As the nation’s population becomes more diverse and inclusion more important, the financial advice industry needs to reflect the same since the advice-seeking public will turn to professionals that have backgrounds and experiences similar to theirs.

Moreover, as the financial professional population gets more diverse, all segments of American society are more likely to benefit from the financial education and leadership this expanded universe of professionals can offer to their communities.

The good news is that the number of black financial planners grew by more than 10% in 2021, while the number of Hispanic CFPs jumped 15%. The bad news? The predominant share of CFPs (83%) remains white, and 77% are men. So, some good progress on advancing diversity, but still a very long way to go.¹

What Can Be Done to Promote Diversity

One major hurdle to greater diversity is an unawareness of the careers offered in financial planning and investment management. It’s not a role that is typically visible in many underrepresented lives growing up.

Industry groups, such as the Financial Planning Association and The American College of Financial Services, are working to remedy this lack of diversity by sponsoring programs to increase the number of minorities entering the business, along with targeted initiatives to help them succeed.

Individual financial professionals can play an important role in advancing diversity. Perhaps the most impactful way is by hiring financial professionals from underrepresented groups. Making a diverse hire provides a practice with an edge to tap new demographic groups, without limiting the ability of a diverse professional to attract new clients within the practice’s existing demographic niche(s). For example, one study showed that trust among individuals of a minority financial professional can equal that of white professionals, provided their credentials and experience are similar.²

White financial professionals can find diverse candidates through their own network or by reaching out to the Association of African-American Financial Advisors or the Association of Latino Professionals of America.

Another way to support diversity is by actively engaging with minority communities to support basic financial and investment education to high school audiences and introduce them to what a career in financial services looks like.

Finally, individuals can make contributions to The American College for Financial Services’ African-American Scholarship Program to provide financial support for young men and women interested in pursuing a career in financial services.

Sources:

1. https://www.cnbc.com/2022/01/26/diversity-among-financial-planners-improved-in-2021-but-it-still-lags.html
2. https://onlinelibrary.wiley.com/doi/epdf/10.1002/cfp2.1134

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