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Attracting and retaining a diverse workforce

More financial services organizations are recognizing the value of a diverse workforce. Here’s how you can join them.

When it comes to mirroring changes in American demographics, the population of financial professionals has not kept up. At a time when women, minorities, and millennials have made inroads in medicine, law, and, increasingly, the STEM (science, technology, engineering, math) fields, financial services remains largely populated by older, white men. 1 The current percentage of women in the field, notes Ann Hughes, founder of The Female Affect, a consulting firm focused on “females and financial services,” still “hovers around 30%—no different than it was 25 years ago.” A recent study from the career path website Zippia found that 62% of today’s financial professionals are over 40 and three-quarters are white. In contrast, only 7.6% of financial professionals are Latino and 8.6% are Asian American.2

As the industry looks to ensure its future, attracting a more diverse workforce is critical. Partially it’s a question of maintaining the talent base: With the nation’s workforce becoming increasingly younger, more female, and more likely to come from minority communities, financial planning firms need to broaden the audience to which they appeal.

Partially it’s a question of maintaining the client base: As women, minorities, millennials, and even members of Generation Z increase their economic clout, financial planning firms need to attract these groups as clients—and a younger, more female, and more diverse financial planning team will go a long way toward appealing to those clients.

And finally, on a basic level, diversity is good for business: A 2020 report from the consulting firm McKinsey found that “the more diverse companies are now more likely than ever to outperform less diverse peers on profitability.”3

As clear as that charge might be, attracting—and retaining—a diverse workforce is easier said than done. The good news is that many companies and HR experts are working hard to pave the way. Here are some paths worth following:

Recruit diverse candidates early

For many people in these target groups, financial planning is not top of mind. Unlike careers in the STEM fields, financial planning is not often highlighted in high school or college. “We need to do a better job of going to campuses, attending career fairs, and demonstrating that this path provides income, flexibility, and helps you help people,” says Hughes. And some companies are doing just that. Citigroup, for example, has developed an Early Identification Program that targets outstanding women and minority college students. The company’s pre-interview mentor programs provide them with a diverse talent pool from which to recruit for summer analyst positions.

Overcome misperceptions about the industry

For some who might otherwise pursue a financial services career, resistance isn’t rooted in unfamiliarity with the field; it’s tied to negative perceptions of the industry. As Tom Lee, founder and managing partner of the financial research firm Fundstrat told a CNBC interviewer,4 the financial crisis of 2008-2009 “underscored [for millennials who came of age during that period] that banks can’t be trusted, and that your money is only as safe as the government allows you to believe.” For many minority groups, an abiding distrust of the industry also stems from experience with redlining and a lack of transparency about fees.

“We need to show people what this career really is,” says Hughes, “what it means and how it helps people versus the stereotype seen in movies like The Wolf of Wall Street.” At the same time, she adds, it’s critical to develop programs and materials to help communities that feel victimized by the industry overcome their hesitations. Toward that end, some financial institutions have very publicly offered grants or loans aimed at minority-led businesses. One of these, JP Morgan Chase, recently committed to investing $30 billion over five years in underserved Black and Latino communities nationwide.5

Establish mentorship programs

Attracting employees is one thing; retaining them is another. Mentorship has become a key tool for helping employees understand how to chart their career paths within a company. Mentorship programs have become so popular that a recent study by the Chronus Corporation found that more than 71% of Fortune 500 companies currently offer mentorship programs6—which corresponds well with a Huffington Post poll that notes that more than “79% of millennials see mentoring as crucial to their career success.”7 The growth of mentoring underscores some differences between what previous generations found important in the workplace and what today’s more diverse population values. For example:

  • Employment website Indeed reports that while previous generations focused on the paycheck rather than on feedback, millennials want as much training as they can get, coupled with frequent feedback and development opportunities8.
  • Gallup highlights a need for “purpose” along with a paycheck, as well as “a coach instead of a boss.”9
  • Women and minorities seek out those who have blazed the path before them, particularly members of their groups who have achieved C-suite status. A study by Cornell University’s School of Industrial and Labor Relations found that not only did mentoring programs boost minority representation at the management level by up to 24%, but they also improved promotion and retention rates for minorities and women by as much as 38%, compared to employees not exposed to mentoring programs.10

Create diversity accelerators and diversity resource groups

Some companies have taken mentoring a step further by creating diversity accelerator programs, which provide high-potential diverse employees with rapid training, education, and additional mentorship. Organizations such as Management Leadership for Tomorrow work with companies to strengthen their recruitment and retention of diverse talent by providing expertise to “ensure talented underrepresented minorities are able to get on and stay on the path to senior leadership.”

But even before that diversity is achieved, notes John Dooney, an HR knowledge advisor for the Society of Human Resources Management (SHRM), it’s critical to “have conversations at work about what diversity means and how to operationalize some of those concepts.” This is a way, Dooney says, “to hear from employees in a particular group about how the company may be able to increase its diversity and inclusion efforts. These programs can make organizations more thoughtful, more proactive, and more aware.”

Embrace different values

Not only does a diverse workforce not look like the traditional financial planning team, but it also has different values, different motivators, different priorities. Attracting and retaining these employees requires not only understanding their differences but respecting and accommodating them. For example:

  • Work-life balance is particularly critical to female and younger workers. And, as Dooney points out, if the pandemic has taught us nothing else, it’s that flexibility is key and that organizations must plan for change as workers’ statuses, needs, and priorities shift. “It brought us the future of work 10 years sooner,” he says.
  • A recent Gallup study showed that millennials, more than any other generation in history, is more likely to switch jobs, especially if they don’t feel engaged in their work.11
  • One factor that helps with engagement is “purpose,” demonstrating to employees that a company is committed to specific causes and then integrating these employees into service-related issues and projects.

Change, of course, is slow. But it’s also necessary. And progress is underway. Forbes magazine put it into context earlier this year when it wrote, “In financial services and fintech industries, progress on gender diversity and other diversity and inclusion initiatives has been slow, but more organizations are recognizing the value of a diverse workforce and are taking steps to improve."12

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