More diversity at advisory firms to better reflect their client base would be in the best interest of the industry, according to respondents of a recent survey conducted on behalf of Edward Jones.
A large majority of black and Hispanic respondents — nearly 80% — said that they think that more diverse advisory firms better serve clients' needs. Among all respondents, a smaller majority — 66% — feel diversity is beneficial.
More than 2,000 respondents participated in the online survey, which was conducted by Harris Interactive between Sept. 26 and 30. More than 300 of the respondents are black or Hispanic.
“Diversity is not just the right thing to do, it's a business imperative,” Jesse Abercrombie, an Edward Jones financial adviser, said in a statement accompanying the survey results.
African-Americans and Hispanics are an increasingly large part of advisory firms’ client base, largely due to the rapid growth of minority owned small businesses, Mr. Abercrombie said.
“In the past 30 years, we have seen more African-Americans and Hispanics move from the middle class to the upper middle class or higher,” he said.
The number of minority-owned businesses increased by nearly 50% nationally to 5.8 million between 2003 and 2007, based on the most recent data from the Census Bureau.
This growing client demographic has expressed a distinct preference for advisory firms that value diversity, Mr. Abercrombie said.
But diversity hasn't generally been one of the advisory industry's strong points.
Nationwide, about 37% of Americans are members of minority groups.
But at the typical advisory firm, minorities only make up 8% of the workforce, according to data from the Securities Industry and Financial Markets Association.
One potential solution to this problem is the creation of multicultural support and mentoring groups within advisory firms.
This was the most popular proposal in the survey, garnering support from about half of the black and Hispanic respondents.
For example, Edward Jones has created an organization called BRIDGE, which stands for Bringing Results through Inclusion-Driven and Guided Efforts. The group is a network of financial advisers who recruit, mentor and support advisers from minority backgrounds.
“The industry has done a decent job of recruiting [diverse employees],” Mr. Abercrombie said. “The biggest thing separating firms now is supporting and developing them after that. If applicants see that an African-American like me can be successful at a company, they’re more likely to think that they can be, too.”