If you want to work with a financial advisor who looks like you, one you can relate to and who can relate to you and your background, that's not always easy to do. That's because the financial advisory industry still has a diversity problem.
Across the financial advice industry, Blacks represent just 2.9% of advisors, Hispanics, 5.1%, and Asians, 4.3%, according to a 2020 analysis from The Cerulli Report. Women account for 18.1% of advisors. Looking at certified financial planners specifically, Black and Hispanic advisors represented 4% of certificants in 2019, and women, 23%, according to the CFP Board Center for Financial Planning.
Those numbers fall far short of that of the U.S. population, where Black and Hispanic Americans represent nearly 30%. Women account for more than half of the population.
Analysis of CNBC's annual FA 100 ranking for 2021 shows that efforts to diversify staff at the top-rated financial advisory firms is still top of mind, but results remain out of reach. "Our industry has a lot of the same problems our society has," Alison Berman, president and CEO of Palisade Capital Management, told CNBC. "These systemic problems are extremely complex."
Beyond what many would call a moral imperative to prioritize diversity across categories of race, gender, and sexual orientation, a major benefit for the top financial planning firms is the ability to bring in new clients. By 2045, people of color are projected to be in the majority of the U.S. population and the driving force of the nation's progress, including the economy.
They'll have money to spend and, more importantly, money to manage.
"When it comes to money, a lot of people, particularly underserved and underrepresented populations, believe that no one's interested in them," says Lazetta Rainey Braxton, CFP and co-founder and co-CEO of 2050 Wealth Partners. Her firm is focused on providing holistic financial planning services to first-generation wealth builders, entrepreneurs, and thriving professionals.
"The bottom line is that people want to live comfortably,'' she says. In addition to a diverse industry, "there should be more access to financial planning and financial planners." As firms continue to focus on diversifying staff, she says, they should be equally focused on making their services available to those in underserved communities.
If you're a young earner or new earner who is trying to build wealth and find financial success (whatever that might look like to you) having the skills needed to manage your money is key.
"You have to be educated and having to teach yourself, or piecemeal that information can be catastrophic for people," Braxton says. "The sooner you have the skills and the confidence you need to be a good manager, the more success you'll have in life."
Video by Courtney Stith
In many cases, financial planning services are not as out of reach as it might seem. Your local community college might offer free or sliding scale services that will at least teach you the basics, Braxton says. And major cities are beginning to offer free one-on-one financial counseling and coaching, like New York City's NYC Financial Empowerment Centers.
XY Planning Network's "Find an Advisor" feature offers the ability to search by specialty, which includes filters for ethnicity, language, and gender/identity. The Association of African American Financial Advisors' also has an easily accessible directory of Black advisors and offers virtual advisement, if there is no one available in your immediate area.
If the cost of seeking financial services is holding you back, Braxton suggests taking advantage of free consultations. "A lot of financial advisors do a screening that starts the conversation and gets you through the door," she says.
It's important to walk into that consultation prepared, says Braxton. "Everything is anchored in goals," she says. "Knowing what's important to you" and where you want your finances to be one, three, or five years down the line can keep you focused.
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