Workplace diversity: The key to the future for financial services

Diversity is, without question, an integral part of our nation’s fabric, and America has proved to be the best argument for its benefits. When encouraged, diversity makes any society healthier, something that is good for business. Show me another nation that has managed to forge an economic powerhouse with such broad cultural diversity. We have demonstrated that the multiculturalism within our borders is an advantage, rather than an impediment. Much of our strength moving forward into the 21st century is that we look like the world.

However, the success of diversity in some American sectors — state and local governments, in particular — underscores deficiencies in other sectors with which they interact, including our financial services industry. Consider the fact that the individuals who control access to public employee-based investment portfolios, such as health benefit plans and retirement funds, are increasingly members of minority groups. When money management firms come calling, it’s no surprise that their own lack of employee diversity increasingly is becoming an issue.  

As Liz Skinner pointed out in her recent story “Small steps toward greater diversity” (InvestmentNews, April 23), the raw statistics tell the story. In a country where African-Americans make up almost 14% of the population, their share of senior positions in the financial services industry remains under 3%. But a far more staggering measure is a projection by the Federal Glass Ceiling Commission that just 30 years from now, the combined numbers of blacks, Hispanics, Asians, Native Americans and other minorities in the United States will outnumber whites. The task our industry faces is to begin preparing now for this future.

CHALLENGE OF EDUCATION

A significant problem is that too many people in financial services talk a good game about improving workplace diversity but in reality do too little to advance the cause. The challenge remains one of education — making all corners of our industry cognizant of the advantages that come with a diverse workforce. I have no doubt that different perspectives bring better solutions to the problems we face. All too often, the financial services industry has fallen victim to “groupthink.” Fill an office with people who have similar life experiences, similar educational experiences and similar approaches to problem solving, and you have simultaneously minimized the potential for innovation while maximizing the potential for stagnation — or worse.

That’s why the Money Management Institute has worked to make it easier for our member firms to tackle this issue head-on. Our diversity workplace initiative, Gateway to Leadership, is designed to introduce qualified minority students to the financial advisory business. Conducted in partnership with the United Negro College Fund Inc., Gateway now is in its sixth year. Under the program, eligible candidates from historically black colleges and universities are placed in eight-week paid internships with leading financial advisory firms. So far, we’ve placed 100 students from 26 schools with 24 Wall Street firms. It’s a small step forward, but it is establishing a very real foundation for future growth.

What makes Gateway unique is that it creates a two-way dynamic: It introduces top students to a range of potential career paths they may not have considered otherwise, while getting participating firms to think about the work that has to be done if they are going to address the needs of an increasingly multicultural marketplace. Gateway is a success for the students and the firms, and eventually for investors and the industry as a whole.

EXTREMELY PERSONAL

Providing advice on and actually managing someone’s wealth is an extremely personal profession which can rival the patient-doctor relationship in terms of intimacy. As multicultural communities grow, we will need advisers who can understand cultural nuances and traditions in order to establish those relationships and serve those communities better.

Not only is diversity here to stay, it’s the key to a healthy future for our industry. America’s diversity must be reflected in its financial services industry if it is to continue to lead and grow internationally. The one path forward must be to embrace and cultivate diversity, making our industry stronger and our nation fully competitive in world markets.

Christopher Davis is president of the Money Management Institute, the membership organization for the managed-accounts industry.