Take Action for Change
Art by Karlotta Freier
In June 2019, Mercer published an in-depth study titled “Bridging the Diversity Gap,” in which its experts analyzed the question of how to build better African American and Latino talent pipelines for the financial services industry.
The analysis was conducted in partnership with the Financial Services Pipeline (FSP) Initiative, an advocacy organization founded by Chicago financial institutions concerned that the representation of African American and Latino professionals within the industry had failed to improve over the previous five years, despite the companies’ diversity and inclusion efforts.
Understanding that the lack of diversity could negatively affect the competitiveness—and equity—of the Chicago region, they decided to take collective action.
The economic, and social, outlook has changed drastically relative to the FPS’ perspective three years ago June. There has been a significant shift in baseline conditions in which the U.S. financial services system operates, which raises the question of whether the FSP’s relatively pessimistic projections about the future of diversity and inclusion in financial services could turn out overblown.
Dawn Harris, director of diversity and inclusion for the Certified Financial Planner Board’s Center for Financial Planning, says there is simply no question that the events of the past two years have caused a fundamental rethinking within the industry as to the importance of improving diversity and inclusion.
Harris also points to an emerging industrywide acknowledgement of a point the FSP was trying to advocate—that addressing diversity and inclusion is not something any single firm or leader can do alone. “Real progress will come from the alignment of strategic industry partnerships and from the coming together of many organizations and associations.”
She notes that the Center for Financial Planning announced, this past December, that it will join the Financial Alliance for Racial Equity (FARE) Coalition, a partnership between financial service organizations, industry associations and historically Black colleges and universities (HBCUs).
FARE’s executive members come together regularly to track progress on its mission and vision. “I’m a graduate of an HBCU, so I’m so excited to get [these institutions’] history and perspective onboard,” Harris says. “We are building out some powerful initiatives.”
Harris says she believes the definition and tracking of key metrics will be central to making progress.
“Currently, in the U.S., about only 4% of our CFP professionals are Black or Latino—despite the basic fact that these groups together make up nearly a third of the U.S. population,” she says. “Women make up only 23% of CFP professionals. So that’s the starting point, and the goal must be to ensure our membership is more representational of the U.S. population as a whole.”
The Importance of Financial Services
Morgan Stanley’s 2021 Investor Pulse Poll found that diverse groups of high-net-worth investors and entrepreneurs believe the financial services industry is the one best-positioned to impact racial inequality in the U.S.
Margaret Flynn-Martin, head of the relationship management group at Morgan Stanley Wealth Management, says she agrees wholeheartedly with that assessment. She also agrees with Harris’ perspective that one firm or leader alone cannot solve the industry’s diversity and inclusion problem.
“At last year’s virtual Morgan Stanley summit meeting, our leadership team challenged the staff and managers to do something powerful and meaningful to address the lack of industry diversity,” Flynn-Martin recalls. “In response, we started building out the framework for what we now call the ‘Equity Collective,’ which was just launched formally in mid-November.”
The Equity Collective comprises 25 members, she says: American Century Investments, BlackRock, BNY Mellon Investment Management, Columbia Threadneedle Investments, Diffractive Managers Group, DWS, First Eagle Investment Management, Franklin Templeton, FS Investments, Goldman Sachs Asset Management, Hartford Funds, Invesco, Janus Henderson Investors, John Hancock Investment Management, Lazard Asset Management, Macquarie Asset Management, Morgan Stanley Investment Management, Natixis Investment Managers, New York Life Investments, Nuveen, PGIM Investments, PIMCO, Putnam Investments, T. Rowe Price and Virtus Investment Partners.
Flynn-Martin says the collective’s efforts will be guided by research and the experiences of its members. For example, she cites a Mercer study that concluded that Black and Latino students’ interest in working in financial services “crystallizes” during high school, while white students are more often drawn to the field during their college years. For that reason, the Equity Collective has established three key sponsorships to generate an interest in finance in young people of different ages—with the Boys & Girls Clubs of America, Team Impact and Hive Diversity.
“We are dedicated to increasing access for young talent and proactively raising awareness about the incredible opportunities in our field,” Flynn-Martin says. “Finding established organizations to do that with, in order to move with intention and speed, was one of our primary goals in establishing the Equity Collective. There’s no doubt in my mind that pulling together is the best way to magnify the impact of these individual groups.