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Merrill Makes Strides on Diversity but Says More Progress Is Needed

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What You Need to Know

  • The growth of diverse, affluent U.S. households is outpacing the general population, according to three new studies.
  • Merrill executives remain commited to making more diversity strides, the firm says.
  • Black Americans were twice as likely as the general affluent population to be focused on reducing debt.

Merrill Lynch continues to make strides on its diversity initiatives but recognizes more progress is needed, the company said while publishing the findings of three studies showing the growth of affluent U.S. Black, LGBTQ+ and Hispanic/Latino households was outpacing that of the general population.

The studies, conducted by research firm Ipsos, found that, since 2015, members of the Black,  LGBTQ+ and Hispanic/Latino communities with annual income of more than $125,000 grew 65%, 76% and 81% respectively, while the general population increased 53%.

The overall picture presented in the reports, released Wednesday, was fairly positive. However, “this research cannot and does not stand on its own,” according to Kirstin Hill, chief operating officer of Merrill Lynch Wealth Management. “It needs to be a part of a much broader set of things that we as an organization are doing both inside of our firm and outside.”

Merrill’s Diversity Initiatives

When it comes to Merrill’s diversity efforts, there is first a “commitment from the top” executives at the firm, Hill said. It is “clear that it is a leadership priority for them,” she noted.

Merrill Lynch Wealth Management was pulling out all stops to add more women and people of color to its “thundering herd” of advisors to meet the firm’s goal of becoming the industry leader in diversity and inclusion, Andy Sieg, its president, told ThinkAdvisor in an interview in November.

The second important thing for Merrill when it comes to its diversity initiatives is accountability, Hill told reporters in a briefing on the new diversity reports on Monday. “These objectives are good and important but we have discovered ourselves that, without accountability, progress is very hard to make,” she explained. “So one of the areas that we have really committed to is holding ourselves accountable as a leadership team.”

That includes “making progress in terms of the representation of our teams because while it is certainly not the only gauge of success in terms of serving diverse communities, it is important that we as an organization do better in looking like and being a part of the communities that we serve,” she said.

“We have progress still to make and, to that end, you saw us last year commit to transparency around the racial and gender diversity of our advisor force,” she pointed out.

Although “we have a lot of progress remaining to be made,” she conceded, “we are making progress.” As an example, “over the last 18 months, over half of our new advisor hires have been diverse,” at 54%, up from 39% in 2017, she said.

“Now we need to keep that up and we need to do the work … around the kind of the culture of inclusivity, among other things, to ensure then that we kind of retain and support the folks that we hire,” she said, adding: “We are absolutely committed with our time, with our resources and … with our leadership time and resources to ensuring we make progress.”

Discrimination Allegations

Merrill, Wells Fargo and Edward Jones are among the firms that have been hit with discrimination complaints in recent years.

A new suit was filed against Merrill on July 2 in U.S. District Court for the Eastern District of Michigan. The complaint, which sought class-action status by ex-reps at the firm, was filed by two former Merrill brokers who alleged African Americans employed at the firm as financial advisors received less compensation and were promoted to senior roles less often than their white counterparts, while being terminated more often than white advisors.

In 2013, less than a week after Merrill settled a lawsuit with some 700 Black brokers for about $160 million, the wirehouse agreed to pay $39 million to resolve a lawsuit filed in Brooklyn, New York, involving about 4,800 female advisors who worked or had worked previously for the firm.

More Details From the New Diversity Studies

The three research reports, collectively called “Diverse Viewpoints: Understanding Affluence in the U.S.,” were designed to better understand how individuals in diverse communities achieved success and grew their wealth, their motivations and challenges, and goals for the future.

Although the survey found many commonalities, within each of the communities notable themes emerged, as did differences when compared to the general population of affluent individuals.

Affluent Black Americans prioritized supporting family members, investing in the businesses of people they knew, and securing wealth via entrepreneurship. They were two times more likely to be motivated by a desire for personal achievement and 25% more likely to be motivated by a desire to set future generations up for success.

Affluent Black Americans faced many of the same challenges as others; however, they’re twice as likely to be focused on reducing their current debt levels. Meanwhile, 25% were more likely to be supporting their families financially and three times more likely to say paying for education was a source of stress.

Members of the Hispanic/Latino affluent community were four times as likely to say that their most important financial goal was planning to assist or support aging parents. One in five also said that leaving an inheritance to their family was very important.

Thirty-five percent of affluent Hispanic/Latino respondents cited providing for their families as a top personal motivator and were also three times as likely to be driven by a desire to make their family proud. But individuals in that community were more stressed than the general affluent community about being able to pay household bills (17% vs. 12%) and balance financially caring for others while supporting themselves (15% vs. 12%).

Among the LGBTQ+ respondents, starting a family was increasingly a goal, with nearly 25% aspiring to get married and 13% of young LGBTQ+ respondents (20- to 34-year-olds) citing having a child as one of their most important financial goals (compared to 5% of LGBTQ+ respondents 35 to 54 years old). In the longer term, more members of this community cited paying for health care and long-term care as an important financial goal (24% vs. 17% of the affluent general population).

One-third of affluent LGBTQ+ respondents said they did not feel accepted by their families. As a result, 58% said they had to chart their own paths to financial independence. Members of the affluent LGBTQ+ community, meanwhile, were focused on being able to live authentically by pursuing activities they loved or simply living life the way they wanted. They were also 45% more likely to view giving back to and supporting their community as a top priority.

Pictured: Kirstin Hill, COO of Merrill Lynch Wealth Management


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