Consumers are making it increasingly clear that they want a financial advisor whose racial, gender and age profile is the same as their own, according to a new survey from Northern Trust Asset Management's FlexShares Exchange Traded Funds.
FlexShares said this trend reinforces the need for financial advisory firms to address the disconnect between what the industry looks like and changing U.S. demographics.
The joint survey of financial advisors and consumers found that among people who work with an advisor, 61% of clients have a preference on their advisor's age, compared with 31% in the initial 2019 survey; 38% on gender, versus 12%; and 34% on race, versus 8%. FlexShares said these preferences are largely due to wanting an advisor of the same demographic.
For example, among consumers who said an advisor's gender is important, 72% attribute this to wanting an advisor of their own gender. Women today are five times as likely as men to use a female advisor, up from four times in 2019.
FlexShares conducted the survey in March and April among 400 advisors and 200 consumers ages 30 to 65 with median assets between $500,000 and $750,000.
Diversity Hiring Programs
As consumers increasingly prefer to work with an advisor of a similar profile, many advisory firms are making a concerted effort to diversify their talent pool.
Fifty-two percent of firms surveyed consider increasing the diversity of staff a strategic priority, up from 45% in 2019. Furthermore, among the 66% of firms surveyed that are actively recruiting, 55% said they are looking for diverse talent across all seniority levels.
Efforts to make recruiting more inclusive have led to hiring success. Seventy-seven percent of firms that have taken action on diversity, equity and inclusion (DE&I) report success in hiring new professional talent, compared with 56% of firms that do not have DE&I initiatives in place.
Moreover, 58% of respondents said their DE&I program has been a selling point in attracting new hires.
"Advisory firms of all types need to match their workforces to better reflect the current and future client universe, which is becoming younger, more female and more racially diverse," said Laura Gregg, director of practice management and advisor research at FlexShares, in a statement.
"While the industry is working toward change, more needs to be done. Our research aims to educate firms about the business imperatives of diversity efforts to support the industry's push in this direction."
