7 wealth management takeaways from Arizent's latest DEI research

October 26, 2022 4:03 PM

When discussing diversity in wealth management, Barbara Bilello said she speaks as plainly as possible about the progress being made by the industry that she loves and has dedicated nearly three decades of her life to.

"Wealth management has a lot of work to do," Bilello, a partner and wealth advisor at RegentAtlantic, told Financial Planning. With a career in financial services that began in 1994 and has regularly included advocating on behalf of the underrepresented, Bilello sees plenty of room for improvement.

Barbara Bilello, partner and wealth advisor at RegentAtlantic

"Part of the issue with wealth management is that there is a very clear absence of women financial advisors. There is an absence or a void of (diverse) portfolio managers. And the reality is that when I think about what we can be doing better, we've got to get folks a little bit more invested and aware about this profession … which I adore," she said. "Just 16% or 17% of wealth advisors across the country are women, and I'll bet you dollars to doughnuts it's a fraction of a fraction of that for LGBTQ, which is a community I am a member of."

Amid the tall task of achieving true equity in wealth management, a deep passion for the industry and its ability to change lives for the better drives Bilello forward. She believes that the continued exchange of "non-traditional" experiences has the power to normalize all experiences, opening the door for more people to get the financial guidance they need while growing the business in the process.

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"The lens I look through is more of a kaleidoscope. It is a very colorful, dimensional experience for me because I've been through different things and I've had different experiences as an individual in financial services," she said. "I've had to see the world a little bit differently."

The second annual DEI study from Financial Planning parent company Arizent explores the state of inclusion across industries, the impact a dedicated DEI strategy can have on business and how leaders in financial services can continue to champion diversity.

The goal of the research is to understand how diverse groups experience their workplaces, and how the different approaches to addressing diversity, equity and inclusion are affecting employees. The insights gathered and shared in Arizent's 2022 report aim to bring data points to DEI metrics not easily quantifiable and identify areas that need the most improvement.

It's those harder-to-track points that make a world of difference for Jesse Wideman, Jr., a certified financial planner and senior financial planner at Facet Wealth in Baltimore. He feels that tracking attitudes, workplace toxicity and whether or not advisors of color feel valued based on what they've experienced on the job can often say more than demographic figures.

Jesse Wideman Jr., senior financial planner at Facet Wealth

It's those issues that get to the heart of the more covert, passive-aggressive negativity that underrepresented groups experience in professional settings — interactions that may seem harmless to some, but have the power to completely derail others.

Wideman adds that even as the headcounts improve, there still needs to be an understanding that each person within a specific demographic is unique. One-size-fits-all fixes won't stand the test of time.

"At the end of the day, it's hard to say we're going to promote a healthy work environment for someone who is white versus someone who is Asian or someone who is African-American or someone who is Hispanic. Because that looks different for each and every person," he said. "It starts with asking, 'who's in charge? Who is influencing the culture?'

"I think it's understanding what healthy looks like for everyone and saying, how do we want to support it? And are we going to make a conscious effort to do so at the end of the day?"

Arizent's online survey, conducted in July 2022, polled 771 respondents across the wealth management, banking, accounting and insurance sectors. It included employees from both small and large companies, varying age demographics as well as from various positions, ranging from non-management roles to executives.

Here are seven wealth management takeaways from the research's findings. The entire report can be found here.

Nine in 10 say they can learn from people who are different from them

Another eight in 10 say they seek out new perspectives. But reaction to DEI and the attention it's getting is mixed among wealth management employees.

About 33% percent shared a fully positive reaction, and 35% shared a fully negative reaction. A mixed reaction to DEI and the current attention it is getting was rerouted by 24% of wealth management respondents, while 8% made only neutral comments.

Fewer than half think that companies make better decisions when there is employee diversity

Just one-quarter of wealth management respondents said it's highly important to them that their company is addressing DEI. But this perspective varies depending on position within their firm.

For example, 57% of president, owner or C-suite level respondents said it's not important that their company addresses DEI. That number drops to 22% among other leadership, and all the way down to 17% among non-management staff.

Nearly half have positive reaction to DEI and the attention it's getting

But 27% expressed concerns about whether the issue is overblown, that it's outweighing a "merit-based approach" and that it's a performative fad.

Sentiment about DEI is particularly negative in the accounting and wealth management industries, where only one-third of respondents had positive things to say about these efforts.

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Diversity is low in wealth management , but it's not the weakest industry

Within the industries surveyed, accounting was found to have the lowest level of diversity where people of color represent just 15% of the industry. That number improved slightly in other industries. People of color account for 17% of wealth management, 19% of banking and 22% of insurance.

In addition to being among the least-diverse industries, accounting and wealth management are the least likely communities to say they have something to learn from others, the least likely to think companies make better decisions when there is diversity and the least likely to say that DEI is important.

Non-white employees are less likely to report feeling valued and that they belong

White male employees are least likely to agree that companies make better decisions with employee diversity, least likely to say DEI is important and most likely to say their company has a genuine commitment to inclusion.

Workplaces, and the cultural behaviors within them, are most likely to be unhealthy environments for non-white women, and these women are least likely to have people with power in their organization to help.

Most companies are taking steps to address inclusion

From providing diversity training and education to examining pay gaps and adjusting recruiting policies, 76% percent of all respondents say they're working on it.

However, the wealth management and accounting industries report lagging in these efforts. Wealth management came in second from the bottom with 69% of respondents saying steps are being taken.

Eight in 10 say teammates value their ideas, and honesty and integrity are demonstrated at all levels

But differences remain in how employees experience their organization based on their job level. Higher-level employees are more likely to feel belonging. Lower-level employees are less likely to feel valued or belonging, and less likely to feel like curiosity is encouraged or honesty is demonstrated.