Andy Sieg, Merrill Lynch Wealth Management Andy Sieg, president, Merrill Lynch Wealth Management.

Focusing on the knotty, hot-button issue of diversity and inclusion, Merrill Lynch Wealth Management is pulling out all stops to bring more of both to its “thundering herd” of advisors to meet the firm’s goal: becoming the industry leader in D&I, as Andy Sieg, president, tells ThinkAdvisor in an interview.

Three years after the start of Sieg’s big push, however, the level of diversity still falls short of that goal, says the head of MLWM, who took the helm in 2017.

The numbers tell the story.

“I’m very pleased to see the direction and pace of progress, but I’m not satisfied because we will not have reached our desired [FA] representation until the business fully reflects the marketplace, which we are still working toward,” Sieg says in the interview. “We haven’t put a specific target date on the calendar — but the sooner, the better.”

Merrill, with $2.6 trillion in client balances as of Sept. 30, is indeed striving to more closely correspond to the diverse representation of its parent, Bank of America. The bank’s workforce mostly aligns with the U.S. population overall, which is 50% female, about 15% Black, 17% Hispanic and 5%-7% LGBTQ. BofA’s employees are 53% women, 13% Black/African American, and 18% Hispanic/Latinx.

Twenty-three percent of Merrill advisors are people of color — up 49% from 2015 — but female representation increased only 17% in that period. That is, women comprise just 21% of the firm’s total 17,500 advisors.

Over the last 18 months, 54% of new FA hires have been diverse: 28% women and 39% people of color.

But “we can’t be satisfied with 21% women. That number should get to 50%,” Sieg, 53, says.

The effort is apparent. Comprising 30% women and more than a third people of color, Merrill’s current FA training class is the most diverse in the program’s history, according to a spokesperson.

Full FA representation of the country’s population will clearly attract and serve the largest of its diverse segments.

Achieving representative diversity and inclusion is both a moral and “a commercial imperative,” Sieg argues.

To understand affluent Black/African Americans, Hispanic/Latinx and LGBTQ segments, Merrill conducted three studies set for release the week of Nov. 21. Among the findings is the degree to which these demographics are amenable to receiving financial advice.

In its drive for more inclusion awareness and action, Merrill now has a senior leadership team that is 50% diverse. Half the executives are women, but there is only one person of color, an African American man.

Safe to say that some initiatives show strong commitment to D&I in the wake of class-action gender and racial bias lawsuits advisors brought against the firm over many years and which the brokerage settled.

When Sieg was appointed Merrill president in 2017, he immediately made changes to how the firm assesses performance of its market executives — formerly called branch and complex managers.

These included the addition of diversity and inclusion to their evaluation scorecard. The two are tied in with compensation and ultimately, their year-end bonus, as Sieg explains in the interview.

The numbers show that, broadly, his D&I strategies are working.

In 2015 the number of Black/African American FAs was 390 — it’s now 780. Hispanic and Latinx rose from 540 to 1,570; and the number of female advisors has gone from 2,850 to 3,650.

In its drive for diversity, the firm launched a major leadership training program in which 60% of candidates each year are diverse, mounted an advisory development program, and created and expanded D&I councils.

Sieg started as an aide in the George H.W. Bush White House. A year later, he joined financial services, first at Merrill, next at Citigroup and then returning to Merrill, where in 2017, he was named MLWM president.

ThinkAdvisor interviewed the New York City-based Sieg on Oct. 30. Speaking by phone from his Connecticut home, he summed up: “Diversity and inclusion is an essential part of how we build a modern Merrill.”

Here are highlights of our interview:

THINKADVISOR:  Where does financial advisor diversity and inclusion rank among Merrill Lynch’s priorities?

ANDY SIEG: When we think about what this business needs to be in the 2020s and where our brand needs to resonate, a commitment to diversity and inclusion is a core aspect of our strategy. [Given] the enormous wealth creation happening across all diverse segments of the population, you can’t contemplate an organic growth strategy without focusing on having [diverse] representation across the advisor population.

Where does diversity come in relative to Merrill’s revenue and AUM growth?

Particularly with the social unrest and focus on racial equality in the U.S., diversity in the ranks is a moral imperative. But it’s also a commercial imperative. I’ve been focused on trying to make sure our team sees both sides — the moral and the commercial.

Please elaborate on the commercial aspect.

