Diversity & Inclusion in Private Wealth: A Continuing Focus

Diversity & Inclusion truly was top-of-mind at SIFMA’s 2019 Private Client Conference. Panelists not only discussed the necessity of incorporating D&I initiatives at their firms but also prominently highlighted the changing face of the industry, as 40% of conference speakers were female.

Women are the fastest growing group of investors in the wealth management industry, controlling “about $14 trillion in assets in the U.S., which is comparable to the gross domestic products of China and India combined” and yet “they’re under-served by financial advisors,” said Andy Sieg, President of Merrill Lynch Wealth Management.

As a result, the need to recruit, train and retain diverse financial advisors that reflect today’s equally diverse clientele is paramount. “It’s become a given that our workforce must reflect the diverse markets in the communities we aspire to serve – gender, generational and ethnic diversity is now a commercial imperative as much as a moral one,” added Sieg.

“The gender and complexion of wealth in our country are fundamentally changing.” – Jen Auerbach, Head of Strategic Growth Markets, Merrill Lynch Wealth Management

Kenneth Correa, Executive Director and Market Head of Metropolitan Market at UBS, explained, “Studies show that people want to work with those that look like them, sound like them and that they can relate to.” When a client can identify and relate to their advisor and vice versa, the client-advisor relationship becomes that much more successful.

However, diversity cannot just be implemented at the financial advisor level; it must be reflected in and exemplified by a firm’s leadership. “We need to be more diverse, and our leadership teams need to be as well. If you’re hiring people and none of your leadership is reflecting what you’re saying you want to do,” it sends a mixed message, said Dylana Hopler, Complex Director at Ameriprise Financial.

Encouraging women to step up and take these leadership roles is essential. At Ameriprise Financial, the firm offers a mentoring program to encourage and build female leadership, as well as a 12-month leadership academy that readies women for top roles in the firm. Hopler explains that many times women don’t consider themselves prepared for a role and thus don’t apply; however, her message to them is, “You have all the qualities of being successful, you don’t need to feel you can do the job 100% before you take it, we’ll support you.”

“Women today have decision making control over half of US investable assets; wealth management firms must be positioned to serve them.” – Shelley O’Connor, Managing Director and Co-Head of Wealth Management, Morgan Stanley

With more women managing wealth in the household, it is clear more female representation is needed in the wealth management industry, but diverse representation applies to everyone.

“African-Americans have purchasing powers of $1.1trillion, and Latinos have a $1.6trillion purchasing power, yet the industry does not represent this,” said Correa.

Some firms are focusing on these gaps, including Raymond James & Associates, which held its 5th Annual Black Financial Advisors Network Symposium in Sarasota, Florida this year. Chris Fils, Complex Manager at Raymond James, said, “It’s an opportunity to meet and discuss what’s occurring in our communities and practices with our peers.”

Ensuring those with diverse backgrounds feel welcome and accepted as both clients and employees at firms in the wealth management industry is important. In fact, Correa believes the current lack of diversity and inclusion in private wealth is going to be “one of our biggest threats in the next five to ten years.”

At the end of the day, said Correa, “Complacency leads to potentially being obsolete. Having these conversations, painting a picture for the future that” might not be fully recognized now is imperative.

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Tracy Eichler is Managing Director, Private Client Services for SIFMA.

Interested in learning more about D&I initiatives in the financial services industry? Check out Making Diversity & Inclusion an Intentional Reality.