Road to Independence Is Particularly Rocky for Minorities

At a recent conference of independent financial advisors, Martin Smith, president of Bowie, Md.-based Wealthcare Financial Group, was the only African-American present in the room.

This, of course, was no surprise to him, he says, since there are barely any black independent financial advisors. But the absence of African-Americans in the independent advisory space is certainly food for thought, Smith says, and it’s a reality he believes is going to take some more time to change.

“The wirehouses have been more interested in hiring African-American advisors because many have recognized the potential that Baby Boomer African-Americans present,” he says. “Many firms have hired African-Americans to reach out to these people, but on the independent side, we’re just a handful and I don’t see that changing very soon.”

Of course, going independent isn’t an easy thing to do for anyone, particularly for the young people coming out of college that the wirehouses tend to focus their hiring efforts on, Smith says. Regardless of color and ethnic community, the thought of launching into the independent space is daunting, yet African-Americans and, to a certain extent, Hispanics, are even farther away from an independent career than others, he believes, because their communities just don’t have the kind of financial make-up that warrants, requires or encourages independent advisors.

“Many of those who do get into the independent space early on can and do because they have a family business or practice already established,” Smith says. “African-Americans and Latinos are not in this business generationally—you don’t see grandfathers and fathers in our communities handing over their businesses because they just don’t have businesses to hand over.”

But even though the road to an independent practice may be harder for African-Americans and for Latinos than it is for others, Smith still believes this is a goal that young people entering the profession should aspire to.