Why I bristle when people say, 'I don’t see color'
I lead an unusually diverse RIA. Our advisors and staff speak four languages. Half of our senior leadership is comprised of black women. At age 42, I’m the oldest person at the firm. And we have doubled our AUM each year over the past three years. I think I’m fairly well positioned to answer the following question: Does diversity matter in financial services?
This is a critical question and the answer is clear: I don’t believe organizations can begin to make changes unless there is a business imperative.
Diverse organizations make better decisions. Certainly, there is a wealth of research that underlines this point. A McKinsey report, for example, found that companies with more culturally and ethnically diverse executive teams were 33% more likely to see better-than-average profits. And a Credit Suisse report found that companies where women make up half of senior managers produced 10% higher cash flow returns on investment than the MSCI ACWI index.
Women and minorities are an underutilized talent pool in our industry. If you believe that talent in the world is evenly distributed but opportunity is not, it’s apparent that an industry that lacks diversity is missing a lot of talented people. One could also argue a few stereotypical points that are not strongly backed by research. For example, that women are better listeners than men. And that minorities, and people who come from less-wealthy backgrounds, often possess a high degree of hunger, drive and determination.
I recently led a panel discussion about diversity. I agreed with many of the points that came up, including the premise that our profession could benefit from more women and minority representation. But I cringed at another topic: Clients want to work with advisors who look like them.
Seventeen years ago, when I was just getting started as a financial advisor, I interviewed with a team where a white advisor said to me, “On our team you can go after the black clients and I can go after the white ones.”
Had I followed that logic, I wouldn’t be in business today. I am not saying that black clients are a bad target market. I am saying that not all clients use race as the primary factor when choosing an advisor. My client book is a beautiful rainbow of young and old, white, black and other ethnicities, and men and women. Clients have gravitated towards me — and my firm — because our personalities and values mesh. And because we are adept at understanding their needs and helping them to express themselves with their money.
What are the barriers to diversity?
There is some great research on this topic from the CFP institute. Among the barriers they’ve identified are a lack of awareness of financial planning as a career path and the misperception that financial advisors must come from wealthy backgrounds.
But there is another glaring problem. Many financial services firms are not welcoming of women and minorities. Imagine you are attending a social event or a conference where no one looked or acted like you. Would you feel comfortable? Would you have a good time? What I’m getting at is that organizations that are diverse are more welcoming to diverse people.
I am a firm believer that businesses are adept at solving problems that they want to solve. And I believe that financial advisors are among the most resourceful and inventive professionals in terms of recruiting a target market. I posed this question to the Investment Forum group: If you wanted to land professional athletes as clients, what are some of the things you would do? I found framing the question this way led to easy answers.
- Build relationships with intermediaries. In this case, agents and coaches.
- Start early and build relationships while potential clients are still in college.
- Take a genuine interest in the news and issues that impact this group of people.
- Find organizations where they congregate. In this case, the players associations.
- Befriend an athlete and ask for advice.
These steps can also be taken toward the goal of recruiting a diverse cohort of financial advisors.
There are organizations out there like Quad-A, the Association of African-American Financial Advisors. Why not sponsor and attend one of their conferences? (A quick plug: They have one coming up in Detroit in September).
Mentor a college student or young professional. This is a great way to give back while also achieving your recruitment mission. As a mentor, you not only get the fulfillment of helping someone, you also get the opportunity to discover if your mentee might one day be a good fit for employment. Also, mentorship creates immense loyalty.
Do you have a genuine interest in the issues that impact people who don’t look like you? One way to check is to take a look at your Facebook friends. Have you unfriended people who don’t share your political or social views? In my lifetime, the country has never seemed more divided in terms of race. Unless we can have conversations and maintain relationships and friendships across racial lines, we will never solve the diversity issue.
Don’t stop at diverse hiring
I bristle every time I hear someone say “I don’t see color.” People of color want to be seen. We want you to recognize that our differences bring value and substance to the table. Our backgrounds and different ways of thinking can be assets for your team. These cultural differences should be celebrated and not overlooked. When someone feels like an interloper or outsider, they will constantly have their guard up. They will not be comfortable enough to bring their full selves to work. They will not be fully engaged at work — and will ultimately walk out the door.
An environment of equity and inclusion helps everyone on the team feel like they belong. It creates a sense of joint ownership that makes people care more about their work and work harder. This type of culture can create a virtuous cycle of success at your firm.