Why does the financial planning profession have so few black and Latino planners, far less than their representation in the general U.S. population, when it should have more minority planners to serve an increasingly diverse consumer population? Of the 80,000 CFP-licensed professionals, just 3.5% are black or Latino.
The Certified Financial Planner Board of Standards’ Center for Financial Planning, whose mandate includes increasing diversity in the industry, conducted a research study to address the question, surveying almost 2,300 people — all but 94 in a quantitative survey study. The survey group included CFP professionals who were black, Latino and white; black and Latino prospective CFPs; and consumers and hiring professionals who were primarily white.
Although 70% of survey respondents agreed that minorities were underrepresented in the profession and a similar percentage of all CFP professionals saw no difference between the skill sets of white or minority planners, they often differed about the reasons for the paucity of minority planners, breaking down in part along racial lines.
Nearly 60% of planners who were neither black nor Latino attributed the underrepresentation of minorities to a reluctance of minorities to pursue the profession, compared with just 23% of black CFP professionals.
Eighteen percent of non-minority CFP professionals attributed the underrepresentation to the reluctance of firms to hire or promote blacks or Latinos versus almost 30% of black CFPs and black and Latino CFP prospects.
Other reasons given for the lack of racial diversity in the profession included a lack of awareness about the profession and lack of role models among minorities.
But despite some differences that broke down along racial lines, 60% of CFP professionals surveyed, be they black, Latino or neither, were very satisfied with their careers.
Given that finding and the changing demographics of the customer base — minorities are expected to make up more than half the population around 2043 — it’s “imperative for the profession to work to expand its diversity ranks to meet the needs of consumers,” said Cy Richardson, who chairs of the diversity advisory group for the CFP Board Center for Financial Planning, in a press briefing about the report.
“It makes good financial sense and business sense” to include more minorities among the ranks of planning professionals, said Peter Fondulas, president of Fondulas Strategic Research, which conducted the survey.
Over half all the respondents to the survey cited mentoring programs, earlier introduction of financial literacy in education and greater awareness of a CFP career as solutions to the problem of minority underrepresentation. More than half of black CFP professionals and black prospective financial planners also favored diversity hiring programs, but less than 40% of Latino prospective planners and hiring pros favor such programs. (There was no equivalent percentage given for non-minority planners.)
The Center for Financial Planning said the research study was the first step in its ongoing effort to build a more inclusive workforce. Next, the center will publish a paper with recommended solutions for increasing diversity among financial planners, followed by a Diversity Summit, where the paper will be discussed, to be held in New York City on Oct. 23.
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