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As more Americans push for diversity, equality and inclusion in the world around them, financial advisors are finding ways to adapt.
The Black Lives Matter movement and nationwide protests have changed the dynamic, yet many financial firms are still dominated by White males. In 2019, 77.7% of those who worked in the management, business and financial operations occupations were White, according to the U.S. Bureau of Labor Statistics.
Yet to adapt, financial advisors need to do more than just checking off a box by hiring a person of color and then calling it a day, experts told CNBC’s Sharon Epperson on Tuesday during the CNBC Financial Advisor Summit, a day-long roundtable for financial advisors.
They’ll have to rethink their strategies and find ways to attract and sustain diverse new talent and clientele.
“If you are really interested in reaching a certain segment, it needs to be authentic,” said certified financial planner Lazetta Rainey Braxton, co-founder and co-CEO of New York-based advisory firm 2050 Wealth Partners.
“It needs to be in your messaging. It needs to be in all your materials.”
You also have to make sure your internal culture is ready for a different population. She suggests conducting a cultural audit of the firm. Look at your demographic balance, and put it all in one document.
Then, survey your workers to find out about the culture. Ask questions about whether they feel if they belong and how comfortable they are voicing contrary opinion, said Braxton, a member of the CNBC Financial Advisor Council.
You should also try to become aware of any unconscious biases you may have. Make a decision that it is an area you want to improve, said Winnie Sun, director and founding partner of Irvine, California-based Sun Group Wealth Partners
“Have that self awareness,” said Sun, whose firm has a very diverse client base.
To attract diverse clients, take to social media, Sun suggests.
You can also look for referrals from current clients, said CFP Louis Barajas, CEO of Newport Beach, California-based MGO Wealth Advisors.
“Always be vulnerable and say you need help,” he said. “There is nothing better than getting a referral.”
When it comes to hiring new team members, Sun tries to do her best in terms of attracting someone from a different background.
“It means being very strategic and very mindful of this,” Sun said. “It is OK to take a chance on someone who doesn’t look like you.
“You have to find the similar value system.”
To find new talent, you can look to becoming part of the community of advisors. For instance, you don’t have to be Black to become a member of the Association of African American Financial Advisors, said Braxton, chair of the organization’s board.
Also, be sure to give people you hire a chance to move up the ladder, otherwise they won’t stick around.
“You have to give them the opportunity and the expectations … what it takes to get to every level,” said Barajas.
All three financial advisors struck out on their own after feeling their voices were not heard at their respective firms.
They believe there is still a lot of work to be done in the industry.
“What we see is a lot of succession planning still happening,” Braxton said. “They are still grooming people that look like them.
“You have to take a chance, you have to expand your pool.”
If they don’t, other firms will be innovative and scoop up the talent being left behind, she added.
Sun concurred, noting that many firms still look one-dimensional.
“Our industry has to change and unfortunately, in my opinion, a lot of cleaning house needs to take place,” Sun said.