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Financial advisory industry seeks to overcome lack of racial diversity

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Martin Seay’s term as president of the Financial Planning Association has, to say the least, been an eventful one so far.

Not only has the coronavirus pandemic changed just about everything in the advisory industry, but the Black Lives Matter movement and the nationwide protests that have followed the death of George Floyd at the hands of police in Minneapolis also present profound challenges to the White male-dominated financial advisory space.

Seay, a certified financial planner, is also Department Head and Associate Professor of Personal Financial Planning at Kansas State University.

The FPA, with 20,000 members, and the broader advisory space are undertaking a candid examination of the industry’s business incentives, hiring practices and work environments in terms of how they support the inclusion — or exclusion — of women and people of color.

To be sure, the scope of opportunities in the financial planning professional is quite broad and can be very rewarding. However, as varied as this profession is in the many types of job opportunities there are, the demographics of the industry do not reflect the diversity of the overall population.

There’s obviously a great deal of work to be done. Just 3.8% of the industry’s more than 87,000 advisors who hold the CFP designation are Black or Latino, according to the Certified Financial Planners board, the industry body which sets standards in financial planning. This compares with the approximately 20% of U.S. workers who identify as non-white or Latino, according to 2019 data from the U.S. Bureau of Labor Statistics.

What’s more, overall less than 20% of advisors are women.

It is not an easy reckoning. Nor are there easy solutions to change that reality. CNBC spoke with Seay about the challenges of increasing diversity in the advisory industry.

CNBC: How diverse is the financial advisory industry?

Martin Seay: The numbers are pretty damning, when you look at them. Industry-wide, 82% of advisors are White and just 16% are women. Our numbers [at the FPA] are a bit better than industry average in terms of female CFPs (23%) but, at the end of 2019, just 3.8% of CFPs were Black or Latino. We want to see those numbers move up.

CNBC: How can the FPA help to increase those numbers?

Seay: Diversity is our challenge, and inclusion is the solution. We’ve been conducting listening tours with under-represented populations to understand the challenges they face with the intent to learn and take action. One individual shared a story with me about how her firm told her she had to change her name because they felt it was too ethnic.

This content was originally published here.

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