Consider this: 79% of advisors are white, compared with 63% of the country as a whole, according to according to the U.S. Census Bureau.
African-Americans and Latinos comprise just 8.1% and 7.1% of advisors, respectively, but those groups account for 13% and 11% of the U.S. population, according to the bureau.
And in 30 years, whites are expected to be a minority.
Meanwhile, Cerulli Associates says just 14% of advisors are female, though women are expected to control two-thirds of the nation’s wealth by 2030.
There is clearly a disconnect among advisory firms.
Ed Gjertsen, a CFP and vice president at Mack Investment Securities in Northfield, Illinois, says that advisory firms need to “take off their blinders” and be aware of changing demographics.
“We need to get the profession to reflect what America looks like,” he says. “People who ignore minority communities assuming those communities don’t have money are making a huge short-sighted mistake.”
Firms need to become “inclusive,” hiring advisors of color, Gjertsen says.
But “you don’t just send those advisors out to serve minority clients,” he says. “Once you have advisors who are black or Hispanic or Asian on staff, the whole office becomes more diverse.”
Firms that are all white and male are missing out on significant demographic trends, says
Zaneilia Harris, a CFP and president of Upper Marlboro, Maryland-based Harris & Harris Wealth Management.
“Look at your operation. If empathy, or just listening, isn’t your natural strength, bring in someone who has those strengths,” Harris says.
“The financial services industry is very conservative and tends to be the last to jump on board new things,” she says. “I don’t expect to see firms hiring minorities until they see the money in it, but it’s there, and they’re already missing out.”
Hiring advisors who are female and/or non-white “just makes sense,” says Shawn McLaughlin, president and chief executive of McLaughlin Ryder Investments in Alexandria, Virginia.
“Having a diverse team is helpful and good for a practice,” he says. “I’d like my firm to look like my city as a whole.”
This story is part of a 30-30 series on savvy ideas on modernizing your practice