CFP Board study provides map for increasing diversity in advice sector

CFP Board study provides map for increasing diversity in advice sector
Case studies of financial firms including Charles Schwab, Fidelity and Merrill Lynch show the importance of making diversity efforts intentional and strategic
NOV 18, 2020

Increasing racial and ethnic diversity in the investment advice sector depends on building support for the effort from the bottom up and making it a strategic imperative, according to a report released Wednesday.

The study, Diversity in Action: How to Sustain the Financial Planning Profession, provides case studies of several financial firms that have implemented diversity initiatives. One of the keys to success is to create volunteer, employee-led groups that foster an inclusive environment and amplify the same tone from executives.  

“Many of these firms have been effective in enacting change within their organizations because they were intentional in identifying barriers, creating solutions that address them, and holding leadership accountable for individual behavior and firm-wide practices,” the study said.

The report, sponsored by the Certified Financial Planner Board of Standards Inc.’s Center for Financial Planning, was released on Wednesday, the first day of the center’s virtual diversity summit.

The report provides case studies of diversity, equity and inclusion efforts at Charles Schwab, Fidelity, HoyleCohen, Merrill Lynch Wealth Management, Northwestern Mutual and Wetherby Asset Management.

“The case studies in this paper underscore how these firms not only understand the business case for diversity but have thrived because they embedded it so intricately in their work,” the study says. “For many of the firms we highlight in this paper, [diversity, equity and inclusion] strategies do not exist as standalone initiatives but instead are threaded into their overall strategy, and many of them attribute their employees’ and customers’ satisfaction, innovation, and financial growth to this deep integration.”

The report also outlines tactics that other firms can adopt and scale for their own diversity programs.

“Racial, ethnic and gender diversity are crucial to the sustainability of the financial planning profession, but we will only be able to court, recruit and retain people from these communities if we are intentional in our diversity, equity and inclusion work,” CFP Board Chief Executive Kevin Keller and Center for Financial Planning managing director D.A. Abrams wrote in a letter in the report. “The national racial reckoning also presents an opportunity for the profession to show up for people of color and stand in solidarity with them.”

The challenge of increasing diversity in the financial advice sector is illustrated among CFP professionals. In 2019, the number of Black and Latino CFPs grew by 12%, the highest increase on record. Yet they still represented only 3.8% of the approximately 86,000 CFPs in the United States last year.

“There is still significant work to be done,” Keller said in opening remarks at the summit.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.