While conversations on diversity and inclusion have become more prevalent, the financial services industry has largely addressed this serious issue with a “square peg, round hole” approach. Financial professionals need to shift strategies and come together to face the challenge of diverse representation in financial services head-on. Without all-embracing, widespread change, efforts to increase minorities’ equity in financial services will continue to fall short.
Currently, 80% of advisers in the U.S. are white, and 70% are male. Becoming a more diverse industry can’t be achieved from the bottom-up. Executives aren’t going to listen if only those in the minority are voicing their needs. We need an authentic, genuine top-down effort across our industry to collectively create a new normal that signals to anyone, from any background, “We want you here. You belong.”
Playing catch-up before we even begin
The wealth gap in America has never been wider. It’s most pronounced for minorities and only getting worse. Before someone from an underrepresented community even begins their journey in financial services, the deck is seriously stacked against them. Generationally wealthy families know what financial advisers are; they understand how their services can greatly benefit their lives. Meanwhile, most people from minority communities don’t even know that financial advisers exist. Awareness of our profession among underserved communities needs to change to increase opportunity.
Many other parts of American life contribute to the problem, notably health and education. The saying that “health is wealth” is founded in fact. For example, throughout the COVID-19 pandemic, communities where household income averages less than $50,000 have been far more affected, and that isn’t a coincidence.
In addition, education circles back to the issues of awareness and imagination. Without early outreach and educational programs, how can minority families learn to access support from a financial advisor to build generational wealth? If none of your teachers look like you, how can young minds from underrepresented communities imagine a future as a financial adviser or planner?
Ironically, both of us were inspired and motivated to become financial advisers because we were denied entry. But for many who might do the same, the challenges are disheartening, especially in an industry that wasn’t made for you. Anyone of color has a similar story to ours. It’s very hard to get that first opportunity. Once you are given a chance, the struggle continues, as we must work that much harder to earn the trust of our clients, all because we don’t look like a traditional financial adviser.
You can’t build on a system that is broken
After years of fighting to overcome countless barriers to entry, we decided enough was enough. Real change is not going to happen if we continue to try to build on top of a system that is broken. We need to start from the ground up and build the industry we want to see. Here are steps that must be taken:
- A vision for the future: Career viability and mobility; helping people understand this is a viable career for them and educate them about the career path of a financial adviser.
- Room for growth: Ensure equitable pay for financial advisers, provide enough runway to scale their business, and prevent people falling off before they can truly begin.
- Break down barriers: Provide the resources that allow financial advisers to flourish, including technology and community. For example, eliminate the significant barrier of minimum requirements for custodial access.
- You can’t be what you can’t see: Mentorship for minority financial advisers empowers them to overcome challenges and find success. Because the experience of underrepresented advisors is unique, having someone who shares that experience and who can offer advice and develop one’s purpose is essential.
Changing the room
Recently, we both were asked to describe what the community of underrepresented financial advisors is like. We both laughed and replied almost in unison, “What community?” When we walk around at an industry conference, the two of us often make up the entire population of Black people at the event. We try to make light of it, but in truth the devastating impact this has on minority financial advisers can’t be understated.
Community is necessary for success, and that aspect of the financial advice profession for underrepresented advisers has long been absent. The desire for no one to have to feel like an anomaly lies at the root of the problem in our profession. Everyone, regardless of racial background, sexual orientation and origin should be able to look out across a room and see their community represented — and know that they belong.
Dasarte Yarnway and Emlen Miles-Mattingly are co-founders of the Onyx Advisor Network, which helps historically underrepresented financial advisers start, scale, and sustain their practices. Follow them on Twitter: @DasarteYarnway and @emilesmattingly.