An initiative by Edward Jones to help women and minority advisers jumpstart their careers is being praised by diversity advocates, but criticized internally for being discriminatory.
In an internal document sent to brokers last month and obtained by InvestmentNews, the company said advisers who are retiring or streamlining their books of business will receive an incentive — an additional 10% on their assets — if they turn them over to advisers who are women or minorities.
Edward Jones said it has been offering the incentive since June 1, 2018, to veteran advisers who transfer assets to women and minorities because they're supporting the firm's strategies.
"The incentive is consistent with Edward Jones' commitment to diversity and inclusion," John G. Boul, the firm's manager of global media relations, wrote in an email.
Lazetta Rainey Braxton, an African-American and founder and CEO of Financial Fountains, said the Jones program will help advisers of color launch their careers.
"This is a normal protocol for wirehouses to transition assets, it just hasn't been done equitably," said Ms. Braxton, who is chairwoman of the Association of African American Financial Advisors. "When you get transitioned assets, it's a leg up. I'm delighted Edward Jones is doing this. This new incentive will ensure the pool [of those receiving assets] has a more inclusive feel in consideration of advisers who are overlooked or disregarded."
Lee Baker, also an African-American and president of Apex Financial Services, also praised the initiative.
"I applaud Edward Jones for coming up with what appears to be a unique idea for supporting diverse advisers," Mr. Baker said.
But at least one Jones adviser was critical of the policy.
"Every one of my colleagues that I've talked to believes 100% in equality, but the new rules are not equal," said the adviser, who requested anonymity. "They are, by definition, discriminatory."
He said he supports diversity in hiring and other business functions. But advisers should not effectively be penalized for giving assets to a white male adviser.
"When you jump into the pay side of it, you're seriously crossing a line," the adviser said.
The move comes at a time when the chairwoman of the House Financial Services Committee, Rep. Maxine Waters, D-Calif., has identified diversity as a priority for her committee. She has created a first-of-its kind diversity subcommittee to promote more women and minorities in the financial services industry.
Ms. Braxton said creating financial incentives will result in better diversity results.
"We want to see other firms do it because it has not been happening without incentives," she said. "Sometimes it takes money to encourage people. Money is a universal language."