Want to boost diversity of advisers and clients? Begin with the business case

Women and men have roles to play in helping to increase diversity of the industry's advisers and clients.

Yonhee Choi Gordon’s father wanted her to be a doctor or a lawyer, or to marry one.

In fact, her career as a financial adviser was a decade old before he gave up on the idea of her going to law school, even though he was an accountant.

“It’s come full circle now,” Ms. Gordon, principal and chief operating officer of JMG Financial Group, told the InvestmentNews Women Adviser Summit in Chicago. “He laughs now because of what I do.”

Less of a laughing matter at the summit was the topic of racial and gender diversity at financial advisory firms — specifically, the stubbornly persistent lack of it.

“We’re in a room that’s not as diverse as it should be,” said Kathleen McQuiggan, special adviser on gender diversity for the Certified Financial Planner Board of Standards Inc.’s Center for Financial Planning.

When Ms. Gordon asked for a show of hands by advisers who could claim a diverse client base, only a smattering raised theirs.

“The scariest part, it’s 2018 and we still have to have this conversation,” said Kate Healy, managing director of Generation Next at TD Ameritrade Institutional, and moderator of a panel aimed at understanding the business case for diversity and inclusion.

InvestmentNews publisher Suzanne Siracuse, in her opening remarks to about 200 advisers, offered statistics on why diversity can make a bottom-line difference.

Business case for diversity

Advisory firms at which women comprise at least a third of the professional ranks reported revenue gains of 50% between 2014 and 2017, compared with just 40% for male-dominated firms, Ms. Siracuse said. And though more gender-diverse firms had lower revenue on average, their revenue per client of $4,100 was greater than the other firms’ $3,800.

Two African-Americans were among the conference attendees who said they have a diverse client base.

Lakitsia Gaines, a State Farm agent in Hallandale Beach, Fla., said one of her two offices caters to Hispanics, the other to Russian immigrants.

“We have to recruit teams that have the ability to communicate in the language and manner the customer prefers — whether it’s walk in, call in, click in, email in or social media,” she said.

Sabrina Pritchett-Evans, a registered representative for State Farm in Kalamazoo, Mich., emphasized her marketing efforts. She said a client told her he sees her picture on refrigerator magnets everywhere he goes.

(More: CFP Board takes on racial, ethnic diversity)

Some panelists suggested a two-pronged approach for women aiming to advance in the financial advice business.

First, don’t hesitate to nudge male colleagues and bosses who promote gender and racial stereotypes, sometimes unconsciously.

“That conversation needs to be continuous,” said Maz Kamaruddin, head of diversity markets for Axa Advisors. “It’s like a [long-running] advertisement.”

At the same time, don’t take every impolitic remark personally, said Ms. Gordon, who is Korean.

“You can’t be offended all the time” and carry a “chip on your shoulder,” she said. “Otherwise, we get painted a certain way.”

Ms. Gordon talked about being dissed by a male colleague many years ago: He wanted her to leave a meeting with a new widow after her part of it was done. Instead, she stayed, and was praised by the client afterward.

Lisa Dolly, chief executive of Pershing and a panelist at a separate session, mentioned firing three of four personal financial advisers. One would ignore her in meetings and talk only to her then-husband, she said.

Ms. McQuiggan, a wealth adviser for Artemis Financial Advisors, spoke about the “myth of meritocracy,” in which men believe promotions are based on merit and women don’t. She urged advisers to consult academic research on unconscious bias just as they would on investment fundamentals.

Men as allies

“We’ve got work to do. The numbers are going backwards. We have to embrace the idea of men as allies,” she said.

Building on the anecdote about her father, Ms. Gordon said the industry’s gender problem starts early with the misconception that girls aren’t good at math.

“When I go through the interview process, I don’t get any women,” she said of her recruiting efforts. “I don’t know why.”

Ms. McQuiggan joked that what the profession needs is a “CSI”-type TV show about financial advisers. “They need to see really strong people in this role,” not just the Bernie Madoff types, she said.

(More: Her road to financial advice was paved by her Vietnamese parents)

Appearing on a panel about business growth, Rosemary Gray, director of TPD retail annuities for New York Life, had a simple suggestion for women: “Speak up!”

Seeking to dispel the notion that the cream always rises to the top, she said upper-level managers “are too busy sitting at their desks to notice who’s working really hard.”

Erin Botsford, another panelist and founder of Botsford Financial, recounted how she “hated it every day” during the first seven years of her career. She patted herself on the back when she increased production by 50% in three years — until she found out that another adviser had realized a tenfold gain. She made that adviser her mentor.

“He taught me how to think like a business owner,” she said, imploring the audience to follow her example. “Go get business coaching. Get mentoring.”

Steven R. Strahler is a freelance writer.