Let’s start with a simple fact: Diversity of thought is a good thing. It helps facilitate creative problem solving and the development of services that can help a wider variety of people. But it’s also important to reflect the array of clients we’d like to serve as wealth managers. That means creating more diverse workforces.
In any business relationship, being able to connect with someone who shares a similar background is very meaningful. For example, a 2021 U.S. Bank survey found that Black consumers were twice as likely as their non-Black peers to want to work with financial planners who look more like them in terms of gender, age, race and sexual orientation. Representation matters, especially when you’re discussing something as sensitive as finances.
The Current Landscape in Financial Services
In the United States, 74% of finance professionals are men, according to Zippia. In many ways, the lasting effects of severely outdated social norms are to blame for the imbalance. Even beyond the “Mad Men” days of the ’50s and ’60s, men held more jobs in financial services than women, and their clients were more likely to be men. Then, because like attracts like, they hired more men to work with them. Unfortunately, that momentum can be difficult to stop.
If we look at racial diversity, we find a parallel story: 76% of finance professionals are white, per Zippia. Recently, there have been legislative and regulatory changes to address the problem. But for a long time, people of color did not have access to the same capital or opportunities to build wealth that white people had.
Thus, more financial institutions were started and staffed by white people serving predominantly white clients. The perceived message was that people of color and other minority groups weren’t welcome; as such, they pursued degrees and careers in financial services far below their proportion of the population as a whole.
What Can We Do to Encourage More Diversity in Financial Services?
To overcome educational and financial barriers, we must first acknowledge that systemic barriers exist. The onus is on financial services professionals to tackle these barriers head-on and attract and encourage those from underrepresented communities to enter the industry. Below are seven steps your firm can take to effect positive change and empower people of color and other underrepresented groups to pursue and thrive in financial services roles:
1. Make Your Internship Program Meaningful
Give interns real tasks and mentors to help them navigate their role, and for goodness’ sake, pay them! By requiring internships to be paid, you’ll include people in your candidate pool who need to earn money and cannot accept working for free.
Showing you value interns’ efforts through compensation and development resources goes a long way. It creates value for interns and gives them the skills they need to succeed, whether or not they stay with your firm long term.
2. Use Inclusive Language in Your Job Postings
To attract and retain diverse candidates, make them feel welcome from the start. That means using inclusive language and gender-neutral pronouns (e.g., they/them).
Otherwise, you might give the impression that roles are intended only for people of a certain gender or background. Make sure to emphasize the responsibilities and requirements of the role rather than describing the personal characteristics of ideal applicants.
3. Recruit Candidates with a Variety of Backgrounds
As we’ve discussed, the lack of diversity isn’t just at the employment level; it starts in school. To help combat this, consider candidates from various industries—not just financial services—who bring valuable mindsets to the table.
People in social sciences programs, such as economics, political science, and psychology, often make tremendous advisors. And there are plenty of financial services roles that don’t require college degrees. Examine your own biases and open your recruitment to all eligible candidates, regardless of whether their background is “traditional” or not.
4. Create a Collaborative Culture
Well-qualified, diverse candidates will be attracted to a collaborative culture. Make an effort to facilitate this type of culture with your existing team, encouraging cross-functional projects and collaboration across departments.
Make sure employees understand their opinions and questions are valid and welcome, and give them a forum to share those opinions.
5. Encourage Youth in Your Community to Consider the Field
Community involvement is a wonderful way to contribute to diversity in financial services, build a strong culture at your firm and give back. Seek opportunities for your advisors to speak at local schools and host financial literacy workshops. Find out what local organizations your employees are passionate about and seek ways to get your team involved in supporting them.
Those personal and smaller-scale moments often drive a lot more impact than you think. When we intentionally instill in students the idea of financial planning as a career, those who don’t have family members working in the industry can dream just as big as those who do.
6. Invest in Diversity Training For Your Team
The tricky thing about implicit biases is they’re almost impossible to recognize in ourselves. We just have to stay open minded, be aware of them and proactively fight them. By investing in diversity training for your team members, you can help them understand this concept and challenge themselves to find new ways to be inclusive.
7. Bring in Diverse Speakers to be Recognized as Experts
This is part of “walking the talk.” By featuring expert speakers from diverse communities, you’re demonstrating to current and future employees that you value financial advisor diversity and respect diverse voices. These experts could be part of your sales training, featured speakers at client events or facilitators at leadership off-sites.
We have a long way to go in fostering diversity and inclusion in financial services, and the change won’t happen overnight. But by taking proactive steps to attract and retain diverse talent, we can create a growing and lasting ripple effect of change in the industry and our firms.
Amy Jones is the chief talent officer at Plancorp, a full-service wealth management company serving companies and families in 44 states.