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.