Research repeatedly shows that a diverse workforce is good for business. Employees’ varied backgrounds and perspectives help companies propel innovation and drive into financial planning. Attract new customers, and drive higher profits. But workforce diversity also has an important impact on a business’ customers.

Financial disparities

The financial planning profession provides one example. The demographic makeup of the United States eventually is changing, with Hispanic, people of color and Asian populations continuing to grow. Despite persisting wealth gaps that affect many minority communities, median earnings and purchasing power among these populations are also growing.

Although these groups are accumulating wealth, they are less likely than white families to work with a planner. About 28% of Black households and 17% of Hispanic households use a planner to help them reach their financial goals. Compared to 31% of white households. According to the RAND Corporation, Hispanics and people of color are also less confident in their ability to meet unexpected. These can be short-term expenses or long-term financial goals.
The RAND research suggests a large population of these individuals could benefit from planning advice. One challenge is that the current planner demographic makeup of the financial planning profession does not reflect the demographic makeup of the U.S. population: At the end of 2019, only about 4% of more than 87,000 CERTIFIED FINANCIAL PLANNERTM professionals are from the minority community.

The need of planning

Diversifying the talent pipeline is an opportunity and a prudent approach for financial planning businesses,” said Center Managing Director D.A. Abrams, CAE. “We are successfully working with many firms who want the industry to reflect our nation’s shifting demographics. And respond to the increasing purchasing power of people of color.”
Abrams sees potential value of like-to-like messages in reaching people in diverse communities. Different groups have different ways of thinking and communicating about money. Some prospective financial planners of color interviewed by the Center explained their families emphasized just getting by versus saving or investing, while in other families, talking about money was taboo. Shared backgrounds and mutual understanding can help financial advisors overcome these cultural challenges and encourage potential clients to shift their thinking.

Diverse financial planners also help raise awareness of planning. Both as a service and a career opportunity and within their own communities. Many play an active role in promoting the financial planning profession by participating in community events. Visiting parent meetings at local schools, or leading workshops or other educational programming at community centers. They also serve as mentors and role models to younger students who may wish to study and join the financial planning profession.
Recognizing these challenges and opportunities, the Center hosts an annual Diversity Summit to provide a platform for discussing initiatives that can advance diversity in the planning profession.