10 stories about DEI in wealth management in 2023

December 27, 2023 8:00 AM

Wealth management professionals interested in seeing the demographics of the industry more accurately reflect the demographics of the nation know that change won't come by just sitting around and hoping for it.

So for the past 12 months, they've put in the work and taken action to reshape the business into something that is more welcoming to everyone.

From celebrating outstanding women in wealth management to AAPI advisors pushing toward better visibility, 2023 was bursting with examples of professionals that don't fit the old fashioned mold making major moves.

And while most of them are quick to remind us that there is still more work to be done, their efforts have moved wealth management into a new era of inclusion.

Scroll down to see how the Financial Planning team has covered matters of race, diversity and inclusion in 2023.

Slowly but surely

For the second consecutive year, the CFP Board kicked off 2023 by saying that it has ushered in the largest, most diverse class of fresh CFPs the industry has ever seen.

In January, the organization announced that 2022 closed with the total number of CFP professionals climbing to a record 95,137, up 3.8% from the 92,055 reported one year prior. The organization is also celebrating some notable year-over-year gains among women and unrepresented professionals.

There were 1,519 women in the class of 2022, representing an increase of 4.4% over 2021's totals. And the number of new CFPs categorized as "racially and ethnically diverse" grew by 763, or 8.5%.

The rest of the numbers make it clear that wealth management still has a long way to go if it hopes to reflect the nation it serves. But advisors say small steps still move us all forward.

Read:

Advisors celebrate 'incremental' diversity gains as the number of CFPs eclipses 95,000

The impact of a legend

Freedom National Bank closed 33 years ago on the famed "Main Street" of New York's Harlem neighborhood, 125th Street, where the institution co-founded and chaired by baseball legend Jackie Robinson sat a couple of doors from the Apollo Theater and provided the beloved venue with the loan for refurbishing.

The bank — and with it Robinson's dedication to building Black generational wealth — is an often overlooked period of Robinson's life, in light of his historic athletic accomplishments.

But the legacy of Robinson and other Black entrepreneurs who have fought against America's persistent racial wealth disparities and economic discrimination lives on today with financial advisors who are launching their own mission-driven ventures and community banks increasing access to capital under burgeoning collaborations with large financial institutions.

The nascent but growing efforts hold the key to reducing the wealth gap, according to experts, who nonetheless point out that questions remain over how to do that most effectively.

Read:

How Jackie Robinson's financial legacy lives on in the industry today

Moving beyond the myths

Tonia Bottoms, Becky Kariuki, Marvine Laurent and Fanci Worthington discuss DEI myths in wealth management during the annual Diversitas Symposium.

Industry efforts to evolve alongside rapidly shifting U.S. demographics and create opportunities for the next generation of diverse financial advisors were the focus of the sixth annual Diversitas Symposium hosted by the University of Akron in February.

Since its establishment in 2016, Diversitas has hosted a financial knowledge symposium to gather wealth management veterans and emerging talent with career influencers and students who are exploring the profession.

The goal is to build hope for young people and career changers in an industry marred by generations of exclusion, but that is working to become more inclusive.

Among the discussions that took place during the annual event was a nearly hour-long panel led by Tonia Bottoms of BNY Mellon | Pershing that analyzed some of the common myths related to wealth management's diversity issues.

Read:

Busting myths around wealth management's DEI problems

Making room for the next generation

As 2023 got rolling, the BLX Internship Program had a major problem on its hands.

Too many talented, diverse interns and not enough firms to take them on.

Born in the wake of George Floyd's murder and in the spirit of the Black Lives Matter movement, the BLatinX Internship Program was founded in late 2020 by a group of four advisors who wanted to see the industry more accurately reflect the nation it serves.

Known as BLX for short, the organization's goal is to provide an opportunity for underrepresented financial planners to secure internships at fee-only financial planning firms. But BLX Internship Program co-founder Luis Rosa said that's easier said than done as the number of applicants ticks up year after year.

"Unfortunately, we won't be able to place every applicant because we just don't have that many firms. And that tends to be the case. We may end up having 35 or 40 slots," he said. "The way it's looking with the number of applications, even if half are qualified applicants, we're still only able to place about a third or so of the qualified applicants."

Read:

Why the BLX Internship's supply and demand problem is one worth celebrating

Sharing the power of financial advice

CAAFP attendees listen during a keystone presentation led by Kristi Rodriguez, founder and president of the Financial Alliance for Racial Equity, during day three of the event.

The 17th Annual Conference of African American Financial Professionals, or CAAFP, returned to Chicago over the summer with the theme of "reclaiming Black wealth" and nearly 1,000 registrants.

The goal of the event is to reinforce and elevate the conversation around how the financial services industry can inspire Black professionals and promote the advancement of underserved communities.

Discussions and sessions were split into four main tracks: retirement, consumer connections, applied knowledge and niche markets. The agenda coincided with the core mission of the CAAFP, which is to narrow the wealth gap and create sustainable, generational change.

And while not listed as a study topic on the formal rundown, George Nichols III, president and CEO of The American College of Financial Services, always sends attendees with some homework once the conference wraps. On the final day, Nichols took the stage in a packed ballroom at the Hilton Chicago and told those in attendance that they have no choice but to show up and "knock the ball out of the park."

