Why has the number of Black and Hispanic certified financial planners remained under 4% when the two groups account for almost 32% of the U.S. population, a shortage of financial advisors looms and the U.S. is poised to become a minority-majority country by 2043?
It’s a question that has been raised before by Black advisors and others, including advisory firms and professional organizations, but it’s getting more attention now because of the growing popularity of the Black Lives Matter movement and the higher hospitalization and death rates and sharp economic impact of the COVID-19 pandemic among Blacks and Hispanics.
“Now is the time to take action,” said Tony Barrett, a founding member of the Raymond James Black Financial Advisors Network at Raymond James, in a recent statement. Barrett said he was encouraged by his firm’s affirmation of its commitment to address racial inequality and pledge to do more, including an expanded recruitment of Black associates, advisors and corporate leaders and a new mentoring initiative.
“It will take a lot to address an issue that has taken over 400 years worth of history to create, but this is just the beginning,” said Barrett.
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The Certified Financial Planner Board of Standards and Financial Planning Association have long acknowledged the racial gap in the financial advisory industry, and many firms, along with the CFP Board, the FPA and the American College of Financial Services, have introduced initiatives to help close it, yet the disparity continues.
Patrick Ortman, a solo advisor and founder of Ortman Financial Planning in Bethesda, Maryland, who is white and has a Black brother and Black son, recently researched a number of large financial advisory firms and was surprised to find that very few had even a few Black advisors on staff. “I know the financial services industry is very white and the RIA community especially so. However, I could not imagine just how bad it was until I started really looking … why is it still this way?” Ortman tweeted.
ThinkAdvisor spoke with Ortman and a number of individual advisors — both Black and white — about what individual firms could do to help close the racial divide in the industry.
Ortman suggested that firms, especially small ones, “professionalize hiring,” rather than depend on informal networks of friends and their kids and their clients. “Networking is everything … That’s how you build a business but then you get to a point of inadvertently keeping business non-representative of the country,” Ortman told Thinkadvisor.