A new congressional committee devoted to increasing the number of women and people of color in the financial industry will raise the profile of the issue, but a solution is more likely to come from firms than from Washington, according to diversity advocates.
The House Financial Services Subcommittee on Diversity and Inclusion, the first of its kind in Congress, was launched Wednesday during an organizational meeting of the full committee. The diversity panel is one of the priorities for the new chairwoman, Rep. Maxine Waters, D-Calif., who is the first African-American and woman to head the committee.
"I don't think you can legislate diversity and inclusion, but you can promote it," said Maureen Thompson, vice president for public policy at the Certified Financial Planner Board of Standards Inc. "I see that it could be a positive force for change. We applaud chairwoman Waters for her leadership in making this happen."
Industry advocates have been trying to convince financial advisers that diversity is an important topic for them to embrace. The creation of the congressional panel adds weight to the effort, according to Kate Healy, managing director of Generation Next at TD Ameritrade Institutional.
"It was a wake-up call that this may be a policy issue that RIAs need to pay attention to," she said. "[But] I don't know that [diversity] can be legislated. We shouldn't be waiting for legislation. There are so many things advisers can do today."
The activity in Washington could inspire advisers to make diversity gains on their own by expanding the scope of their hiring efforts and raising awareness about the field in local communities, Ms. Healy said.
A workshop on advancing women in the industry drew about 180 attendees Monday at the Financial Services Institute OneVoice conference in New Orleans.
One of the ideas that was raised, according to participants, was to consider increasing the length of time allowed for someone to be out of the industry before a securities license lapses. This was seen as a way to lower barriers to re-entry for women who leave firms to have children.
"If we can do something along these those lines, that's certainly a step in the right direction from a pragmatic standpoint," John Rooney, managing principal of Commonwealth Financial Network and FSI vice chairman, told reporters.
On Tuesday, FSI announced two women are among six new board members, bringing the total number of women to four on a panel of 21.
Diversity also was a focus at a general session, which featured four women leaders of independent broker-dealers.
"I've never been on a panel that is not a breakout or a 'pre-day' with all women," said the moderator, Mimi Bock, president of Cetera Advisors and First Allied Securities.
For the congressional subcommittee to be effective, it needs to gather input from a wide array of groups that are working on diversity issues, according to Rianka Dorsainvil, founder and president of Your Greatest Contribution, a registered investment adviser, and host of the diversity podcast 2050 Trailblazers.
"They can have a huge impact, if there is attention and intention," she said. "I would like to help ensure the right people are sitting around the table."
While Ms. Waters elevates diversity, she's remaining quiet on other issues affecting financial advisers. In a speech earlier this month, she delved into a range of policies but didn't mention the Securities and Exchange Commission's proposal to reform investment-advice standards, even though she's been a leading congressional critic of the measure.
"I'm going to guess eventually [SEC Chairman] Jay Clayton will be brought in to testify, and I would be shocked if she didn't raise fiduciary duty," said Duane Thompson, senior policy analyst at Fi360, a fiduciary certification, training and technology consultant.
But any legislation on advice standards that Ms. Waters writes or supports wouldn't likely get through the Republican-majority Senate.
Senate Banking Chairman Mike Crapo, R-Idaho, released his agenda on Tuesday, which also lacked any mention of issues directly affecting financial advisers.
Substantial changes in market-conduct rules are "going to have to come out of the regulators — federal and state — and not out of Congress," Mr. Thompson said.