and traditionally impoverished communities, and we can make a more diverse population aware of financial planning as a career and as a service to be sought out. We can lift people who are 350 years behind in building generational wealth out of poverty and put them on the long, slow path to prosperity.
We need to be creative, and we need to care.
Bob Veres' Inside Information service is the best practice management, marketing, client service resource for financial services professionals. Check out his blog at: www.bobveres.com. Or check out his Insider's Forum Conference at www.insidersforum.com.
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The profession has a diversity and inclusion problem. Look at the speakers pictured on the advertisements for financial planning conferences, and you see white men in business suits with occasional white women.
