Moving the Needle on DEI in Financial Services

Mitigating the wealth gap and recruiting diverse talent go hand in hand when promoting inclusion in the retirement advisory industry.

The lack of diversity within the financial services industry has repercussions on marginalized communities, in part because the fee-based nature of services can perpetuate the industry’s homogeneity, both within firms and among clients being served, according to experts.  

However, amidst these challenges, there is growing optimism among DEI experts and practitioners that change is possible. New ideas such as reconsidering minimum fee thresholds for clients, staffing diverse teams to match an increasingly diverse client pool and proactively recruiting among diverse communities are all starting to be considered as ways to combat homogeneity and a “good-old-boys” network in finance.  

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The Wealth Gap  

“When you go to conferences that are mainly adviser-driven, they’re still pretty homogenous, unless they’re aggregating around a topic like diversity,” says Laura Stamps, head of DEI engagement strategy for Financial Finesse.  

She says wealth management is largely a business of networks, in which people with money try to get other people with money to invest. Given the current wealth gaps—by race, by gender, by sexual orientation—advisers from those communities will, in turn, have a smaller pool to work with.  

“There are people that come into this business still building books, starting off in very low salaries,” Stamps says. “Some communities can’t afford to live on such a low wage level after they’re educated, because perhaps there are other households they might be responsible for.”  

The racial wealth gap plays a large role in why wealth management is not as diverse as it could be, she notes. The more work done to mitigate these gaps through financial well-being and intentional strategies to remove barriers to wealth-building, the more hopeful Stamps says she will be that change will happen. 

Preston Duppins Jr., a senior partner in Vilardi Wealth Management at the Association of African-American Financial Advisors, says adviser firms often have an asset minimum—say, $100,000—and if a client does not meet it, that client will be sent to a call center.  

“As an African American, if I’m going into my community that has 10 times less wealth than other people and I don’t accept lower minimums, I’m not serving my community,” Duppins says. “Someone from my community might have $80,000, and they’re the first generation to even work with an adviser.” 

He says if his company is not allowing him to bring on smaller dollar amounts, he could be ostracizing his own people. A lower minimum, he says, is an option to serve groups without generational wealth.  

People Aren’t a Monolith 

Duppins notes that individuals of any race cannot be painted with the same brush, so financial advisories need to consider ways to serve all types of clients. 

When asked if an identify-specific firm, such as a firm staffed with Black employees serving Black clients, could help address the situation, Duppins says that may not be the right answer either, as it will then exclude other groups.  

“It’s been proven that diverse organizations tend to perform better,” he says. “I think the world is changing.”  

Stamps agrees that many more multicultural families do not fit into a single category. If money management is a familial endeavor, it would make sense, she notes, that firms reflect what families look like as well.  

“People are not a monolith,” she says. “People aren’t necessarily going to be served well just because an adviser looks like them. There’s a higher probability that maybe an adviser can understand them culturally, but there’s also so much nuance within the culture that: maybe not.” 

Recruitment  

Recruiting employees is a concrete way for a firm to increase diversity, says Carina Diamond, CEO and founder of Stella Secunda Partners and director of Diversitas at the University of Akron. She encourages advisers to develop a relationship with local colleges and universities.  

“Pick a school nearby, and even if they don’t have financial planning or personal finance, other majors can be great too,” she suggests. “Once you get that relationship, you can start to give back, set up a scholarship, mentor the students, help with a career day. You’re going to get those phone calls from those professors who say, ‘Hey, I’ve got this superstar woman in here, and I think she’d be a great fit at your firm.’” 

Morgan Stanley’s Duppins agrees there must be overt action taken by financial organizations, as the industry is still “a good-old-boy network.” A business owner hiring someone to take over might think clients will abandon the firm if their successor is of a different nationality, has different political beliefs or is part of the LGBTQ+ community, he says, and they therefore recruit people like themselves.  

“My son’s coming into the space, but there are very few people like me, and not every son is going to want to follow his father’s footsteps,” he says. “I think there has to be a tangible program in place to make sure firms are going to [historically Black colleges and universities] and explaining to people the opportunities in this space. That’s what I do. I talk [to every] young person that’s in college in finance.” 

Recruiting diverse talent will help those from underserved communities. Duppins says there are funding opportunities he has been able to give clients that his white counterparts probably would not have been able to provide. He talks about a client, of Cuban descent, who used his own money to fund his business until Duppins told him about the Black Business Investment Corp., which helped him secure funding.  

“Regardless of how you feel in your heart about DEI, you have to acknowledge that there’s a business case: We have to expand the labor pool,” Diamond says. “Frankly, as a profession, we need to look like more like our audience, which is increasingly diverse.” 

