EFFICIENT PLANNER
Diversity, equity, and inclusion is not yet a reality, but it’s not out of reach
By Alexandra Baig
I have been in financial services for nearly 20 years. When I first started at a mid-sized investment bank, there were very few other female equity analysts and only one woman on the brokerage trading desk. The only reason there were a few non-White employees was because I worked in the Hong Kong office. When I shifted my focus to providing personal financial advice with a different broker-dealer, I was pleasantly surprised by more female faces, but saw almost none, male or female, who could check census boxes other than “White, non-Hispanic or Latino.”
I launched my own firm because I wanted to focus exclusively on providing financial education and planning to people with disabilities and their families. To assist with the challenges of launching a small business, I joined the XY Planning Network. My “launch” group, which persists today as a supportive study group, was more diverse than I had expected. As prepared this column, I reached out to that study group, as well as to a few other planners with the following questions on diversity, equity, and inclusion (DEI) in our field of fee-only planning.
As fee-only financial planners, how do we make ourselves available to a diverse client base?
“As a person of color myself and technically a first-generation citizen, the reality is that most people of color (POC) still are economically disadvantaged and [the level of] financial literacy is almost nothing in our communities. A fixed, high planning fee is, unintentionally, going to restrict or scare POC from being clients,” explained Alvin Parra, founder of Strategic Choices Financial.
Parra believes that financial planners could offer scaled fees based on income, be open to helping families start a financial plan “from scratch,” and use straightforward language accessible to the lay person. “High-level words like rebalancing, tax loss harvesting, and Monte Carlo simulations will scare away most people, but POC even more so,” he said.
Greg Knight founded Engage Advising with a focus on working with LGTBQ+ individuals and families. “When I got my CFP® credential, I signed up for a mentor at FPA, NAPFA, and with the CFP Board and clearly said I was fee-only, LGBT community and wanted a mentor. Crickets! I got ZERO valid responses.”
He believes that most fields, including that of financial planning, have a long way to go to pay more than lip service to DEI. “DEI practices are not just about skin color, gender, or sexual orientation. It is much broader and deeper than that, and it starts with ingrained thought—and THAT is what most management teams miss. It's not a tick-the-box affair.”
Knight advised that advisors must “Stop showing only White people, doing White things, at White locations in your marketing materials for starters. Credit due, many firms now use a Black couple for their training materials as the ‘scenario couple, the Joneses,’ but most of the materials are still focused on golf, wineries, boating, etc. They just created the ad material, and someone said, ‘Looks great, but make the couple Black.’”
Kathleen Oberneder started her firm, Crescendo Wealth Management, following the birth of her daughter with Down syndrome. She noted that, “Little did I know when I started out doing this seven years ago how broad the definition of special needs would be. Yes, intellectual disabilities are a very common disability affecting families, but mental health disorders such as bipolar and schizophrenia, as well as physical disabilities are affecting my prospects and clients, too, increasing the need for my consulting services.” Like several other colleagues, Obeneder believes that a fee-only structure permits her to better support a diverse range of clients.
Jennifer Mawson, a person with a disability who has completed the Certified Financial Planning coursework, said, “I personally volunteer for VITA (low-income tax prep) and am training as a peer support specialist within the mental health and addiction domains. In that capacity, I will be able to do [financial literacy] classes and one-on-one support in both in- and outpatient facilities to people reintegrating into society.”
Kathleen Campbell, founder of Campbell Financial Partners, pointed out that solo practitioners and small financial planning firms frequently acquire new clients through word-of-mouth and referrals from existing clients. “This means that the diversity of our client base is initially set by the diversity of our immediate circle of friends and contacts. If I live in a neighborhood of people mostly of my own demographic, have former colleagues and current ‘power partners’ who are mostly of my own demographic, and attend social and civic functions or religious services with people who are mostly in my own demographic, then my pipeline of ‘natural prospects’ will be mostly in my own demographic.”
How we can educate ourselves about the needs of clients from a different demographic whether that is in terms of race/ethnicity, marital status, socio-economic status, having or not having children, etc.?
Knight’s suggestions: “Try attending as a guest at groups and organizations where you are obviously not the target. It is OK to feel uncomfortable, and it is OK to ask questions. It is like prospecting. No magic bullet here.”
This view is echoed by Mawson, who explains: “Even though I have a disability, it doesn't mean I understand the struggles or needs of everyone in my shoes. One thing I do is join Facebook groups. That is easier if you are part of that demographic. But you can also just be transparent and say, ‘Hi! I'm a PFP (personal financial planner) and I want to know your experience with PFPs and how I or my colleagues might better serve your community.’”
Javier Diaz, founder of the aptly named Accessible Financial Planning, says, “I believe there is a difference between ‘talking to’ and ‘talking with’ a particular market segment you’re trying to serve. By immersing yourself in the client community you serve, you can truly understand a client’s need in a financial planning context that goes beyond the numbers. The more you become a true stakeholder of the community you serve, the more you would be able to go beyond the numbers. There are many ways to achieve this. You might be a member of the community yourself, or have family or friends who are a part of the community. If you don’t have a personal connection, you can become an advocate for that community.”
