4. Diversity-focused firms are more successful in recruiting and connecting with NextGen clients.
It stands to reason that a pool of younger and more diverse staff will be more conversant with the tech needs of clients who were practically born with a smartphone in their hands, compared with an older generation for whom a mouse was a major development and who came late to tweeting and Instagramming. Younger clients who expect to do everything — or nearly everything — online and on whatever the latest device is will feel more comfortable with younger advisors who speak the same tech they do.
3. Diversity-focused firms have a more satisfied advisor workforce.
More satisfied with their current firm, at 49% (compared with 32% at other firms), advisors at diversity-focused firms are also more satisfied with their careers, at 68% compared with 51%; more satisfied with their firms’ hiring and onboarding process, at 37% versus 19%; and more satisfied with how well their firms have “lived up to providing the value that they said they would” since the advisors joined, at 72% versus 58%.
2. Diversity-focused firms experience better growth in their client base.
Among firms that regard diversity as a high priority, 86% are experiencing growth in the number of clients/households they serve, while just 74% of firms for which diversity isn’t a consideration are experiencing growth.
1. Advisors in diversity-focused firms enjoy higher compensation.
According to the study, advisors in diversity-focused firms average gross compensation, including salary, commission and fees, of $383,000, compared with those at firms not focused on diversity, where, average gross compensation is $335,000.

(Related: 10 Ways to Increase Diversity Among Employees, Clients)

It’s a tight job market, and not just in tech or health care. Financial firms are having a tough time finding enough of the right kind of workers, too, and that’s particularly important considering that they’re already facing a coming shortage of advisors.

According to a new report from Fidelity, 50% of advisors will retire in the next 14 years — hardly surprising, considering that the average age of advisors now is 50.

Advisory firms also aren’t very happy with their recruiting results, according to the report, with 59% reporting that it’s a “challenge for my staff to find talent and staff that fits our needs” and 73 % being “dissatisfied with [their] own hiring and onboarding process with [their] current firm.”

So what’s to be done?

According to the report, adding diversity to the mix could not only fill vacancies but also offer opportunities that aren’t currently under consideration. While it’s not just a matter of exiting advisors, entering clients are going to want capabilities beyond what current advisors might be able to provide: not just an “intelligence quotient” in handling clients and their portfolios, but also an “emotional quotient” and even a “digital quotient” will be required to keep clients happy in the future — and even today, as the changeover from boomers to Gen X and Y as the dominant client population begins.

According to the report, Gen XY investors have different expectations of their advisors. In addition, by 2030, Gen XY together will have more assets than boomers, they’re more self-sufficient and likely to use technology, and their perception of value is changing in the advice industry.

They’re also more diverse, and that’s where diversity in hiring comes in — but that’s far from the only consideration. It’s not just a matter of staff reflecting the client base. Firms that focus on diversity experience some interesting benefits, although those benefits aren’t necessarily caused by diversity.

Check out the gallery above for four correlations that Fidelity found in its 2018 Talent and Diversity Study.

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