Very little about Lauryn Williams is typical. She’s a four-time Olympian who won three medals in two different sports. She was making six figures before she was old enough to drink. And she’s a certified financial planner. Which, given that she’s a black woman, is “almost like being a unicorn in the industry,” she said.
Sometimes, being one of very few black women in the field has its advantages. But sometimes it also means people look at her and have trouble thinking, that’s who I want to manage my money. She’s heard that pretty directly from guys who play in the NFL and NBA, in particular.
“I would think that a black player who has been raised by a black mother would be interested in the black female adviser, but I’ve actually been told, ‘that that’s not what money looks like,’” Williams said. “It’s kind of an awkward conversation to have. They believe that an old white man is the person that’s best equipped to help them handle their finances, because that’s all they’ve ever seen, and that’s their idea of what success and money and wealth look like.”
Like so many industries, the financial planning world in 2019 still skews heavily white and heavily male. Women and people of color are dramatically underrepresented in the profession across the board, but especially among certified financial planners — just 1.5% of CFPs are black, 2% are Hispanic or Latino, and 23% are women, according to a recent report from the Center for Financial Planning. The percentages have barely budged in years, despite study after study showing the myriad ways diversity benefits customers, employees and companies themselves.
“Those numbers are obviously very low, and I think there is a lot of work that all of us have to do in the financial services space to get these numbers higher,” said Samuel Palmer, a head of business development and strategy for JPMorgan Chase wealth management, who has been closely involved in launching and running the company’s diversity and inclusion initiative.
“I spent a decade at a consulting firm solving some of the most difficult business problems that firms have across the world,” he said. “And I have to say that after two years of working on the diversity and inclusion question, I have a lot of appreciation of how difficult a question and how difficult a problem it is.”
It’s becoming an increasingly urgent question for the financial planning industry, though, as the country gets more diverse. Women are already more than 50% of the population, and by 2045, census projections show that white people will be in the minority in the U.S.
“I would say the impact of not having a diverse advisory population is there are a lot of people who are underserved,” said Marguerita Cheng, a certified financial planner and a member of the CFP Board’s diversity advisory group. That includes people from different racial and cultural backgrounds, women, younger people, LGBTQ people and people from different class backgrounds.
Cheng, who grew up in a multiracial, multicultural family, said that when she got her first job at a firm as a CFP, “I was the only female financial adviser, with kids, who was a minority. That was it, it was just me, there was no one that looked like me.”
No one ever explicitly told her she didn’t belong, but it sometimes felt like it. And sometimes it felt like she had been hired to check different boxes. But after a while, it also felt like she was able to connect with clients that her colleagues didn’t always.
“There are a lot of clients who told me, ‘Hey Rita, working with you is so different. I don’t think I would be where I am without you,’” she said. “There’s a saying that when you first start in the business, you are going to connect and work with people who kind of look like you. Maybe they don’t look like you, but your story connects with them, and they connect with you. And there’s some truth to that.”
Palmer has found that, too.
“Money is very emotional,” he said. “If you come from a different background, or if you come from a place where you, for example, did not grow with money, then you may be able to bring a level of empathy which another person might not.”
More motivating for big companies, though, is the business case for increasing diversity, said D.A. Abrams, the new managing director for the CFP Board.
“I like to position diversity and inclusion as something that should be leveraged for positive business impact,” he said. “Of course we want to do the right thing, the right thing for society, and I think that’s important. But when you connect it to business outcomes, people pay attention.”
The CFP Board’s 2019 report, “Why Diversity Matters,” also focuses heavily on that connection between greater diversity and greater business outcomes, and highlights numerous recent studies that “have demonstrated that greater diversity leads to stronger sales revenue, customer growth, greater market share and higher profit levels.”
One of those studies, put out by McKinsey in 2015, found that companies that rank in the top quartile in terms of gender or racial diversity do better than average financially. Companies that are in the lowest quartile when it comes to gender or racial diversity tend to do worse than average financially.
There are plenty of other metrics, too, Abrams said, that show that actively recruiting and retaining more women and more people of color is “a massive business opportunity.”
Like the still largely untapped buying power of minority groups, which stands at nearly $3 trillion, just taking into account the black and Latino communities, according to a recent report from FSG and Policy Link. For the LGBTQ community, it’s around $917 billion.
“For firms that really get this right,” Abrams said, “they’ll be taking advantage of that, and it will be leading straight to their bottom line.”
Ultimately, though, reaching a more diverse clientele is going to take more than just hiring and retaining diverse CFPs, though that is a critical step, Williams said.
Even as a black woman, she is struggling to break through what she calls “deep-seated cultural issues” that she’s run into in her own community around financial planning and advising. Some of those issues have to do with attitudes toward money and privacy. Some have to do with a lack of familiarity with and trust in the industry. And some have to do with how sales-driven the financial services industry can be.
“Sales in general, and sales-driven financial advising, is one of the things that turns people off,” Williams said. “So in our community, we are a lot less receptive to financial planning, financial advisers, financial help, because everyone knows someone who’s been sold something, or that felt forced into a situation because someone in their community that looked like them didn’t do what was in their best interest, or didn’t actually help them with these other things that were necessary in order for them to get going on changing their financial story and their trajectory.”
In order for that to change in a significant way, in order to really reach new, more diverse communities, she said, “the industry as a whole needs to change, and be less oriented towards sales, and more oriented toward literacy and comprehensive financial planning.”