Parra spoke to the process of beginning to work with prospects from a different demographic who do sign on as clients: “The interview onboarding process is a good start to ask more personal questions. [It] is important to understand how people think, what their history is, and what may be their limiting beliefs.”
I first became committed to financial planning with families where one family member had a disability because I had served as the executive director of a supportive living community for adults with intellectual and developmental disabilities. I saw the financial challenges and complexities faced by those whom I supported, and their families. But my viewpoint was that of a professional. I did not have direct experience of disability in my own immediate family. To build my skills, I spent years attending workshops, reading, and engaging, both on social media and in person with people who did have direct experience. I also build friendships and networks among other professionals skilled in meeting the needs of this demographic.
Why is it important to be available to a diverse client base?
My sources responded to this question from the perspective of so-called minority demographics and from the perspective of our field and the society and economy as a whole.
Andrea Clark, founder of The Table Financial Planning, a firm that focuses on households in transition, particularly those of military personnel and women over 50, wrote, “‘Diversity’ has to include conversations about the people we serve in our businesses who have been historically excluded or taken advantage of. Not just POC but also single/divorced/widowed women or low-to-middle income households.
Those women “have so much more to lose through bad or incomplete advice,” compared to the household that meets the “minimum investable assets” threshold required by many advisors, Clark said. “Advisors who are tied to product sales often have the best intentions, but ‘suitability’ versus ‘best fit’ can be a wide gap in a household with limited resources and an advisor with limited products to try to meet their financial needs. Being in the business of ‘just’ advice and education is critical,” she said.
Diaz inspires confidence in his clients because he has walked a similar path: “As a person who was diagnosed as a toddler with a progressive eye disease and [who is now] considered legally blind, I can relate to the challenges, beyond the numbers, that the families I serve face. We advise our clients to be confident in the advice we give and to push beyond any hurdles they might face dealing with the Social Security Administration (SSA). As a person who has had to personally deal with the SSA at a very challenging moment of my life, I understand how defeating the process can be, despite being armed with the relevant knowledge and facts to make your case.”
I have seen these issues clearly in my own practice. Many, if not most, people with disabilities want to work rather than be supported primarily by government programs. Some hesitate to work and otherwise develop their financial independence because they fear losing a safety net, the rules of which are complicated and can seem punitive. When people with disabilities, or any other demographic, have access to comprehensive, accessible, unbiased financial education, their financial position strengthens and with it the financial independence of the larger community and economy of which they are a part.
If we feel we are not a good fit for a prospect because that prospect's situation is very different from those we typically serve, how do we find and make good referrals?
Clark considers it part of her responsibility to make competent referrals: “Everyone in our field should feel responsible to know where to turn next, whether it be a fee-only advisor with a different focus or compensation model or knowing where to find financial counselors or coaches or therapists who can fill in the gaps for households who don’t have the financial literacy to navigate their choices.”
As a start, Clarks says use Google, and look for advisors with credible certifications.
Knight exhorts fellow planners to “be honest and be serious about reaching out to advisors who don't look—or act—like you do! Ageism, racism, classism (i.e., where you got your degree/certification/etc.) is very palpable, very alive in this field.”
If we plan to hire staff, how should we take diversity into account?
Several of my colleagues suggested being more flexible in hiring requirements and practices. Parra said, “POC employees don't expect ‘special treatment,’ but just want a chance to show that they can grow into the position. Studies have shown that employers have unconscious bias [for example, based on] the name on the resume. They think: If I cannot pronounce it, then I will not consider it.”
Some employers look for specific skills that many POC employee prospects may not have, whereas smart recruiters look for evidence that the candidate can develop the needed skills.
Knight agrees: “This is where that unconscious bias of where you got your degree, when you got your certification, how you came to the business creeps in. Most established firms (read ‘White-managed firms’) still focus on where, when how much—how much did you bring in, how much did you sell. Not all of us had those opportunities. Be open to candidates who had to fight harder just to get the qualification to apply in the first place.”
Michael Rivas, founder of Bienvenue Wealth said, “It is probably best to go out of your way to diversify your workforce from a business perspective as well as for inclusion. Clients appreciate the different perspectives, and your planning can improve 'groupthink.’”
My study group members as well as many fee-only planners I have encountered through the XY Planning Network, NAPFA, and other groups are aware that diversity, equity, and inclusion represent goals rather than our current reality. They are working consciously toward these goals. As Clark concludes, optimistically: “NAPFA, XYPN, Garrett Network, AFCPE, and others are doing so much to open up the world of financial planning, counseling, and coaching to everyone. The reach of tech and promotion of financial literacy first, before a product sale, helps more people than ever have a clearer path in their financial lives. The path will only become more inclusive as we serve more and more households!”
Alexandra Baig (alexandra@companionsonyourjourney.com) has an MBA from the University of Michigan, her Certified Financial Planner® designation, and practical, professional experience in both finance and disability support. She focuses her practice on people with disabilities and their families, helping them to maximize public and private resources to underwrite a quality life.
image credit: istock.com/FG Trade