Managing client relationships is challenging enough without the added demands of administrative issues like compliance, technology, human capital and managing to profitability — and yet, the subject of diversity and inclusion (D&I) needs to be addressed.
According to the CFP Board Center for Financial Planning, the profession has not seen much improvement in representation since diversity and inclusion became a conference topic about 20 years ago. Today the advisory world consists of just 23% women, and only 8% people of color. Further, we now have more CFPs over the age of 70 than under the age of 30, a concerning statistic. At the same time, most firms say they are having a hard time finding, hiring and keeping talent of all genders, races and ethnicities.
It is not that advisors lack the will. They just lack the way. We tend to describe the need for greater diversity as an industry problem, rather than an opportunity for each individual advisory firm to drive growth and enhance their business. It is easy to agree with a main stage speaker who exhorts us to hire people who do not look like the majority of practitioners. It is even easier to leave it to other advisors to put the effort in to change our industry demographics for the better.
Bear in mind, women account for more than 50% of the U.S. population. According to the consulting firm Accenture, women are almost three times as likely to be on the fast track to leadership in an organization that has at least one female senior leader compared to those firms with all male leadership. In less than 20 years, the U.S. is projected to be comprised of more than 50% racial and ethnic minorities. A similar logic applies. We must work to get more diverse leaders on board, to jump-start the process of diversifying our industry.
We see that a human capital strategy that consciously recruits and promotes women and minorities brings fresh energy, great ideas and access to new communities of wealth and innovation. That said, there is no catchall method for recruitment. As with all business strategies, leaders must start the process with questions.
First, identify the "why": Why would we benefit from more women and people of color in our firm? Then ask "what": If we strive for greater diversity, what are the measures of success? This conversation leads to the critical question, "how": How will we achieve our goal?
Identifying candidates Where will you find candidates to join your firm? Some firms hire employees right out of school so they can train and mold them into the types of advisors they want. Some firms prefer to recruit experienced advisors to avoid the pain of developing people. Other firms seek career changers who bring wisdom, maturity, relevant experience and contacts, assets they feel they can leverage.
If you are interested in developing new advisors, more than 100 colleges and universities around the country offer CFP Board Registered degree programs. Some institutions offer discrete certificate programs in financial planning, a great option for those deepening their knowledge of financial planning or considering a career change.
In addition to traditional programs, a number of affiliation groups provide training, networking and personal growth opportunities for people of color who work in finance.
Most notable are the Association of African American Financial Advisors and Association of Latino Professionals for America. The CFP Board Center for Financial Planning produced a helpful reference on this topic.
Look for online resources as well. According to an analysis by the Center for Work-Life Policy, now known as the Center for Talent Innovation, 31% of high-performing women voluntarily left the work force between 2004 and 2009, primarily for childcare reasons. To help address this opportunity for the benefit of prospective employees and employers, Carol Fishman Cohen and Vivian Steir Rabin started iRelaunch.com as a vehicle for helping women transition back into paying jobs, including financial services.
Onboarding As most advisory firms are small businesses without official human resources departments, advisors, partners and staff have to be more engaged in the onboarding process. As an example, a number of enlightened firms partner each new hire with an employee who acts as a resource, showing them how things work and providing training and support.
