The broad financial advice industry, comprising roughly 320,000 individuals registered as investment advisers or brokers, is trying to indicate that it's finally getting serious about becoming diverse and hiring more women, Blacks, and other minorities.
Having a diverse set of workers strengthens any business or endeavor because of the range of talent, experience, intelligence and perception of such a workforce. One year after the murder of George Floyd, the financial advice industry has made some efforts to at least look as if it cares about the issue.
For example, last August, a few months after Floyd's death, Merrill Lynch for the first time in five years took the unusual step of releasing statistics about the diversity and makeup of its 17,500 financial advisers.
The numbers showed some improvement at Merrill in the hiring of women and minority financial advisers, notably an increase in women as a percentage of advisers, 21%, compared to 18% five years earlier. Meanwhile, 23% of advisers were "ethnically diverse" at Merrill last year, compared to 15.5% in 2015.
That's some improvement, but not nearly enough, particularly considering that the securities industry has paid lip service to hiring women and minorities for years.
In fact, talk about diversity and some level of information and data were pretty standard fare at an annual meeting held 20 years by the former Securities Industry Association, which became the Securities Industry and Financial Markets Association in 2007 after it merged with another trade group.
That same year, Sifma reported that about 2% of the brokers and financial advisers at Sifma member firms were minorities and 16.3% were women, according to a report in InvestmentNews.
So comparing the 2007 Sifma information to Merrill Lynch's 2020 data indicates some improvement over a 14-year period, particularly in the hiring of financial advisers who are minorities.
But think again. According to a lawsuit filed last year by a former head of global diversity at Morgan Stanley, less than 1% of that firm’s 16,000 advisers are Black.
What a hodgepodge. What a muddle.
The financial advice industry employs some of the top mathematical minds in the nation, yet there is no clear, standard picture showing whether the financial advice industry is succeeding in its much-ballyhooed effort to hire more women and minorities over the past five, 10 or 20 years.
It's high summer and time to celebrate the Fourth of July. Most of us would probably like to shed a few pounds before donning our swimsuits and hitting the shore. But how can we know how much weight we lost, or gained, during Covid-19 if there is no scale to step on to count the pounds?
And how can the financial advice industry know whether its attempts to hire more women, Blacks, Latinos and Asians are working if there no accurate, unified measure of success or failure?
Don't look to the Securities and Exchange Commission or the Financial Industry Regulatory Authority Inc. for such information, even though those two regulators keep strict tabs on the thousands of registered investment adviser firms and broker-dealers where financial advisers are registered to work.
It would make the most sense for those two organizations to be in charge of an effort to collect the financial advice industry's data about diversity, but the bureaucrats and lawyers who run both organizations would likely need a couple of years of meetings before giving the OK about what types of pencils should be used when jotting notes about diversity.
That leaves it up to the big boys of the industry -- and I underscore boys here -- to step up. That leaves it to LPL Financial, Morgan Stanley, Fidelity, Merrill Lynch, Raymond James Financial Inc. and all the rest to own this issue. This summer, those firms should form a consortium on diversity, put their best people on it, open it to the public and get to work.
That's not likely to happen. The big firms dislike each other intensely and often regard the competition with suspicion and enmity.
So what clear steps and changes need to happen for the financial advice industry to hire and retain more women, Blacks, Latinos and Asians?
Look for this column to examine the dilemma of a nondiverse financial advice industry over the summer. Meanwhile, have a happy Fourth. Hit the beach, regardless of the pounds.
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