Lee Baker, founder of Tucker, Georgia-based Apex Financial Services, is one of the few minority advisors in the business. Baker, former president of the Georgia chapter of the Financial Planning Association (FPA) who now serves on its board of directors, says of his many experiences at industry conferences: “It’s not that anyone does anything or says anything – it’s just a strange feeling to walk into a conference of 3,000 people and see only 30 people who look different from the masses.”
It is this lack of diversity in the advisory profession itself, Baker believes, that inhibits many potential minority clients from signing on with a financial advisor. “In most cases, people prefer to go to a planner who looks like them,” he says. “Beyond this, people also feel that they want an advisor who understands where they are coming from and what their social and cultural context is. Someone coming from the same place would understand these issues better.”
Diversity has always been one of those catchphrases, a term that is bandied about often, but serious efforts to do something about increasing diversity in the advisory profession have really just ebbed and flowed, Baker feels, without there being a sustained effort to really try and effect what he strongly believes is a much-needed change. That’s why he undertook the effort to work with the FPA to set up a Diversity Task Force aimed at encouraging people from different ethnic minorities in the financial advisory business through a series of programs and incentives.
The hallmark of the Task Force is the Diversity Scholarship (five will be awarded at this year’s FPA conference), which helps ease an advisor’s entry into the fold. Those who want to try for it need to show that the issue of diversity is important to them both on a personal and professional level, Baker says, and they need to give some clear thought on what they would do to increase it. While it’s aimed largely at minorities, “a white male who says he thinks diversity is important and ‘here’s what I would do about it’ could also win the scholarship,” Baker says.
If more people from different ethnic and cultural backgrounds join this profession, then there is a greater chance of a greater number of people being able to benefit from financial planning. Baker does believe that firms are doing a better job at recruiting financial advisors of different colors and cultures. But, he says, to do this on a sustained basis and to really achieve success, firms need to change their approach, their model.
“If you have a system in place whereby you tell, say, a Latino ‘go to your community and get clients, but you have to hit these numbers,’ it’s not going to work,” he says. “We know that this profession calls for clients that have the means to invest and we know that firms and advisors have to be profitable. But a firm would have better luck both with recruiting minorities and having them reach out to their own people if they had a program like ‘go to your community even if there is a strong likelihood that you won’t hit these targets in the first year or two, but that’s okay, because we’ll also put you concurrently in a program where you can make the numbers.”