It [derives] from the ways U.S. demographics are changing. The number of people of color is increasing — the wealth they control is increasing even more quickly. Women are, increasingly, financial decision-makers. And, by most estimates, the LGBTQ community is a trillion dollars of purchasing power.

So what are the implications for financial advisory? 

By having greater representation of people with diverse backgrounds among our advisor force, those areas of the marketplace will see themselves reflected in our advisors and, increasingly, in our brand — and that will better position us to serve their financial needs.

Where does Merrill now stand in its goal to boost the diversity of its advisors?

We’re seeing progress in diversity and inclusion, which we started driving toward back in 2017. Our commitment is very clear: We want to lead the marketplace in diversity and inclusion.

Do you think Merrill and/or the industry will ever match a diverse representation of FAs with the U.S. population — 50% female, about 15% Black, 17% Hispanic and about 5%-7% LGBTQ?

I’m 100% confident that Merrill will become a firm that’s representative and that the industry [will be too]. We haven’t put a specific target date on the calendar [for MLWM] to achieve that — but the sooner the better.

Why no target date?

It’s hard to predict because our firm has 17,500 advisors and no mandatory retirement age. So I can’t tell you at what pace [the FAs] will retire. Therefore, we spend a lot of time focused on our training program and the [diverse] representation in it.

To what degree have you been hiring people of color; in particular, African Americans?

Over the last 18 months, 39% of our new advisor hires have been people of color. In 2015 we had 390 Black/African American advisors. That number has doubled to 780 today — it’s gone from 2.5% to 4.5%. This is important because these are people making it through the training program [not washing out].

What about Hispanic and Latino FAs?

Similarly, in 2015 there were 540 Hispanic and Latino advisors; today there are 1,570. That’s a big increase.

How have you progressed in hiring female advisors? 

During the last 18 months, our new advisor hires have been 28% female. There were 2,850 in 2015; now there are 3,650. That’s 800 additional women advisors.

So are you pleased, happy or disappointed with the progress the firm has made in increasing FA diversity?

I’m pleased but not satisfied. The representation of women and people of color is going up far more rapidly than the overall growth of our advisor force — which you would hope to see — and the percentage increases are extremely strong. So I’m very pleased to see the direction and pace of progress.

Then why aren’t you satisfied?

I’m not satisfied because we will not have reached our desired representation until the business fully reflects the marketplace, which we are still working toward.

To what do you mainly attribute Merrill’s growth in FA diversity thus far? 

When I became president in 2017, we made a number of changes designed to accelerate progress. Maybe the most consequential was changing the way we assessed the performance of our 105 market executives [aka branch or complex managers with no clients of their own]. They’re the key field leaders. They’re in six divisions around the country and generally have more than one physical location they’re responsible for; on average, each has responsibility for about 150 advisors.

How do you evaluate their performance vis a vis diversity?

They’ve long had a scorecard, which essentially codifies expectations for their performance and ranks each one from #1 to #105 relative to their peers. In 2017, we added diversity and inclusion for the first time and tied it in with the core performance evaluation and compensation. This becomes a driver of how their year-end bonus will be set.

How much does FA diversity pivot on the volume of diverse advisors the market executives hire? 

At the beginning of the year, each has specific gender and [racial] hiring goals — representation goals — [the latter] tailored to the market in which they’re located. Everybody is expected to continue making progress.

What’s the diversity representation of the market executives themselves?

One-third, about 20%, are people of color; 16% are women [The latter] has been up a little bit in the last five years. During the last couple of weeks, we appointed a few new market executives — one African American and one [Caucasian] woman.

Do you provide training in order to become a market executive, and how does that relate to increasing diversity?

We have a development program, the Market Executive Leadership Academy. Over the last three years, about 60% of the candidates coming in each year have been diverse, and we’re seeing strong diverse talent now graduating from the program.

What other steps have you taken to grow FA diversity?

We’re trying to do a better and better job of bringing a representative group of talent into our Advisor Development program. And then we need to do a great job supporting them as they become a part of teams and develop their own clients.

The issue isn’t only hiring more diverse advisors: Inclusion is critical too — is it not?

It’s essential, foundational. We spend a great deal of time focused on how we can foster an inclusive culture where everyone has a sense of belonging. For example, last year more than 20,000 people participated in training sessions specifically on inclusion; the focus was on unconscious bias and how to cultivate an inclusive environment.

In what other ways is Merrill trying to foster inclusion? 

