During the “Future Faces of Advising” panel at the 2018 PLANADVISER National Conference, an audience poll revealed that retirement plan advisory practices do have some diversity on their teams, in terms of having women and/or minorities on the staff. The poll disclosed that 40% have less than 20% of their staff being diverse, but for 23%, it is between 20% and 49%, and for 14%, it is 50%.
Another audience poll question, about how much diversity is on the committees that retirement plan advisers are working with, showed that 54% of these committees are diverse—suggesting that if advisers want to align with their plan sponsor clients, their teams need to become more diverse.
Yet another question revealed that advisers are aware of the importance of becoming more diverse, with 32% saying it is very important for their practice, and 46% saying it is somewhat important.
The panel included Melissa Cowan, executive director at Morgan Stanley, also vice president of the Women in Pensions Network, which has 700 members and 20 chapters around the country. The aim of the network is to “elevate women into the role of financial adviser, which, for many, they may not be comfortable with.” Keith Gredys, chairman and CEO of Kidder Advisers, LLC, said he is “always trying to push the envelope.” Kidder Advisers’ third-party administrator team is 75% female, but its adviser team is 80% male, he said. “There are obstacles that need to be overcome,” he said. “Demographics are changing, and we need to stay relevant.”
Emphasizing her point, Morgan Stanley “would not hire a group that doesn’t embrace diversity,” Cowan said. “Without diversity, you can’t get the best and the brightest. Folks want diversity on their teams but have difficulty getting there.”
Diversity also means hiring young people, Cowan said. The benefit of doing so is that you gain “different perspectives,” she said. It also gives you insight into what younger people want from their retirement plan and has the added benefit of naturally creating a succession plan, Gredys said.
Many of the requests for proposal (RFPs) that sponsors are issuing today ask directly about the construction of the team, the panelists agreed. Some sponsors say they are expressly looking to hire minority-owned or diverse businesses. If a practice is neither of those things, it may not even get in the door to do a presentation.
As a whole, the retirement plan industry needs to figure out a way to attract women and minorities to join the field, Gredys said. “There is still this feeling that being an adviser or broker is shady,” he said.
Suggesting another potential solution, Morgan Stanley has a specific program to help women re-enter the workforce after raising their children, Cowan said. Another potential source of candidates could be community colleges, Gredys said. Another is an internship program, he added.
In order to make retirement planning a more attractive career path, he continued, the industry needs to make this goal “a priority” and persistently address it. “Educate potential candidates that this business is about relationships,” Gredys said. “We have to move quickly because advisers’ average age is mid-50s. This is a cultural change we need to address.”
Cowan noted that many women are afraid to move into sales jobs. “Change the description of these roles,” she suggested.