As the United States becomes more diverse, the broad financial advice industry, from giant wirehouses to one- and two-person registered investment advisory firms, is trying to hire more women, Hispanics, Blacks and Asians.
The industry has given lip service to the effort for decades but currently appears to take the work to become more diverse seriously. There’s a lot to overcome.
Take Merrill Lynch, a leader in the training of financial advisers.
Last August, a few months after George Floyd’s death, Merrill Lynch for the first time in five years took the unusual step of releasing statistics about the diversity and makeup of its 17,500 financial advisers.
The numbers showed some improvement at Merrill in the hiring of women and minority financial advisers, notably an increase in women to 21% of advisers compared to 18% five years earlier. Meanwhile, 23% of advisers were “ethnically diverse” at Merrill last year, compared to 15.5% in 2015.
So while the financial advice industry has made some progress in becoming more diverse, it still has a long way to go, particularly if it wants to look more like Generation Z, which is projected to become majority nonwhite by 2026, according to a presentation this week at the Schwab Impact conference titled, Optimizing Your Talent Pipeline: Bolster Recruitment and Retention with the Power of Inclusion.
“We really believe that talent is what sets firms apart,” said Leslie Tabor, director of business consulting services at Charles Schwab Advisor Services. “Your people are your most important asset.”
When hiring, the goal for executives and firm leaders is to broaden their potential talent pool and professional networks, Tabor said, including diverse groups attached to local business associations and chambers of commerce.
Consider simple steps, from shaking up your social media connections to attending more diverse industry conferences, Tabor said, citing InvestmentNews’ Women Adviser Summit meetings as an opportunity to build a diverse network.
Internships are another way to attract diverse employees, she said. And now that working remotely has taken hold during Covid-19, some firms are considering hiring more diverse employees who don’t live in the firm’s immediate geographic area.
Indeed, there are three phases of an employee’s work “life cycle” for leaders at firms to consider, Tabor said.
The first, the interview process, should “lay the foundation for inclusive first impressions.” Then, hiring should “foster welcoming experiences when an employee joins a firm,” including assigning the new employee a mentor.
Finally, when the employee settles in to working, firms should create “equitable opportunities for employees to succeed,” Tabor said, and not assign menial or mundane tasks to one group of workers.
A warning: Firm websites offer potential employees an important first glimpse of the business, Tabor noted, and if a job seeker is not represented, he or she will likely move on.
Niche advisers should demonstrate their expertise
Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.