PLANADVISER - November/December 2021 - 24

practice management / diversity
STRENGTHIN
W
hen hiring a new adviser for the firm, the best
strategy is to: a) ask one's personal and business
networks for referrals; b) woo talent from a competitor;
c) run an ad; d) contact an historically Black college.
If you chose anything but d, you think like most of your
peers. In fact, 61% of advisers recruit through people they
know, a May FlexShares survey found. Yet, when firms are
typically white and male, with networks of similar makeup,
to hire via the tried-and-true may be a strategy for falling
behind. The country's demographics have been changing.
The U.S. Census Bureau projects that, by 2045, the country's
non-Hispanic white demographic-which includes tomorrow's
investors and talent-will be less than 50%.
Even today, more than 31% of the population is Black
and Latinx, says D.A. Abrams, managing director of the CFP
[Certified Financial Professional] Board, in Washington, D.C.;
51% are women. And to work with these groups, just 4% of
CFPs are Black and Latinx, and 23% are women.
These trends are far from news. This year, apparently
prompted by 2020's various protests, says Laura Gregg,
director of practice adviser research at FlexShares, the
exchange-traded fund (ETF) suite of Northern Trust Asset
Management in Chicago, more advisers said " staff diversity
is a priority. " The number jumped from 45% in 2019 to
52% in May, according to FlexShares' two latest " Diversity
Is Good Business for Adviser Firms " studies. Still, " there's
DIVERSITY
The business case for building a heterogeneous workforce
a disconnect, " Gregg says. In the same survey, " hire and
retain more diverse talent " fell from eighth to last place of
nine strategic priorities. " I think many advisers see it as a
nice-to-have maybe something-they-should-do-when-theyget-around-to-it,
but not as a business imperative. "
She says advisers often tell her, when they want to hire
they run an ad, but no people of color apply. They do not apply
because they lack representation in the field, she observes.
Firms that want to break out of that cycle have various
means, but true effort is required. The industry will not get
diverse by chance, experts agree. Many firms start with a
diversity, equity and inclusion (DE&I) policy. In this document,
a practice can outline a strategy for creating an environment
more welcoming for Black, other minority and
female employees; key may be working to ensure upper
management consists of more than white men and implementing
mentorship opportunities for workers in those
traditionally less-advantaged groups.
Advisers may, in turn, find themselves rewarded financially
by taking action with DE&I. Effective DE&I programs
may win firms new clients, says the FlexShares report: 51%
of high-net-worth respondents to the same survey said that,
when interviewing an advisory firm, they specifically ask
about its commitment to DE&I.
Women, who statistically outlive men, hold $11 trillion
in assets and will likely control $30 trillion by 2030, Gregg
24 | planadviser.com November-December 2021 Art by Uijung Kim
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PLANADVISER - November/December 2021

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