Even though African Americans make up about 13% of the
United States population, the U.S. Bureau of Labor Statistics reports they
account for only about 7.6% of financial services practitioners.
In response to this significant representation gap, several
business and community leaders are leading efforts to change the face of the advisory
industry into one more representative of the United States as a whole.
The American College of Financial Services is starting by
launching a scholarship program as part of its “mission to double the number of
African Americans working in the financial services industry within the next
decade.” Anyone who is Black or African American and is in college, recently
graduated, or interested in changing careers is welcomed to apply.
According to the organization, the program would cover 100%
of the cost of earning a professional designation such as certified financial
planner (CFP) or earning a master degree in financial services or financial
American College Assistant Professor and CEO of Ascensus
Wealth Management Jocelyn Wright says the idea for the scholarship grew out of
a story in a local Philadelphia paper about the retirement income gap among
African Americans. She says the story quoted an astronaut who said the percentage
of black people in America’s space program outpaces their representation in the
financial services industry.
That note also struck American College President Robert
Johnson, so the school moved to start the scholarship fund, initially
committing $200,000. Johnson says he plans to expand the program “into the
millions with the help of donors, corporate partners, and supporters.”
NEXT: The benefits of
diversity are clear
Professionals cite various reasons as to why African
Americans have been underrepresented in the industry. One factor is psychological.
“If you were to Google ‘financial adviser’ and look at the
pictures that come up, you’d largely see pictures of older, white men,” Wright says.
“And that is the face of the profession. That might be a hinder initially,
because if you see someone that doesn’t look like you, you may say 'well, that's not for me.' So we need to expand
the face of what a financial adviser looks like. And that’s not just more
African Americans, that’s more women and more people of underserved
Delvin Joyce, managing director of the South Florida Financial Group at Prudential Advisors, points to research that shows African Americans are
often “more entrepreneurial than the general population, and many see
themselves as wanting to start their own business.” This fits well with the entrepreneurial
spirit generally associated with the advising industry—both among large and small
“Importantly, there’s been a lot of research showing that
more diversity helps the bottom line,” Write says. “You don’t want people who
all come from the same background. You want diversity of thought and expression
so you can expand where your business is going.”
Clearly, better diversity could help propel advisory businesses
deeper into communities where people may have otherwise not thought to engage
with a financial professional. It will also help if those people already in the
industry, whatever their background, help break down misconceptions and raise
better awareness of what advising is really all about .
“I hear it all too often that advising is only for people
who are really wealthy,” Wright says. “I’ve had friends and family say ‘I will
come to you when I make my first million.’ That’s not how it works. You don’t
go to the doctor once you’ve cured yourself.”
NEXT: Thinking deeply
about the diversity challenge
According to a study by Prudential, titled “The African
American Financial Experience,” many African Americans report they have been
reached out to by financial professionals, but only 14% actively work with one.
Joyce says his firm’s studies show that many African
Americans prefer to receive financial information through faith-based
organizations, social media, and community outreach programs instead of
advisers. Using that intel, the firm conducts career information seminars and
dinners with different diversity organizations. They also offer debt-management
programs through churches and send advisers to teach financial literacy to
members of different community organizations.
“While we’re there, we always give a plug for the career and
the talk about the opportunity to become a financial adviser,” Joyce says.
Out of those who don’t engage with a financial adviser,
Prudential found most cited not having enough assets as the primary reason. But
despite well-reported income gaps between black people and their white counter
parts, research suggests African Americans still hold a significant amount of
wealth, and many are highly active about managing their finances. The U.S.
Bureau of Labor Statistics indicates that weekly earnings for African Americans
have increased by 33% in the last 14 years. However, a recent study by
Financial Finesse found that the
biggest financial concern for African Americans was getting out of debt—rather than
Another important fact for firms to consider is that African
Americans will almost certainly outpace white people in terms of population
growth in the U.S. over the next 30 years or longer—barring significant changes
to population growth trends.
“The demographics of this country are changing and if you
miss that opportunity, you are doing yourself and your business a disservice,”
explains Wright. “It will only help the business to expand and have more people
from diverse communities working for them.”
trends just another reason to consider diversity
The Prudential study also found that 25% of advisers expect
to retire or leave the industry within the next 10 years. Nine million African
Americans are also expected to retire in the next 20 years.
Taken together, these figures provide African Americans with
not only an opportunity to pursue financial services roles, but also to provide
much-needed financial support to families in a growing section of the
population, experts agree.
According to a recent Prudential study, African Americans have
about as much access to employer-sponsored retirement plans as the general
population, but many are contributing significantly less than their white
counterparts. It also found the second most important financial obligation for
African Americans was “having enough money to maintain my lifestyle throughout
retirement.” This was reflected in a recent study by asset management firm
Vanguard, which also found that black people are more likely to take
Wright says her own advancement in the industry had a lot to
do with the people around her. Now a CEO, she tells PLANADVISER she became
interested in financial planning after suffering the loss of her grandmother
while a sophomore in college.
“My grandmother had a small life insurance policy so I knew
my dad and siblings had to come up with the difference,” she recalls. “And that
always struck me as strange. Although I wasn’t involved in those conversations
because I wasn’t in a position to contribute financially, I knew that if this
was happening to my family, it was probably happening to others and I wanted to
know how to prevent that.”
She went on to find a mentor when she started working at her
first firm, which was led by an African American women. Now, she says she is
very happy to see an array of colleges and professional organizations encouraging
African American students to become the mentors of future generations in the
financial services space.
“The more examples of successful African Americans in the
financial services industry, the more it helps breakdown that stereotype that
the typical financial adviser is an old white guy,” Joyce says.
The African American Financial Experience Study can be found
at Prudential.com. The 2016 Year in Review by Financial
Finesse can be found at ffinesse.app.