Challenging BD's to Add More Advisors of Color
The past week I've seen plenty of well-meaning social media postings about racial justice and racial equity from many wealth management professionals, advisor recruiters, and BD executives. A year or two ago the CFP Board had a thoughtful study on what BD's and RIA firms needed to do differently to increase the diversity among wealth managers.
Let's cut to results, and the one way to substantially increase new minority advisors - The best way to get more minorities to become financial advisors is to pay independent recruiters an attractive fee for each new advisor candidate the BD or RIA brings on board. Maybe some/many BD and RIA firms have such arrangements but don't promote them to outside recruiters - losing out on the full power of these recruiters. This is because recruitment firms only are being compensated for bringing in advisors with books of business (again, if such flat recruitment fees for new advisors exists, it isn't being promoted enough).
Many independent recruiters wanting to have their actions match their sentiment - Such an advisor flat fee recruitment arrangement won't make any independent recruiters wealthy, but it will help those who want to match their actions with their sentiment and be able to pay some of their bills. I know this because, with my Financial Advisor Network (FAN) group of over 17,000 members, I have partnered with an exceptional independent advisor recruiting firm that could deliver many new minority advisors. And I know other independent recruiting firms that would want to help here as well.
People only understand dollars and cents - Behavioral finance has taught us that investors don't focus on intent or relative performance, but real returns. With that line of thinking, BD's and RIA firms saying that they've committed X amount of dollars on increasing the number of minority advisors will impress clients and minority candidates much more than saying how much a firm values diversity. This dollar amount can include the cost of the outreach efforts, like the cost of outside recruiters. The public image and long term profitability and sustainability of a BD or RIA firm will be increased much more by stating the dollars that back their sentiment, instead of just posting their sentiment (sorry, I buried the lead, or the "what's in it for me" for BD's and RIA firms).
What we all can do today - 1. For BD's and RIA firms that already have such flat recruitment new advisor fee arrangements for independent recruiters, contact me and all of the independent recruiters you use (I'll share this info with the recruiting firms I know). 2. For independent recruiters who know of such fee arrangements, contact me and your competing firms (if you really feel increasing minority advisors is important). 3. For BD's and RIA firms willing to consider paying such recruitment fee arrangements, contact me and the recruiting firms you use (I will notify the recruiting firms I know).