How Can You Create a More Inclusive Profession?

Journal of Financial Planning: November 2018

 

 

Marilyn Mohrman-Gillis is executive director of the CFP Board Center for Financial Planning.

As consumer demand for financial advice grows, it is imperative that the financial planning profession work toward expanding and diversifying the ranks of financial planning professionals who can meet the needs of increasingly diverse consumers. However, today fewer than 3.5 percent of the more than 82,000 CFP® professionals in the U.S. are Black or Latino, which is significantly less than the percentage of those groups in the total U.S. population. The financial planning profession will not be relevant if it does not reflect the diversity of the public it will serve in the future.

To address this challenge, the CFP Board Center for Financial Planning launched a diversity initiative and hosted its first Diversity Summit in New York City last month. At the summit, the Center released a thought leadership paper, highlighting key findings from a comprehensive study on the underrepresentation of Blacks and Latinos in the financial planning profession. The Center also recommended research-based solutions to address this issue.

The event featured presentations from distinguished leaders in diversity and financial planning, personal reflections from CFP® professionals of color, and breakout sessions during which attendees reflected on the recommendations in the thought leadership paper.

Research Findings

The summit started by acknowledging that the lack of racial and ethnic diversity in the financial planning profession is a significant challenge we need to address. Research from the Center yielded many important findings, including:

Due to economic inequality and cultural norms, Blacks and Latinos lack awareness of financial planning and the CFP® certification process.

Firms’ hiring and onboarding practices, including the focus on immediate returns, commission structure, like-to-like mindset, and subjective hiring criteria, are seen as major barriers to diversity and inclusion throughout the financial services industry and the planning profession.

Clients’ bias in choosing a financial planner also functions as a barrier to racial diversity in the industry and the profession.

Various constituents differ dramatically on what they think the root causes are of underrepresentation of Black and Latino financial planners.

Although Black and Latino CFP® professionals and prospects are more likely to distrust the profession, Black and Latino CFP® professionals say they are as highly satisfied in their careers as other CFP® professionals and are more likely to recommend the profession than other CFP® professionals.

Most segments agree on initiatives for boosting diversity, as well as potential messaging strategies to communicate the importance of diversity to firms and attract more Black and Latino prospects to the profession.

 

Opportunities to Boost Diversity

The findings highlighted in the thought leadership paper shed light on three opportunities to boost racial and ethnic diversity in the financial planning profession: increasing mentoring programs, introducing the profession to students earlier in the education path, and boosting awareness of the career. The thought leadership paper also acknowledged that attracting more Black and Latino prospects to the financial planning profession will require joint effort from the Center, firms, and CFP® professionals.
It is important for firms to create a more inclusive workplace for all financial planners. To do so, current hiring and onboarding practices need to improve. Starting today, firms can build for their future—and the future of the profession—by using their resources to be industry leaders and to ensure that their policies and practices support diversity and inclusion in employment, retention, and advancement.

The thought leadership paper includes the following recommendations for firms to weave diversity and inclusion into the fabric of their culture, enabling them to grow:

Embed diversity, equity, and inclusion into the firm’s growth strategy to address everything from staffing and clients to compensation models.

Develop and utilize objective hiring criteria based on skills, rather than subjective hiring criteria, when evaluating all candidates. Eliminate bias with consistent questions and rubrics.

Encourage top management and firm owners to make transparent commitments to racial diversity by specifying measurable diversity, equity, and inclusion goals for the firm and monitoring progress toward those goals.

  • Define metrics and set up accountability mechanisms for all aspects of the business (for example, applicant pools, hiring, retention, vendors, clients, etc.), and be transparent about progress and challenges.
  • Conduct cultural assessments and demographic surveys to measure changes and progress on diversity, equity, and inclusion.
  • Assess managers on diversity, equity, and inclusion on performance reviews. Tie performance compensation to hiring and retaining diverse talent.

Develop and support mentorship programs, internally and externally, which have been proven to increase racial representation in management. This will allow CFP® professionals to share their passion with new candidates and expand a pipeline that will increase diversity within the sector.

Develop, implement, and make diversity hiring programs visible.

Increase the involvement of Black and Latino financial planners in recruiting diverse talent, while being careful not to tokenize current employees.

Support professional affinity groups that allow professionals of color to build support systems within their workplace (for example, the Association of African American Financial Advisors and the Association of Latino Professionals for America).

As a stakeholder in the profession, individual financial planners also play a critical role in helping to create a more diverse and inclusive workforce:

Become a mentor or a reverse mentor (where you mentor someone in a higher position of authority in comparison to yourself).

Advocate for and recommend people of color within your firm or with others for advancement and opportunities.

Be professionally courageous by sharing your story and invite the stories of others.

Simply making recommendations will not get the job done. The responsibility now falls on each stakeholder in the financial planning profession to create a more diverse and inclusive workforce.

Sidebar 1
Learn More

FPA Honors Diversity Scholarship Winners

FPA recognized the following four recipients of its annual diversity scholarship at the FPA Annual Conference in Chicago last month: Robert Castillo; Loojimps Marcius, CFP®; Elizabeth Plot, AFCPE; and Miranda Reiter, CFP®.

The merit-based scholarship recognizes professionals who are working to encourage diversity in the financial planning profession and the population served. Criteria for scholarship applicants includes:

  • Raising awareness of
    the profession in diverse communities
  • Serving diverse communities with financial planning
  • Increasing professional opportunities for diverse
    communities within the financial planning profession

The diversity scholarship program is sponsored by the FPA Diversity Committee, whose mission is to develop strategies to raise awareness and promote inclusiveness of diverse communities. Learn more at OneFPA.org/diversity​.

 

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CFP Board’s Initiatives to Increase Diversity

 

The CFP Board Center for Financial Planning strives to be a thought leader and to convene conversation and action on the important topic of diversity and inclusion in the financial planning profession. To that end, the Center invited diversity experts, academics, and CFP® professionals to participate in its Diversity Advisory Group (DAG). Lead by Cy Richardson of the National Urban League, DAG members advise the Center on its diversity initiatives, including the Diversity Summit.

The Center is committed to work to increase the number of Black and Latino CFP® professionals. Its initiatives to increase diversity, include:

Connect candidates for CFP® certification with a network of experienced CFP® professionals volunteering to provide guidance and support along the way.

Provide Black and Latino leaders in the profession opportunities to be more visible to broad audiences through speaking engagements, public appearances, media presentations, and social media.

Establish and administer scholarship programs to support the education and exam requirements needed for CFP® certification for underrepresented individuals in the financial planning profession.

Develop a toolkit of initiatives and support mechanisms designed to assist Black and Latino candidates in the CFP® certification pipeline. 
—M.M.G​

Topic
Diversity, Equity and Inclusion
General Financial Planning Principles