Practice Management September 19, 2022

PANC 2022: DEI at Work

Advisers share insights about how they are changing the composition of their firms—from entry-level positions to senior management—to better reflect the demographics of the U.S.
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The first day of the 2022 PLANADVISER National Conference featured an in-depth panel discussion about the need to improve the diversity of the financial adviser industry in the U.S.

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The three advisers on the panel were Dan Becraft, an executive director at Morgan Stanley Wealth Management; Lisa Garcia, a retirement plan consultant with SageView Advisory Group; and Deena Rini, vice president and practice leader of the retirement plan division at Oswald Financial.

Becraft, Garcia and Rini discussed the financial services industry’s diversity problem and shared suggestions for creating more equitable and fair workplaces. The trio agreed that one of the biggest challenges the industry faces is the homogeny of its work force. While the range of clients that advisers serve is diverse and growing, with constantly evolving wants and needs, the demographics within the industry are not keeping pace.

The panel agreed that rapidly growing the number of retirement plan managers with different life experiences, backgrounds and beliefs is necessary to best serve all clients. They also agreed that a major obstacle to achieving better diversity, equity and inclusion is the disconnect between entry-level positions and hiring practices and promotion and leadership demographics. Accordingly, the advisers noted that their firms’ efforts in DEI are dedicated to changing the composition of management as well as staff, and to ensuring that promotion practices are fair and equitable.

Becraft’s practice, for example, takes a three-step approach when addressing the lack of diversity.

“First, I believe empowerment is necessary,” he said. “Individuals must feel confident in their abilities and know that I am also confident in what they can achieve. This empowerment is ingrained in my team’s culture. The second step is delegation. I delegate work to my team members befitting their skills and goals. I want to provide my team members with positive challenges and opportunities to learn and grow across the field. The third step is championing. Each of my team members is invaluable in the work they do and what they bring to the team. If an individual wants to pursue career advancement, professional goals, new opportunities, etc., it is my responsibility to champion them as best I can.”

Garcia said SageView shares a similar philosophy and approach, and she noted that the benefits an equitable and inclusive culture bring to a firm and its people are incomparable.

“An equitable and inclusive culture provides individuals with a sense of belonging and respect, which turns into joy at work,” Garcia said. “To enjoy the work one does, alongside with a team and organization that values you as an individual, makes an impactful difference.”

Rini emphasized the importance of including DEI objectives in strategic planning and ensuring that there is meaningful executive and senior leadership buy-in from the beginning. In Oswald’s case, the firm established a DEI Alliance Advisory Committee that would be the entity of accountability and act as a think tank of strategic and measurable goals for the organization.

“Our goals are generated directly from Oswald employees aligning with the areas of focus given by our strategic plan,” she explained. “Our goals aim to make inclusive and equitable impact throughout the organization. Our Alliance is made up of 21 diverse perspectives of employee-owners of various backgrounds, identities, tenures and departments. Our goal is to be transparent, outcomes- and impact-oriented and sustainable with our actions as we embed DEI in everything Oswald does.”

The panel concluded that one of the top benefits of an equitable and inclusive firm culture is a sense of belonging in the workplace. Employees can feel safe, seen, heard and valued, which drives engagement and loyalty to an organization.

Products August 24, 2022

Advice Demand Buoys Optimism About Managed Account Growth

Survey data from Edelman Financial Engines suggest that, among those who spoke with a financial professional during a significant life event, virtually all of them found the interaction to be ‘highly valuable.’
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In late July, Edelman Financial Engines announced the launch of Momentum, a new financial wellness platform built for the workplace.

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According to the firm’s press release about the new solution, Momentum builds on Edelman’s 401(k) advice and management services with a set of expanded financial wellness, counseling and planning resources. The service seeks to provide individuals with information and support during major life events and milestones, from significant family or health changes to decisions about saving for college and retirement.

The platform features a library of digital content, webinars and educational tools and assessments. Employees also have unlimited access to live, one-on-one counseling and planning sessions with certified Chartered Retirement Planning Counselors and Certified Financial Planners.

Following the announcement of the new service, EFE’s Kelly O’Donnell, head of workplace solutions, sat down for a discussion with PLANADVISER, recounted in the Q&A below, about the evolving financial wellness and managed account landscape. O’Donnell noted that recent Edelman research shows that 73% of employees expect their employers to provide access to a financial professional when they experience a significant life event.

