Advisers searching for new and diverse talent should cast a wider net

Building a more diverse workforce solves multiple challenges currently facing the wealth management industry.

Over the past few years, issues related to diversity, equity and inclusion have been among the most surveyed, analyzed and talked about topics in wealth management. But has there been measurable progress in terms of building a more diverse industry of financial professionals?

Not so much.

This isn’t to downplay such significant efforts as the creation of Choir, which is aimed at increasing diversity at industry events, and Onyx Advisor Network, a platform designed to support underrepresented advisers.

But the overall wealth management industry — which is deeply rooted as a platform essentially created by white men and in many ways for white people — continues to struggle to realize real progress when it comes to diversity.

One of the best examples of the chasm between what is needed and what is happening showed up earlier this week in the form of two reports presenting awkwardly diametric findings.

On one hand, there’s the survey of 101 independent advisory firms that cites a dearth of talent, despite respondents claiming to be “focused almost exclusively on talent.”

The study, conducted by Advisor Growth Strategies, showed that for the third straight year “finding talent” is the biggest hurdle for advisory firms, with 23% describing it as “very challenging,” and more than half the firms across every size segment describing the talent search as “challenging” or “very challenging.”

But on the other hand, there’s the report by the Investments & Wealth Institute touting “double and triple-digit increases in the number of new women, Latinx and African American applicants.”

The institute found a 21% increase in the number of Certified Investment Management Analyst, Certified Private Wealth Advisor, and Retirement Management Advisor applicants in just one year.

A breakdown of the data shows an 18% increase in women applicants, a 43% increase in Latinx applicants, and a 262% increase in the number of African American applicants.

“We started this important work in 2019 with our Women in Wealth program and continued it with our successful THRIVE initiatives launched in January 2020,” said Dorothy Bossung, chairperson of the IWI board of directors. “Since the inception of our scholarship fund in 2020, more than 400 applicants have received tuition assistance, and the percentage of female candidates has grown 23%, while the percentage of candidates of color has increased by 125%.”

That looks like grand progress, but it also begs the question of how advisory firms are having such a hard time filling their ranks with qualified personnel.

It seems as if a variation of a dating app may be needed to help the respective parties connect.

While the two studies don’t represent a perfect apples-to-apples comparison, they do underscore the steep grade of the mountain the industry is trying to climb.

“The hiring crunch is a real challenge right now, and not just in the RIA space but throughout the business landscape,” said Sonya Dreizler, who co-founded Choir in January.

“One of the things I hear often is, ‘I want to hire women and people of color, but almost all the resumes I get are from white men, so I don’t really have a choice,’” she said. “If you want a wider variety of candidates for a job opening, you have to cast a wider net. And that will take work and intention on your part, both in the hiring and in creating a firm culture where everyone can thrive.”

Dreizler offers a few tips for attracting a more diverse set of candidates, which includes hiring for skills and not for specific past experiences.

“If you want to hire for an administrative position, consider whether being successful in that role really needs three years of experience in wealth management,” she said. “What is probably needed is a set of skills and capacities that could have been learned in a variety of other fields.”

Dreizler also advised rethinking how you’re searching for new hires.

“If you’re hiring by word of mouth, you’ll tend to get candidates that look like the people in your network,” she said. “You can expand that by sharing your job ads with affinity groups like Quad A, Women in ETFs, etc.”

In addition to making the content of job postings less gender-focused, Dreizler said firms looking for new hires should take a close look at their website to ensure that if you are “actively doing the work to become a more equitable and inclusive company, acknowledge that on your site.”

While not all firms are going to subscribe to efforts to create a more diverse industry, it would be difficult to argue that diversity among the ranks isn’t good business.

Along those lines, here at InvestmentNews, we have added our own Diversity, Equity and Inclusion Editor, Joanne Cleaver, to help us pay more attention to what the industry is doing in this area, and to ensure our coverage is in line with this ongoing evolution in wealth management.