How Financial Planning Firms Can Help Diversify the Financial Planning Profession

Americans of all backgrounds need competent and ethical financial planning advice. However, the financial planning profession does not sufficiently reflect the demographics of the United States. For example, only about 4% of CFP? professionals in the U.S. are Black or Latino (even though these communities comprise more than 31% of the U.S. population ) and women comprise only 23% of CFP? professionals.

This is a problem for Americans and for financial planning professionals who serve the public.

That is why financial planning firms must embrace diversity, equity and inclusion (DE&I) practices — to foster a more diverse financial planner workforce that reflects the changing demographics of wealth in the United States.

To help firms achieve this goal, the CFP Board Center for Financial Planning released research at our 2020 Virtual Diversity Summit that highlighted successful DE&I initiatives within the profession and provided guidance to replicate that work. According to Diversity in Action: How to Sustain the Financial Planning Profession , there are seven key building blocks for establishing effective DE&I programs:

1. Customization: The program is tailored to a firm’s unique mission and values to ensure its sustainability.
2. Mission and vision: The firm has a clear mission and vision statement that explains — on paper — why it is launching the DE&I program and why it is important.
3. Committed leadership: Firm leaders prioritize DE&I work and demonstrate their commitment by allocating sufficient resources to sustain a multi-year program and investing their time in education and accountability.
4. Strategy: There is a DE&I strategy in place with specific goals and tactics that support the mission and vision statement.
5. Measurement: The firm develops and tracks metrics ranging from staff demographics to inclusion competencies — and incorporates these measures into employee performance reviews — to ensure accountability.
6. Employee engagement: Leaders regularly invite employee feedback on and contributions to the DE&I program to help create buy-in, transparency and trust.
7. Evaluation: Surveys, questionnaires and other tools are used to determine a firm’s baseline and where there is room for growth, as well as track DE&I progress.

Once financial planning firms have these elements in place, consumers should quickly see the benefits. When people of color see more financial planners who reflect their diverse backgrounds, there is greater opportunity for transparency and trust to be built between the financial planner and client. This is especially true for people affected by discrimination in the past.?

We’ve seen increased consumer demand for financial advice amid the pandemic, and it is imperative that the financial planning profession works toward expanding and diversifying the community of professionals who can meet the needs of increasingly diverse consumers.

We here at The CFP Board Center for Financial Planning are trying to do our part by focusing on creating a more diverse and sustainable financial planning profession through innovative solutions and initiatives.

Collectively, these efforts are making an impact: In 2020, the number of Black and Latino CFP? professionals rose by more than 12% over 2019, nearly 5 times the growth rate of all CFP? professionals for the year. Meanwhile, the number of women CFP? professionals also increased to an all-time high of 20,633.

As you can see, increased diversity numbers and percentage growth matters to us.

That is why the theme of our 2021 Virtual Diversity Summit & Career Fair is Metrics that Matter. This special event will spotlight qualitative and quantitative metrics for firms’ workforce and culture. At the Summit, you’ll learn about actions firms can apply to their diversity and inclusion efforts, hear from an Executive Roundtable of firm leaders committed to diversity and inclusion, and be inspired by personal reflections from CFP? professionals of color. To participate in this important conversation, register to attend the Summit this November 17-19 . We hope to see you at the Summit!