We have expanded our advisory councils; for example, we bring together our Black/African American advisors for two-day meetings. These are part of our strategy of trying to pull everyone together and lead a unified business where people have a sense of belonging.

In several interviews I’ve held with African American advisors industrywide, including a former Merrill FA, they said unconscious bias at the firms has been a problem for them; for example, microaggressions make them feel they’re discriminated against. How are you trying to ameliorate this situation?

The tone needs to be set from the top around values and expectations of how people work together. In some cases [at Merrill], we need to engage people in training sessions to help them understand unconscious bias, which they may not have encountered or don’t really understand. We need to be very attentive to those who violate our code of conduct and aren’t demonstrating the values and way of working that we expect.

What’s the procedure if there’s a problem?

If an employee is uncomfortable about something, they can bring it to [the attention of] their manager or the human resources department. We take that extremely seriously. In many cases where people feel they’re experiencing what you just described, they’re investigated independently. We have a very strong model around how we take the appropriate disciplinary steps.

A moment ago you said “the tone needs to be set from the top.” How many in your top 10 senior leadership posts are in the diversity category? 

Fifty percent is diverse. The senior leadership team, which reports directly to me, very much sets policy, strategy and direction for the business. There are four women: Kirstin Hill, who is the first woman to be the COO of Merrill; Lindsay Hans, who, in addition to heading the Mid-Atlantic division also leads our overall diversity and inclusion council; Carole Wentz; and Susan Axelrod, who is our chief supervisory officer.

Any on the team racially diverse?

Craig Young, our National Business Development executive, is African American. He’s also the leader of our Black/African American advisory council.

So only one in senior leadership is a person of color. Have you recently been making a greater effort to have more racial diversity on the team?

Very strongly. We try to develop talent internally. That’s why the Market Executive Leadership Academy is so important, making sure that in the training program we have diverse representation. Last year, we made a bit of an exception when we hired some outstanding leaders from other firms.

Who?

James Cadet, a Black/African American market executive in NJ, and Ken Correa, an Hispanic-Latino market executive in Manhattan. He’s now also leading the Hispanic-Latino advisory council.

Only about a third of financial advisors industrywide are female, according to the Bureau of Labor Statistics. Merrill’s proportion is 21%. What are you doing to encourage more women to become FAs? 

We can’t be satisfied with 21% women among our advisor force. That number should get to 50%. A few weeks ago we released a study focused on women and their relationship to financial advisors. We did it so we could do a better job of serving women clients, and it helps us with recruitment because women see that we’re really trying to understand women as clients.

Is part of the challenge of hiring more women that they simply don’t aspire to be FAs?

As an industry, we haven’t done the job we need to do trying to interest and excite them about a career as an advisor. Broadly, what the wealth management industry does today for clients is not extremely well understood by people finishing college and thinking about a career. They probably think [an FA] has the traditional role of stockbroker. So they don’t have a full understanding of exactly what this career would be like. As an industry, we have a task to help people get a feel for it.

A study you published this past September found, in part, that “as younger women take more control of their and their families’ financial lives, they are less tolerant of [gender-based] biases [toward investors] and demand more.” Does Merrill take that into consideration?

Very much. In that study, we staged a client meeting with a heterosexual couple and used eye-tracking software to help [determine] where advisors were focusing their attention. Their eye contact tended to be more with the man — regardless of whether he or the woman was the financial decision-maker or taking the lead in controlling the assets, so to speak. That’s an example of unconscious bias.

Did the study raise your FAs’ consciousness about that, which is an industrywide issue?

After the study, we went to our advisors and pointed out that doing it is counterproductive and wrong. It helped underscore what it looks like to be listening well to clients and focusing on both members of a client couple so they feel they’re receiving full attention.

You’ve also conducted three diversity studies about wealthy African American, Hispanic-Latinx and LGBTQ+ people. Why, chiefly, did you do this research?

Because these are large segments of the market — so let’s make sure that Merrill understands their attitudes, perceptions, hopes, dreams, views of money and openness to receiving financial advice. We utilize the studies for our own marketing and training purposes, but we’re also releasing them publicly.

Your wife, Heliane, was a financial advisor at Merrill for 18 years — 1999 to 2017, when she retired. Does she ever whisper in your ear about female FAs and their needs?

No more than three or four times a day! We’ve had many, many conversations about that. One of the things that’s been a great advantage for me is having an additional window into the business through her eyes and experiences as an outstanding woman financial advisor.

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