Read:

CAAFP 2023 highlights the power of financial advice in Black communities

Passing down the knowledge

Helping clients navigate life events like career changes, starting a family or planning for retirement is a complex, high-stakes situation no matter who you're working with.

But if your client happens to be one of the countless Black Americans who already feels overlooked or undervalued by the financial services industry, crafting a successful plan can be even more complicated without the right approach.

During CAAFP 2023, a crew of experienced Black advisors dished out tips for planners working with underserved families in an effort to better equip the industry to serve a populace it has long overlooked.

They said things like defining success, providing the room to make mistakes and taking the time to repair generations of damaged trust go a long way to break the cycle and serve Black clients better.

Read:

7 tips to help Black clients find multigenerational success

Not just talking the talk

New research released in October by Arizent, Financial Planning's parent company, aims to gauge the "realness" of DEI efforts across financial services, as well as highlight the business benefits that come with a proven commitment to inclusion.

Arizent's online survey, conducted in July and August 2023, polled 669 respondents across the wealth management, banking, accounting and insurance sectors about their attitudes on the progress of ongoing DEI initiatives.

The analysis also attempts to quantify the elements of a healthy workplace where all employees feel seen or valued.

"A genuine commitment to inclusion … and thoughtfully crafted DEI policies can help companies flourish," the report states. "But simply acting isn't enough; companies also have to calibrate the actions they take around DEI efforts. Doing too much, too little or the wrong thing is just as problematic as not doing anything at all."

Read:

Why 'keeping it real' is powerful DEI advice for wealth management

Getting to know the DIY CEO

Advyzon CEO Hailin Li strikes a pose on a motorcycle.

The more he is asked to detail the long list of accomplishments that comprise his 27-year wealthtech career, the more Hailin Li adjusts his glasses and shrinks in his Zoom window as a shy smile spreads across his clean-shaven face.

It's not a reaction that comes from discomfort or a lack of confidence. The former senior vice president of advisor solutions at Morningstar who left the firm to found Advyzon back in 2012 is every bit the industry leader that his résumé suggests.

But after a few moments of discussing work, it's evident that Li is a man who prefers walking the walk over talking the talk. That's because for Li, the hard work is just as fulfilling as the payoff. It's a mindset that permeates not only his professional pursuits, but also his personal passions.

A self-proclaimed car enthusiast, Li is well aware of the thrills that can be had when behind the wheel. But he has even more fun under the hood with a wrench in his hand and a problem to solve.

That hands-on mentality is one of the many reasons his colleagues said working alongside Li for the past has been such a pleasure, and likely played a role in the Chicago-based firm securing a spot on Arizent's 2021 list of best fintech's to work for as well.

Read:

Advyzon's Hailin Li is a DIY CEO who never stops asking 'why?'

Breaking the double bind

Disrupting the wealth management industry's legacy of excluding women, Black Americans and other minorities takes the recognition that change is a "two-way street," according to experts.

Amid the growing consensus in the industry of the necessity to recruit a more diverse workforce and serve a wider base of clients, more financial advisors and other wealth management professionals are pointing out that the problem goes beyond workforce representation figures.

Those who have entered the profession can face outright discriminatory practices or other conduct that prompts them to leave large firms or exit from the industry entirely.

With that backdrop, FINRA held its Virtual Diversity Leadership Summit in late October using the theme of "resilience in a time of transition."

In one panel session, Nandita Das, who is the director of the planning program at Delaware State University's College of Business, and Erika Kirgios, a University of Chicago Booth School of Business researcher focusing on the behavioral science of race and gender in the workplace, explained the complexities that the industry must learn in order to recruit and retain the next generation of advisors and clients.

Underrepresented industry professionals often face "a double bind," Kirgios said.

"On the one hand, you can try to assimilate, try to emphasize just belonging and behaving like majority group members in this space, or you can try to use your identity strategically and then potentially deal with concerns about being stigmatized or being treated like a diversity hire," she said.

Read:

Going beyond virtue signaling to boost diversity in wealth management

The strength to keep fighting

Daisy Auger-Domínguez, author of the book "Inclusion Revolution: The Essential Guide to Dismantling Racial Inequality in the Workplace," delivered the opening keynote at the CFP Board Center for Financial Planning's sixth annual Diversity Summit.

The work of advancing diversity, equity and inclusion in wealth management firms today can feel discouraging, as DEI staff endure layoffs and lawsuit-fearing firms back away from DEI investments across many industries.

But a roomful of financial planners gathered in November in an Arlington, Virginia event space rallied cautiously, at times defiantly, around the cause of DEI in an industry that still has far to go on its diversity efforts. Currently only 1.9% of financial planners are Black and less than a quarter are women.

"There have been attacks, as you all know, on university programs that focus on diversity. I don't have to tell you that there are those working to dismantle the progress that we've made," said Kevin Keller, the CEO of the CFP Board, in his opening remarks at the CFP Board Center for Financial Planning's sixth annual Diversity Summit.

"But let me be unambiguous. … We at the CFP Board are unwavering in our pursuit of a diverse financial planning profession."

Read:

CFP Board Diversity Summit in 2023 strikes notes of defiance, hope