Driving diversity and inclusion in the independent financial services industry

The Financial Services Institute has long believed in the power of diversity and inclusion, and the events of the past 18 months — including historic protests that sparked a renewed national dialogue on issues of social justice — have reemphasized the urgency of these topics for our industry and for society as a whole.

We believe that in order to fulfill our mission of expanding access to financial advice to all corners of the country, our membership and our profession must reflect the makeup of our overall society.

Driving progress on diversity, equity and inclusion, in our view, means having courageous conversations and developing an understanding of where our industry stands in its journey to expand diversity and opportunities for underrepresented communities.

The latest workshop in our series on diversity and inclusion, #DoingTheWork: Actionable Diversity & Inclusion Success Planning, featured Lazetta Rainey Braxton, an adviser and recognized diversity and inclusion consultant to a vast range of financial services firms.

It was also my privilege to discuss these issues with Braxton from the main stage at FSI OneVoice in July.

As part of our workshop, Braxton focused on the business case for diversity and inclusion, in addition to their obvious social benefits.

Citing a recent McKinsey & Co. report that surveyed more than 1,000 companies worldwide, she noted that businesses with higher levels of gender and racial diversity are more likely to outperform their peers financially. The reason is that their employees were happier, healthier and more engaged — which, unsurprisingly, led them to be more productive.

"We are beyond questions about whether diversity, equity and inclusion have an impact on the bottom line, so this is no longer a question of why we should be having this conversation," she said. "It is a question of how do we implement initiatives that will be impactful."

Braxton mentioned that such efforts can start with how firms build their teams. For years, she said, businesses have focused on IQ or hard skills when hiring or forming their executive teams — where they went to school, the designations they achieved or how many assets or employees they managed.

That is now changing. EQ, or emotional quotient, has been elevated, she said, with softer skills like self-awareness and empathy becoming more critical. In today’s landscape, Braxton noted, it is very difficult to have a productive dialogue around creating a diverse, inclusive and welcoming culture without possessing these traits.

"If your firm wants to stay ahead of the curve and be relevant in the future, having this conversation is not just about reacting to today's headlines. It is about implementing a business strategy," she said. She noted further than the clients of tomorrow — Generation Z — are far more likely to make consumer choices based on which businesses reflect their values.

Our members are embracing this message. In our conversations with member firm executives and advisers, we are finding that firms are increasingly encouraging these conversations — and putting steps in place to act on them.

A recent survey of our member firms shows a growing share have established clear multiyear strategies — backed up by concrete goals and incentives — for strengthening diversity and inclusion within their workforces and leadership teams. They are increasingly aware that ensuring diversity means embedding best practices and awareness of this goal throughout each employee’s "life cycle" within the company, from recruiting and onboarding to development, retention and eventually, exit and separation.

Beyond this, firm leaders are increasingly aware that they must personally get involved in training, as well as the development and execution of their diversity and inclusion strategies. They are more powerfully committed to providing resources and avenues for staff to express their own concerns, stories and history. And they are putting in place specific procedures to measure their progress and hold themselves accountable to their goals.

We realize that we and our industry — like our nation as a whole — have a long way to go when it comes to creating truly diverse and inclusive professional cultures. What is obvious and encouraging, though, is that our industry is committed like never before to doing the work.

Dale E. Brown is president and CEO of the Financial Services Institute.