FSI launched a diversity initiative Tuesday designed to increase the number of people of color and women working in the financial advice sector.
The Financial Services Institute has entered a partnership with Inroads, a nonprofit organization that provides career and leadership development opportunities for ethnically diverse high school and college students. Under the initiative, Inroads will work with FSI member firms on strategies to meet diversity, equity and inclusion goals. The effort will include paid internships for Black and brown students at FSI firms, which are mostly independent broker-dealers and financial advisers.
FSI Chief Executive Dale Brown said the trade association, which comprises 90 member firms and about 30,000 affiliated advisers, is well positioned to make a difference on diversity.
“They’re all unique and diverse in a variety of ways and yet they’re also entrepreneurial, innovative and they’re committed to helping solve this issue of getting more representation in the ranks of independent financial advisers,” Brown told reporters during an online availability from FSI’s OneVoice conference in Dallas.
Inroads has 5,163 diverse students who are available for paid internships, said Forest Harper Jr., the organization’s chief executive.
“We want to expose Black and brown kids who come from high school to college [to] the financial services industry,” Harper said. “We want to close that gap in representation.”
The chasm is pronounced among FSI firms, according to a study conducted by Broadridge Financial Solutions and released at the FSI conference. The survey of about 400 advisers showed that 93% were white, 2% Black, 2% Hispanic and 3.5% Asian American. Overall, 82% were male and 18% female, and 62% were over the age of 55.
“Diversity is truly a megatrend, a movement, not a moment,” said Broadridge President Chris Perry. “We really are moving forward and have to or this industry will be underserved.”
From the stage at the hybrid OneVoice conference later in the morning, Brown appealed to executives of FSI firms in the audience to get involved in the Inroads program.
“Listen and be ready to be early adopters when this session is over,” he said, adding at the end of the panel: “Let’s seize this opportunity to make a meaningful change for the better.”
Brown promised FSI would report on its progress on trying to increase diversity.
“I can’t speak for individual member firms, but I know that our commitment is to continue to track the baseline data that we now have from the Broadridge survey,” Brown told reporters. “I see no reason to keep that secret from anyone. We’ve got a lot of work to do and we need to measure.”
Placing students of color in internships in financial services and other industries will launch career trajectories that will help reduce racial wealth disparities, Harper said.
“If we get it right, I believe we’ll put them in the upper middle class,” he said.
FSI AGENDA, POLICY ENGAGMENT
During the meeting with reporters, FSI officials outlined the group’s policy agenda. The organization in large part serves as the government relations function for its member firms, many of whom are too small to hire lobbyists.
This year, FSI will concentrate on the ongoing implementation of Regulation Best Interest, the broker-dealer standard of conduct that went into force in 2020 with the backing of FSI and most of the brokerage industry. The Securities and Exchange Commission is expected to pursue enforcement cases this year as well as releasing guidance about compliance.
FSI is committed to stopping legislation that it says would threaten the independent contractor status of its members. It’s also one of the leading voices in the financial industry opposing what it calls “regulation by enforcement.” FSI asserts that the SEC sometimes imposes new regulatory requirements through enforcement cases rather than the rulemaking process.
Another issue on FSI’s agenda is unpaid arbitration. It opposes a fund generated by an assessment on all financial firms to cover arbitration awards that investors don’t receive in the Finra arbitration system when losing firms don’t pay.
Last year, despite having to operate remotely for the most part because of the pandemic, FSI achieved a high level of member participation in meeting with and writing letters to lawmakers and lobbying activities, Brown said.
“We saw the most significant engagement of members ever,” he said.
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