Why financial professional diversity makes good business sense

Current state of financial professional diversity

From our day-to-day interactions as financial services professionals, we have a general sense of the lack of diversity and inclusion in the industry. According to a 2020 report from Cerulli Associates, "only 2.9% of advisors identify as Black or African American, 5.1% as Hispanic or Latino, and 4.3% as Asian;" as for gender, only 18.1% are women (up from 15.7% in 2015).¹ It’s time for meaningful change in our industry. Becoming more diverse and inclusive will help us all better fulfill our mission to positively affect the financial lives of others.

Financial professional gender, race, and ethnicity in 2019

^{Source: “U.S. Advisor Metrics 2020: Dimensions of Diversity and Inclusion,” The Cerulli Report, Cerulli Associates, 2020.} 

Benefits of a diverse practice 

What can you do to be part of this change? Consider making diversity part of your strategic plan, if you haven’t already. A diverse and inclusive workplace can help your practice thrive because it provides:

• Fresh perspectives—You want a team that brings innovative ideas and solutions to the table and isn’t afraid to challenge the status quo. Diverse backgrounds and experiences mean diverse viewpoints, which can lead to constructive conversations about revenue opportunities, client service, and operations.
  
• New business prospects—People generally prefer to receive advice from financial professionals to whom they can relate. Fifty-eight percent of female financial professionals say that at least 50% of their primary client contacts are women, compared with only one-third of male financial professionals.¹ A more diverse practice can open doors to previously untapped markets, expanding your reach.
  
• A succession plan—The financial services industry is aging, with 35% of financial professionals planning to retire in the next 10 years, and there aren’t enough new ones to replace them.¹ This means you’ll need to get creative with your recruitment, using channels you may not have previously considered. (We’ll talk more about recruitment in the next section.) Having a broader talent pipeline can minimize the disruption when colleagues in your firm retire, helping ensure a smooth transition for clients.

Building diversity and inclusion in the workplace 

Adding diversity to your strategic plan means analyzing all aspects of your practice to identify opportunities to become more diverse and inclusive.

Rethink your recruitment process

Do you rely on referrals from family members, colleagues, or your professional networks? While there’s nothing inherently wrong with this approach, it limits your talent pool, and you’re likely getting many candidates who reflect your firm’s current demographics. Expand your outreach to help connect with non-Caucasian financial professionals—17% found their first job in the industry through college campus recruiting—as well as female professionals.¹ Work with professional recruiters and recruiting websites, such as workplacediversity.com, hispanicdiversity.com, and employdiversity.com, to attract a broader group of candidates.* Partner with local organizations that serve underrepresented communities to reach individuals who don’t have industry connections. Go where the candidates are.

We all know that having a written goal makes people feel more accountable and can help motivate us to act, so consider making a formal commitment to make your practice more diverse within a certain period. John Hancock and Manulife have set a goal that at least 25% of annual graduate hiring will be black, indigenous, and people of color by 2025.

Refresh training, resources, and policies

Recruiting diverse talent isn’t enough. You have to retain them, and that can be challenging because the traditional business model—lack of stable compensation, pressure to meet revenue goals, and limited training—makes it hard for all new colleagues to succeed. While the business model won’t change overnight, we can take steps to increase the probability of success.

Establish a mentoring program that encourages diversity, with women guiding and championing other women, and financial professionals of color doing the same. Many successful people attribute their accomplishments to having a mentor who served as their advocate, teacher, and sounding board. Along that same line, institute a team approach, where junior colleagues are paired with senior ones to help them learn the business and potentially take over when the senior members retire—an approach already commonly used, but with a lack of diversity. More than half of white financial professionals are part of a team, compared with 22% who identify as black or African American, 41% as Hispanic or Latino, and 44% as Asian.¹

Team structure by race and ethnicity, 2020

^{Source: “U.S. Advisor Metrics 2020: Dimensions of Diversity and Inclusion,” The Cerulli Report, Cerulli Associates, 2020.} 

Provide flexible schedules that support work/life balance. While gender roles have blurred, women are still the primary caregiver for children and adult family members. Of the roughly 53 million American caregivers, 61% are female.² In addition, younger generations have different expectations for their careers. While they value hard work, they want time to pursue their passions outside the office and the freedom to work remotely. Adopting policies that address these needs can help foster loyalty and retain high-performing talent.

Create a culture of inclusivity, helping people put biases aside and celebrate differences. At John Hancock, we sponsor a variety of employee resource groups (ERGs), which are voluntary, employee-led networks united by a common identity, trait, or interest. These groups enable us to work together to address barriers to advancement and provide professional development opportunities. You may think your practice isn’t big enough to have ERGs, but there are ways to pursue the same objective on a smaller scale. The key is to create a feeling of community for all through constructive conversations in a safe, judgment-free environment.      

Reimagine your community involvement

One of the primary reasons women and people of color—and recent college grads—don’t pursue a career in financial services is because they’re not familiar with our industry.¹ Community outreach can change that. Once again, it’s about meeting potential candidates where they are and deepening local ties. Look for opportunities for your team to engage young adults through mentorship and financial education programs. Join organizations that support diversity, equity, and inclusion. For example, John Hancock has partnered with the MLK Scholars Program in Boston as a means of introducing underserved communities to careers in financial services.  

Financial professional diversity—a win for your practice and those you serve

Our industry has reached the point where diversity and inclusion in the workplace aren’t just nice to haves but vital contributors to a thriving practice. Having diverse talent can bring in fresh perspectives, help you attract new clients, build a succession plan, and deepen your connection to your community. A diverse practice also means individuals can receive financial advice from a professional they can relate to on a personal level. And in the end, isn’t that what it’s all about? 

1 “U.S. Advisor Metrics 2020: Dimensions of Diversity and Inclusion,” The Cerulli Report, Cerulli Associates, 2020. 2 “Caregiving in the U.S.,” AARP, May 2020.