While almost 89% of respondents to Edelman reported experiencing at least one major personal or professional event during the last five years, 79% confirmed that they hadn’t spoken to a financial professional during those moments. Among those who did, 96% found the interaction to be highly valuable.

PLANADVISER: Can you speak about how EFE’s clients are responding to the current moment of market volatility and economic uncertainty?

O’Donnell: As you know, we currently work with more than 800 of the largest retirement plans in the U.S., and that gives us a lot of insight into how people are feeling and responding to unfolding events in the markets. Right now, our clients and the workplace in general are in a very interesting spot. We had such a long and large bull market, and now we are facing a downturn, and people do have some fear that we could enter a period of recession. And, of course, this is all coming in the wake of a pandemic that dramatically reshaped people’s working and financial lives.

Frankly, this is an environment that we haven’t really seen before. What we are finding with the employers we work with is a desire to provide more holistic help for their employees. That’s one main aspect of what is going on in the retirement planning marketplace today.

We see strong evidence that this environment is motivating employers that have sat on the sidelines and waited to embrace things like advisory services and managed accounts to actually step up and get their people more help.

We have conducted surveys that show employees are looking to their employers for professional financial support, especially to help guide them through the critical moments in their lives, such as when they are newly hired or if they are experiencing a major personal milestone—perhaps a marriage or the birth of a child. Retirement planning support is also in great demand among employees.

PLANADVISER: Can you expand on this idea that more employers are moving ‘off the sideline’ when it comes to providing advisory solutions to their people?

O’Donnell: In our experience, it is a few different things. One is the ‘Great Resignation’ and the desire to attract and retain the best talent. The survey I mentioned shows 70% of employees are expecting this kind of support and these solutions. As an employer, if you want to attract the best talent, this is becoming a standard offering.

It’s also a matter of workforce management. As an employer, you want to make sure your people are financially stable, so they can be productive and eventually achieve a stable retirement. Advisory support and personalized investments help to make sure people are prepared and are ready to retire when that time comes.

We feel that another important factor is the growing focus on diversity, equity and inclusion in the workplace. I would also say that, in the past few years, we have seen a renewed focus on DEI issues. Today it is something that so many employers are focused on, and part of this focus is recognizing that there are many communities that have been significantly underserved by the financial community.

Bringing it all together, there is a real desire among employers to provide advice, access and financial wellness support for all—not just the upper managers and executives.

PLANADVISER: What roles are managed account technologies and other approaches to scalable advisory solutions playing in the marketplace today?

O’Donnell: Our approach is all about using technology to get this type of support to the masses. We built our whole retirement business on this theme. The technology is what allows us to build a truly personalized portfolio for people who only have that first $10,000 or $20,000 saved in their DC plan.

I would emphasize that technology has been at the forefront of our firm’s efforts, yes, but we also know the human support is critical, which is part of why we launched Momentum. Frankly, money is always emotional. Many of our licensed investment advisers are spending their time helping clients think and process their emotions—and to make sense of their financial lives at the moments that matter.

Even if you enjoy a tech-first approach, you are probably going to want to talk to someone at these critical life points, even if it is only to get some reassurance about how you are feeling. People are still needed in the most critical areas—for example, when you are deciding whether or when to take a rollover, or even more important, validating your decision of when and how to start drawing Social Security. We feel very confident about the hybrid approach.

PLANADVISER: In what other ways do you feel the advisory industry could grow to become more inclusive and holistic and reach new sets of underserved clients?

O’Donnell: Where we can all keep getting better and better is in recognizing and supporting the communities the traditional financial services industry has overlooked. Take, for example, same-sex couples. If two married men want to have a baby and start a family, their financial considerations are going to be different than those of a heterosexual couple. If you look at women in general, and then at the experience of Black American women, there are big differences there in terms of the financial challenges they face.

As an industry, we are now at the stage of working to solve the advice and retirement income issue for the masses. The highest net-worth people have this solved for them at this point. But the typical employee in America does not have the support when it comes to understanding how to draw down DC plan income, how to balance taxable and non-taxable accounts, when to draw Social Security, etc.

In this environment, we feel really great about our new solution, because it is built as a true planning experience, with the investment management built in. Our view is that you can’t just save and spend money and reach an optimal outcome. You have to have a plan. You have to be able to manage your assets in a way that gets you ready for retirement.  

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