WIPN Connects Women in Retirement Sector With Male Sponsors

The retirement group launched an ally program after finding that active connections and recommendations had a bigger impact on women’s career advancement than ‘mentorship.’
WIPN Connects Women in Retirement Sector With Male Sponsors

WIPN—We Inspire. Promote. Network—an organization for women working in the retirement industry, has for years fostered mentorship and networking opportunities among its members to advance diversity, equity and inclusion in the widely male-dominated retirement plan industry. A couple of years ago, however, the group started a proprietary research program that unearthed an interesting finding.

“We found that women were over-mentored and under-sponsored,” says Rosalyn Brown, WIPN’s vice president, referring to contacts who help advance careers through promotions or even job recommendations at other firms. “We found that, when we incorporated men into our research, most of them have a sponsor, but not women. All of sudden, a light bulb went on.”

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From there, Brown and her team started work on a program to match women in the retirement plan sector with male sponsors. Called Allies in Action, the program launched in March with about 14 women paired with men committed to putting them in touch with actionable contacts in the industry. The women in the program come from a range of roles and experience levels, Brown says, including sales managers, service managers and technology experts.

Rosalyn Brown

Brown notes that women often gravitate toward a mentor in the workplace to work through projects and issues within their firm—vital partners, but sometimes a bit more on the “warm and fuzzy” side of workplace connections. Meanwhile, women are less likely, according to the research, to lean on contacts known as sponsors to connect them with industry players who can help with promotions, moving across divisions or even going to another organization altogether.

“A sponsorship may not be someone you keep in contact with or someone you have known for years,” Brown says. “It is really and truly someone who has the capability to move forward your career, and we wanted to make that happen. We’ve identified the problem, and we’ve put together a solution.”

This session of Allies in Action will run through the year. From there, Brown says, WIPN will gather the results and consider how the program should evolve next year.

She notes that, through WIPN’s near-15-year history, men have often asked how they can participate or help, considering membership is, by design, only for women.

“It fixed two things that we keep hearing: men who say, ‘I want to help, I want to do more,’ and then the women who say, ‘I am looking for a sponsor,’” she says. “Even in our launch conversation with the men, I remember one of the quotes was, ‘I’m looking forward to learning some things, too,’ which I thought was amazing. Because it should be mutually beneficial, and sometimes we miss that.”

Need Remains

WIPN has been working to advance opportunities for women in the retirement plan industry going back to 2009. In research the firm released in May 2023, it found that an average of three out of 10 women in the retirement industry said their caregiving role has negatively affected their career opportunities—a minority, but still a negative sign. Only 4% of women said their caregiving role positively affected their career opportunities.  

According to data from the Certified Financial Planner Board, female representation in the financial advisement sector has not improved very much despite industry pledges to improve it. In 2023, women made up just 23.7% of CFP professionals. That has not changed much over the years, with past figures at 23.6% in 2022, 23.4% in 2021 and 23.3% in 2020, according to the CFP Board website.

Through the years, Brown says WIPN has evolved from a place of connection and support to one leading change and development in the retirement industry writ large.

The new Allies in Action program, in her view, is an example of such evolution toward creating programs and activities that go beyond community and support toward actionable outcomes.

Brown says when preparing the women who joined the program, WIPN members coach them to be specific with their asks and focus areas with sponsors.

“A mentorship can be brainstorming together, but a sponsorship is a shorter relationship,” she says. “You have to be very direct and tell people what you are looking for, who you want to meet and how you want [the sponsor] to help you.”

Moving Forward

Allies in Action is designed to help women looking not just to move up in their current roles, but who might be considering moving from one side of the business to the other. Brown notes that, in retirement plan advisement in particular, women are sometimes in support roles, as opposed to being lead advisers or salespeople.

“Oftentimes it’s hard to move from one side of the business to the other,” she says. “Let’s say you’re on the service side, and you keep wanting to get over to the sales side, and [the employer] says, ‘Well, you don’t have the experience.’ But you see someone else who is able to move over to that side, and they don’t have that experience. It’s because someone on that side knew [the candidate] and recommended them.”

The program was not just of interest for people early in their careers. Brown notes one industry leader who was interested in participating, as she saw a chance to further her connections and career plans.

“When you see people at a higher point in their career, it’s often because they know how to take an opportunity and utilize it, and [they] understand the value of another sponsor,” she says.

Meanwhile, men in the program have committed to making introductions as related to the goals of their sponsored partner.

The sponsors “have to go through their Rolodex of people to find someone who is looking to develop more women or [is saying,] ‘I want someone on the sales side’ or ‘I’m looking for a consultant to do a certain type of work,’” she says. “It’s their challenge to make sure that the ladies they are working with—where they have the confidence to say, … ‘I know you’re looking to bring on another adviser. This person doesn’t have a book of business, but they have this amount of knowledge, and they would be great for your team.’”

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