The Importance and Impact of Recruiting and Serving Black and Latinx Financial Planning Professionals

Journal of Financial Planning: December 2020

 

Dana L. Wilson is the CEO and founder of CHIP (Changing How Individuals Prosper), a B2B and B2C fintech platform that makes it easy to find Black and Latinx financial professionals. She holds a BBA from North Carolina Central University, and has over a decade of investment management, insurance, and financial planning experience.

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Attending a Historically Black College and University (HBCU) allowed me to start my travels with a strong sense of pride, an understanding of community, and a feeling of empowerment to enter the next chapter of my life as a Black woman. My experiences in financial services—particularly, as a person of color—changed my perspective.

Throughout my career, I realized that parts of the industry lacked support, upward mobility, and empathy for Black and brown financial advisers like myself. I had to persist and overcome this feeling of isolation. In doing so, I began building my independent investment advisory practice, where it became even more apparent to me that my community was underserved. These experiences motivated me to face this challenge head-on, creating a start-up that sits at the intersection of consumers and professionals of color. It is important that we rally together and change the financial landscape for communities of color.

Silent Injustices

If you’ve turned on a television lately, it’s safe to say you’ve seen the social injustices that have plagued our communities of color for decades. Like many others, I’ve witnessed and experienced discrimination and stereotyping, both as a professional and as a consumer. Let’s discuss how prejudice manifests itself in modern-day financial planning. 

Consumers. According to the CNBC, citing data from the Selig Center for Economic Growth, Black buying power was $1.4 trillion in 2019, and it’s projected to grow to $1.8 trillion by 2024.

The CNBC article1 noted that Black buying power growth “is outpacing White buying power. Between 2000 and 2018, Black buying power rose 114 percent, compared to an 89 percent increase in White buying power, according to Nielsen.” According to an RIA Intel article2 citing Pew Research Center data, “Latinos constitute 18 percent of the population, possess $1.5 trillion in buying power, and more than half are under the age of 29.”

The upcoming wealth transfer by baby boomers will be the largest in our history, and there are many in our Black and brown communities who will benefit from this shift of wealth. Some of these individuals are ahead of where their parents were financially but still are not being looked at as having the financial means to be individual investors.

Black and Latinx people are often looked at as only consumers and spenders, but we know we are much more. Yes, there are many in our communities who are working to begin their financial journey, but with active engagement, those individuals could change the economic narratives for their families. Many of us are distributors of wealth, high-income earners, founders, CEOs, and top executives.

A Nielsen study3 reports that Black  households earning $75,000 or more per year are a fast-growing segment that will have more influence going forward than ever before.

If even a third of the buying power of both Black and Latinx consumers were shifted more towards savings, investments, and financial education resources, the more financially empowered communities of color would become. 

Simply put, when we are overlooked as investors, there is a missed opportunity for establishing relationships with the future generators of wealth. As financial planning professionals, it’s our responsibility to be more intentional about how we communicate, engage, and support both of these communities.

Financial planning professionals. The aforementioned statistics prove that many in our communities have the means to build wealth. Also, many financial planners of color will be at the forefront because we are being sought out with intention by consumers of color. However, we need allies to help us change the look of this industry because it’s evident that it is not reflective of those who look like me.

The number of Black and Latinx CFP® professionals grew 12 percent in 2019, which CFP Board says was the highest increase ever.4 These numbers were further highlighted in a recent Financial Planning article by Tobias Salinger.5 However, the overall percentage of financial planners of color is still less than 4 percent.

Our goal as professionals is to make sure we are addressing all possible barriers to entry to ensure everyone understands that there is growth and sustainability in the profession.

As professionals of color, we can change the narrative and give a voice to those who are often overlooked. We are the bridge that can reach the untapped wealth within our communities because their financial success is essential to us and future generations as we work hard to close the wealth gap.

Stronger Together

As Black and Latinx financial professionals, we are forging our paths and building legacies by working together. We are positioning ourselves to be at the forefront of a wealth shift that will occur in Black and brown communities, and those engaging and educating our communities will be the recipients of profitable financial practices.

I am overjoyed with the work of those in our profession who continue to pave the way and show us that we belong as owners and not just employees. For example, Rianka R. Dorsainvil, CFP®,  and Lazetta Rainey Braxton, CFP® merged their businesses and created 2050 Wealth Partners, and there are many more to come.6

We all need to understand that visibility matters. When Black and Latinx financial professionals are not reflected in positions of leadership and on advisory teams, your company could miss opportunities to cultivate wealth, retain top talent, and ensure communities of color feel more included. Therefore, when you’re building your financial planning teams, RIAs, or executive leadership boards, ask yourself how you will be more inclusive to reflect the world around you.

Steps for Financial Planning Professionals

Take these steps to diversify your client base and your firms.

  1. Review your clients and see where you can make changes to ensure your client base is more diverse. 
  2. Take time to mentor those looking to enter the profession and diversify your candidates for internships within your firms.
  3. When it comes to expanding your team, look to hire Black and Latinx financial professionals and give them a chance to earn hours to get their designation, if they do not already have it. Also, ask yourself if your website and marketing material is reflective of all communities.
  4. If you are a leader in your firm, reach out to the Black and Latinx individuals at your company or on your team. Acknowledge that these opportunities for dialogue can be vital to the success of a Black and/or Latinx person at your company and your ability to be open is key to your success and growth as a leader.
  5. As an individual, you can volunteer your time or work alongside organizations whose mission is to create sustainable financial futures for people of color.

Call to Action: Changing the Landscape

Let’s believe in our ability to work together to make the financial planning profession more welcoming for the next generation on both sides of the table.

As a Black woman in the financial industry, my distance traveled led me to a new place of action and intention, and I’m here to do more than level the playing field because our communities can no longer wait—the racial wealth gap is far too large. The future generation of Black and Latinx leaders in finance depends on the decisions we all make today.

Endnotes

  1. See the CNBC article, “As Black Buying Power Grows, Racial Profiling by Retailers Remains Persistent Problem,” at www.cnbc.com/2020/07/05/as-black-buying-power-grows-racial-profiling-by-retailers-remains-a-problem.html.
  2. See the RIA Intel article, “The Most Overlooked Clients in Wealth Management,” by Gary Stern at www.riaintel.com/article/b1mhf1t4g3tpn7/the-most-overlooked-clients-in-wealth-management.
  3. See the Nielson report, “Increasingly Affluent, Educated and Diverse. African-American Consumers: The Untold Story,” at www.nielsen.com/wp-content/uploads/sites/3/2019/04/african-american-consumer-untold-story-sept-2015.pdf.
  4. See “Record Growth for Black and Latino CFPs; Status Quo for Women,” by Charles Paikert at www.cfp.net/news/2020/02/record-growth-for-black-and-latino-cfps-status-quo-for-women.
  5. See the Financial Planning article, “How Many Black Planners? CFP Board Will Answer Upon Request,” by Tobias Salinger. Available at www.financial-planning.com/news/cfp-board-discloses-1-355-black-financial-planners.
  6. Read more about Rianka Dorsainvil and Lazetta Rainey Braxton’s merger in the ThinkAdvisor article “Women in Wealth: An Examination of Gender Diversity in Financial Services,” at www.thinkadvisor.com/2020/02/12/how-2-cfps-teamed-up-to-serve-younger-clients/.

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There is a Financial Professional for Everyone

CHIP is an online platform that connects experienced professionals from diverse backgrounds. Professionals on the site include financial planners, tax advisers, attorneys, and financial coaches, among others. Find out more at chipprofessionals.com.