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Financial Planning > College Planning

We Asked, Advisors Answered: How Can the Industry Increase Diversity?

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Raymond James' Tony Barrett. “Now is the time to take action,” said Raymond James’ Tony Barrett.

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.

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.

Firms could adopt a hiring model similar to one ESPN has used, focusing on first creating a large diversified pool of candidates, both men and women, before filling a job, said Frank Paré, a former president and chair of the FPA and the founder of the PF Wealth Management Group (PF stands for People First) in Oakland, California.

Frank Pare, FPA President Firms need to widen their hiring pools, Frank Paré says.

Such a requirement could be “woven into the hiring practice,” said Paré, who also recommended that firms recruit those new advisors from a wide array of schools, not just the Ivy League, and not just to work with other people of color. “Firms should be willing to embrace cultural differences and … to provide exemplary service.”

Hiring Isnt Enough

But hiring isn’t inclusion, the creation of a work environment and culture that enables all employees to participate and thrive — a point made by a number of Black advisors we spoke to.

“Everybody is talking about hiring but nobody is talking about what happens afterward, about keeping people,” said René Nourse, founder and CEO of Urban Wealth Management, an all-female RIA in El Segundo, California, a member of the board of the Association of African American Financial Advisors (AAAA) and the CFP Board’s Diversity Advisory Group. “The culture and the environment needs to change … to allow women and people of color to remain.” 

Nourse says that change need to involve a shift from a focus on assets and a minimum investable assets — the majority of potential minority clients don’t have $250,000 outside of retirement accounts — to one that emphasizes financial planning and a holistic approach. Her firm has adopted that approach and doesn’t have an asset minimum for clients. “At the end of the day we need to make sure our firms look like our community.”

Like Nourse, Lazetta Rainey Braxton, co-founder and co-CEO of 2050 Wealth Partners, an all-virtual RIA, sits on the board of directors of the AAAA. She has also worked with the CFP Board and FPA on diversity panels and currently serves as president of the AAAA Foundation, which provides scholarships and internships for students at historically Black colleges and universities.

Lazetta Rainey Braxton Discrimination lawsuits should not by subject to mandatory arbitration, Lazetta Rainey Braxton says.

Braxton offered a long list of recommendations for addressing the lack of diversity in the financial advisory industry, like zero tolerance for racism, including “micro-aggressions” that can occur between staff members; support for financial planning and CFP programs at historically Black colleges and universities and for Black students at other educational institutions; and an end to forced arbitration for discrimination lawsuits. 

She would also like major firms to disclose their diversity and inclusion efforts and, along with industry organizations like the CFP Board and the FPA, provide support for the AAAA and its foundation, helping to build endowments for financial planning programs.

“Black people alone will not move this,” Braxton said. “We need white allies with the courage to do the right thing.”

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