Retaining diverse talent is tough — 3 tips on how to succeed

November 13, 2023 6:03 PM

Creative retention panel at CFP Board Diversity Summit - 11-09-2023.JPG — Experts discussed retaining diverse talent at the CFP Board Center for Financial Planning's sixth annual Diversity Summit. L to R: Leslie Yambao Tabor of Charles Schwab; Lindsey Woodward of Abacus Wealth Partners; Kobby Okum of Edward Jones; Richard Shaw of the CFP Board and Bessemer Trust.

When it comes to improving diversity at a wealth management firm, it's not necessarily who's hired but who stays that counts. And replacing advisors, especially good ones, is a costly affair.

Key to successful retention is creating an inclusive environment for all employees to thrive, according to Richard Shaw, CFP Board director and principal and senior client advisor at Bessemer Trust.

"Without inclusion, retention is not possible," Shaw said, speaking on a panel Thursday at the CFP Board Center for Financial Planning's sixth annual diversity summit in Arlington, Virginia. Shaw added that organizations must foster a sense of belonging among employees.

"If employees feel a sense of belonging — they can bring their authentic sense of self to work every day — they are more likely to stay with the organization and contribute to that organization."

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Shaw moderated the panel, aptly titled "Creative Retention Strategies: Case Studies in Practice," which featured Kobby Okum, a financial advisor at Edward Jones; Lindsey Woodward, co-chief investment officer at RIA Abacus Wealth Partners; and Leslie Yambao Tabor, director of business consulting and education at Charles Schwab's Schwab Advisor Services. The panel was a follow-up to a paper the CFP Board published in May that highlighted the three firms as "case studies" in creating a specific form of programming to improve diversity, equity and inclusion in a wealth management practice.

Several firms at the event, including lead sponsor Merrill Wealth Management and other sponsors Morgan Stanley and Edward Jones, have faced litigation in recent years from former advisors alleging they experienced discrimination. However, with their presence at the summit, those firms attempted to convey their commitments to improving talent practices.

Below are several tips shared by experts and industry leaders at the event, as well as the CFP Board's May paper, on how leaders can not only hire diverse talent but also keep it.

Create a clear path to advancement

Part of retaining talent is keeping questions of fairness at bay when it comes to promoting young advisors. Without clearly posted rules for advancement, it can be easy for employees to read favoritism into a decision or feel lost on how to stand out.

In the case of Abacus, Woodward said, the firm established in 2014 an associate advisors program that hires advisors with no experience in the industry and trains them from scratch to move up to the role of lead advisor within two to three years. The firm sponsors these younger advisors to obtain both a Series 65 license and a CFP designation. A lead advisor with more experience can be promoted to relationship manager; they are groomed for this process by working closely with a relationship manager.

"Our previous leadership team was kind of like: 'Oh, choose your own adventure. You have so much flexibility here,'" Woodward said. However, in retrospect that well-intentioned attitude was "almost exclusionary, because if you don't have a set path for people, there is a lot of space for inequitable practices."

When promotion isn't possible, the firm can offer stretch assignments, the CFP Board said in its paper.

Offer employee groups to support diverse talent

Tabor said that Schwab had a robust set of employee resource groups to support advisors in finding a place to learn from peers and have a voice in creating solutions that work for their needs. There are currently 10 ERGs at the firm with over 150 local chapters, ranging from groups for racial minorities to groups supporting those with disabilities, LGBTQ+ employees, women, and military families, among other identities. ERG groups frequently offer mentorship programs where a young advisor can have the opportunity to learn from someone more established.

"I follow all of our 10 channels — so every day, I log in, and there's usually going to be some motivational something from one or more of the channels," she said. "All of those daily affirmations and those daily stories that people voluntarily share, contributes to the day to day culture, because those are lived experiences."

About a third of employees participate in the ERGs, she said.

Additionally, the firm has a "workplace flexibility program [which] gives employees 90 flexible work location days per year; they can opt to work with their managers to request more. Research shows that a more flexible work environment is an effective strategy for retaining diverse talent," the CFP Board said in its paper.

Leaders must set the tone

Leaders can incentivize diverse talent retention by tying manager pay and bonuses to both hiring and retention of diverse teams, but also through avenues like public recognition to model managers, the CFP Board said in its paper.

"Outside of pay and promotion decisions, simple rewards and recognition are often the most concrete and emotionally supportive interventions firms can implement to advance DEI objectives," the paper said. "For example, at an all-staff meeting, a firm executive may acknowledge a manager who embodies the company's DEI goals and practices — perhaps by hiring and retaining a racially diverse, high-performing team for over five years, by facilitating their team's provision of pro bono financial literacy to communities of color, or by continuously learning about racial equity."

In the case of Edward Jones, Okum said, the firm had made a very public commitment to hit certain milestones in its home office senior management staff — aiming to make it at least 50% female and 20% people of color by 2025.