Small steps toward greater diversity in the advice business

Glance around most financial advisory conferences, and it is hard not to notice that white men greatly outnumber the women and minorities in the room.

Although many firms and industry groups in recent years have focused on bringing more women into the business, efforts to boost the presence of minorities are rarely highlighted.

But this week, two financial advisory firms and their top executives will be honored for their support and participation in an industry effort to bring more blacks into the financial advisory business.

For the past six years, separate-account specialists Brinker Capital Inc. and Lockwood Advisors Inc., an affiliate of Pershing LLC, have played host to summer interns selected through a Money Management Institute program. The initiative works with the United Negro College Fund to provide eight-week paid internships to students at historically black colleges.

“The program is primarily aimed at African-Americans because that is where the need is the most acute and diversity is the most lacking,” said MMI president Chris Davis.

There are few statistics about the number of minorities who are financial advisers, because neither regulators nor industry groups such as the Financial Planning Association track the race of advisers they monitor or have as members.

But a Government Accountability Office study of the whole financial services industry found that in 2008, 2.8% of senior positions were held by blacks, compared with 64% for white males, 3% for Hispanics and 3.5% for Asian-Americans. Most of the remainder were held by white women.

As of the 2010 U.S. Census, blacks made up 13.6% of the U.S. population, and some advisers think that their industry should start reflecting the nation’s makeup.

WIDER GROUP

“There is a push for advisers to serve the wider community, to serve everyday people,” said Lazetta Rainey Braxton, founder and chief executive of Financial Fountains LLC.

“In order to identify with these populations, it helps to have advisers who are familiar with the nuances that may make some cultures different,” she said.

Ms. Braxton, who is black, said that she has a diverse client base, including some who prefer to work only with black professionals.

They can better identify with an adviser who has a similar background and understands their traditions, she said.

For example, blacks historically are staunch givers to their church and to family members who may need support, so advisers serving this community need to recognize this gifting will be a significant part of these clients’ budgets.

“It’s culturally driven and has to be managed with sensitivity,” Ms. Braxton said.

Scot Hanson, an adviser with Educators Financial Services Inc., said that he recognizes the value of having people of all different backgrounds in the industry.

However, he has been challenged to find practiced minority advisers and said that his small firm can’t afford to hire and train someone who is inexperienced.

“We have a lot of white guys here,” Mr. Hanson said about his firm’s advisers, who serve mostly public-school teachers. “I have clients of every race, color and creed, and it would be easier if we also had advisers who could understand different cultures.”

Morgan Stanley Smith Barney LLC is another firm that participates in the MMI’s diversity initiative, and it has permanently hired three of its former summer interns.

“Our clients are becoming more diverse, and a diverse team works best to generate ideas for clients,” said Kerry Piercy, MSSB’s head of diversity and inclusion.

The brokerage giant also has a multicultural networking group to encourage mentoring and idea sharing. The firm participates in recruiting events, and about a year ago, it created a multicultural adviser blog to highlight successful minority advisers.

“The blog is one way we try to appeal to those outside of the industry to come into it, by showing them someone like them who has been successful,” Ms. Piercy said.

Growth is a goal of the 10-year-old Association of African American Financial Advisors, which has about 50 active members. It was founded by LeCount R. Davis, the nation’s first black certified financial planner.

Most of the association’s advisers are located in and around the nation’s capital, according to its president, Crystal Cooper.

Members in Florida and New York are moving toward creating the first chapters outside the Washington region, she said.

“We try to foster relationships between minority advisers because sometimes the issues are a little bit different than the mainstream,” said Ms. Cooper, who is the financial planning director for Strategic Wealth Management Group LLC.

Sharing advice among minority advisers also has been a goal of an annual conference that MetLife Inc. initiated seven years ago after a group of its minority advisers said that they wanted an opportunity to compare best practices with others who served black clients.

MOTIVATION, RETENTION AID

MetLife is the lead sponsor of the event, held in conjunction with The American College. Last year, more than 425 advisers attended.

This year’s August conference in Washington is set to draw more than 600 advisers, said Thomas Stephens, a MetLife vice president who is leading the conference planning for his company.

With former Secretary of State Colin Powell slated to address the gathering, the conference’s workshops will be focused on retirement planning, creative use of insurance for clients, regulatory updates and other business-building and marketing ideas, Mr. Stephens said.

Ms. Braxton attended last year’s conference and said that such events that gather like-minded people help with motivation and adviser retention.

“If you haven’t been a minority in a situation, it’s hard to [put into words] the pressure to assimilate,” she said. “It puts you at ease to walk into a room and see 400 successful African-American people like you.”

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Related Topics: Money Management Institute (MMI)