NASHVILLE, Tenn - When it comes to racial diversity, the financial planning industry still has a long, long, long way to go.
African-Americans make up around 2% to 3% of advisers, according to most estimates. Tony Barrett, who manages Raymond James & Associates’ Delaware Valley Complex in Philadelphia, says that, given his experience in the industry, it feels to him like the real number is about half that.
“I look around and say, 'Where are these black advisers?' Barrett says. "I think the real number is around one percent at best.”
Barrett wants to see more blacks in the profession, and help support African-Americans who are already advisers. A year ago, he and another black adviser, Joel Burstein, a branch manager for Raymond James & Associates in Miami, along with Kaon Nelson, an adviser in Rockville, Md., co-founded the Raymond James Black Financial Advisors Network.
The group’s first meeting in 2015 attracted 22 advisers. Earlier this year, more than twice that many black advisers came. The network now has 50 members, slightly more than half who come from the firm’s independent arm, Raymond James Financial Services.
Barrett and Burstein hope the numbers double again next year, but know that incremental change is more likely.
“Attracting young people to the profession is a very broad problem to begin with,” Burstein said at a press briefing at the Raymond James Financial Services annual national conference. “Attracting young African Americans is that same problem magnified.”
- Read more: How to Solve the Industry's Race Problem
For starters, an African-American college graduate is going to have plenty of options for their services, Barrett points out. “Diversity is hot, and there’s competition from a lot of other industries,” he says.
Quote"Young people are hearing negative things about Wall Street every day from both political parties."
Then there’s the Wall Street connection. “Young people are hearing negative things about Wall Street every day from both political parties,” says Burstein. “And they don’t differentiate between what Wall Street does and what financial advisers do.”
On top of that, financial advice simply isn’t familiar to many African-Americans, Barrett notes.
“If you’re not from an affluent family, you probably never heard of a financial adviser ,” he says. “It’s never been part of the culture. If African-Americans had any investable assets they were more likely to put it in the bank, real estate or life insurance, not the capital markets.”
‘A WHOLE DIFFERENT LEVEL OF BARRIERS’
Compounding the problem is the difficulties blacks face when they do enter the profession.
“Racial bias does exist,” Barrett says. “Anybody who says it doesn’t is kidding themselves.”
Some white people simply won’t give a black person their money to manage or trust them for advice, according to Barrett and Burstein. And the ones that do are more likely to give a black adviser less money than they would give a white adviser, until their initial concerns are allayed, the men say.
Quote"Racial bias does exist. Anybody who says it doesn’t is kidding themselves.”
But while the path to success is steeper for blacks, it is also possible to be successful, Barrett and Burstein say.
“You can control the controllables,” Barrett says. “When I started out as an adviser, I knew that X percent of people I spoke to were not going to give me their money. So I knew I had to make more calls, meet more people and make my presentations as close to perfect as possible. You have to have a thick skin.”
Barrett says he builds in extra time when meeting a prospect who doesn’t know he’s black.
“I have to break down a whole different level of barriers,” he says. “I have to prove that I’m a professional and intelligent, and I have to spend 10 to 15 minutes just looking for commonalities to make them comfortable with me.”
Creating advocates is also critical for success, Barrett adds.
“You have to go to people who know you and trust you,” he says, “and ask them to introduce you to people who will give you a shot.”
'DESPERATELY IN NEED' OF DIVERSITY
Once black advisers do get traction, their assets tend to be sticky, according to Burstein. “You didn’t get the account because you were in the same country club,” he says. “Odds are it was hard earned and well taken care of.”
Nonetheless, even established black advisers need support, Burstein says.
Quote"I have to spend 10 to 15 minutes just looking for commonalities to make them comfortable with me.”
“That was the biggest thing, to create a support network,” he says. “We wanted to get information out to people and give them a place to share their experiences and their problems with people who could understand and help.”
The Raymond James Black Financial Advisers Network uses a SharePoint web site where they can exchange and find information, ask questions and post comments. There are also mentoring programs, practice management workshops and member meetings.
But Raymond James can’t do it alone, Barrett and Burstein say.
“There has to be an industry solution,” Burstein says, “because this is an industry desperately in need of more diversity.”