How to Create a More Diverse and Inclusive Financial Planning Profession

Robert Powell, CFP®

In an interview with Retirement Daily, Robert Glovsky, CFP®, the chair of the Center for Financial Planning's Advisory Council, discussed the CFP Board’s multifaceted approach to diversifying the financial planner workforce. Here are slightly edited excerpts from that interview. 

Retirement Daily

What is the current state of affairs in the financial planning profession and what kind of activities and projects are you and the Center for Financial Planning working on?

Glovsky

Let's be clear about where we are as a profession. When you look at the 87,000 certified financial planners, you see that only 23% are women, and then people of color represent less than 5% and that's versus about 15% of the population.

So, it really is a profession that doesn't represent where the country is and where the country is going. And if you think about the wealth that's being created in these communities of color, there's a lot of untapped resources there, both as clients and as advisers so that the center is really dedicated.

The mission of the Center is to create a more diverse and sustainable workforce with a vision that every American have access to competent and ethical financial planning advice. So, the Center was started in 2015, it's now 5 years old. We have support of many groups, including large companies, Fidelity, Schwab, Northwestern, and TD Ameritrade was our founding sponsor.

We have a lot of individuals that have donated both their time and their money to the Center. And we have now completed our fifth year and moving on to the next decade of success.

What we do at the center is really broken down into three, three buckets. One of which is what I'll call the talent pipeline. Next is diversity and inclusion, and the third is knowledge for practice.

And when you look at these three buckets, we're looking at how do we replace the aging population. When you look at the fact that there are more advisers over the age of 70 than at the age of 30, we know we have an aging population. We have to do something about that.

We also have a demographics problem, and we have a demographics problem versus what the profession is demanding and what the consumer is demanding.

If you look at the younger generation, they want to work in more diverse environments.

When you look at the diversity and inclusion part of what we're doing what you see is it broken down into a couple of different pieces. One is research and programmatic initiatives. With research, we have done two research papers. One is a Racial Diversity in Financial Planning. The second, which was released last year, Why Diversity Matters. And third research paper that will come out this year at our Diversity Summit in November will feature case studies of success: who has actually created a diverse environment and had it succeed.

And when you think about why diversity matters, what does the research show us? What's the business case for it? Why does it really matter?

We can talk about the moral case, but let's talk about the business case. We know from the research that diverse organizations better serve diverse clients. We also know that diverse organizations recruit better talent, and we know that diverse organizations retain that talent better, too. People want to work in those environments. They're happy to stay in those environments. And lastly, we noticed the diverse organizations are more creative, different people with different backgrounds, bring different ideas to the table.

The other part of it is the inclusion piece. If it's an inclusive environment where people feel free to express their feelings, their ideas, then they feel valued. And it's a much richer environment that retains the talent and motivates the talent.

So that's what research has shown us. We know all of that.

So, what are we doing at the Center to really make it more practical, to really implement it?

What makes it more practical is the CFP Board’s Diversity Summit (the third of which will be held in November).

The theme of this year’s Summit is sustainability. How do you not just recruit but retain? What are the things that make it work?

Other initiatives, including scholarships, CFP Board Mentor Program, the Women’s Initiative and “I am a CFP Pro” campaign, can be found here. 

The CFP Pro campaign highlights young CFP professionals, women, and people of color. It highlights their careers and why they decided to be a financial planner and how rewarding it is to them.

Retirement Daily

Filling the pipeline has been an ongoing concern. How do you get more people of color, more women to actually enroll in a CFP Board-registered program and enter the world of financial planning?

Glovsky

That's really the $64,000 question. How do we seed the pipeline? Part of it is awareness. Part of it is perception. We need to create awareness. We've got initiatives going on in colleges and in high schools to create awareness of the profession.

Part of it is perception. We have a career guide coming out in the fall on all the different career models, all the different ways that you can practice financial planning. And as you know, from your work, there are very different ways to get paid. There are very different ways to practice, and there are very different roles within organizations in the financial planning universe.

So, the question really becomes one of what's right for you. And the guide is going to be distributed to the high schools and colleges, to our 200 colleges and universities that are already registered to take some of the mystery out of it. So we can say to the students and potential students, this is what the career looks like. This is how rewarding it can be, and this is the different ways you can do it.

From the standpoint of rewards, if you look at the data, what you see is job satisfaction is very, very high, very high. And therefore, retention within the profession is very high.

You also see that economic remuneration can also be pretty good.

Retirement Daily

What advice do you have for those who have designs on becoming a certified financial planner professional?

Glovsky

Many of the answers are on the CFP board's website, www.cfp.net. You can find whatever you need there.

Retirement Daily

As you think about the challenge that's ahead of you, what, from your perspective, does success look like?

Glovsky

We have several metrics that we look at. In the long term, there are a couple things that I would look at one of which is that the professional population mirrors the population as a whole, or gets close to it.

Another is that financial planning is a recognized profession and is taught in business schools, which is really where it should be. It is very interdisciplinary.

It also is very much a new profession being 50 years old. But if you look at behavioral finance, 20 years ago it really wasn't studied, and people didn't think much about it. Now, no business school would have a curriculum without behavioral finance. Financial planning, I think, is like that. We belong in the business schools.

The other area that I think we need to teach is client psychology. That may be a topic for another day, but that's a big part of what a financial planner needs to do.

How do I look at success? I look at a recognized body of knowledge and a pipeline that's robust and diverse.

Retirement Daily

Does it seem as if we are getting there?

Glovsky

There's still a shortage of qualified faculty. That’s one of the reasons why the Center has partnered with Columbia University to do a teaching program so that individuals who want to teach in registered programs can get some training. We have a dire shortage of qualified faculty, so we need more.

Retirement Daily

Anything that we haven't touched upon that you’d like to discuss or anything that we've touched upon that you want to reemphasize?

Glovsky

I do think that we're in a unique period in our country's history right now, and we see what's going on with Black Lives Matter, what's going on in the streets and how people really are focusing on diversity.

I would say 10 years ago, when we started pushing this idea of a more diverse and sustainable workforce, there was some responsiveness for more women. There wasn't a lot of responsiveness for more diverse people of color.

Five years ago, when the Center was launched the women's initiative was a lot more at the forefront. And here we are today, a short five years later, and companies really are committed to diversity. And I do think that diverse organizations are better organizations. They're more profitable organizations, they're more successful. They retain their talent longer. Their work environments are more enjoyable. They're more creative.

It makes sense that companies are understanding that. We need to work together as a profession to bring more people of color and more women into it. We need to raise awareness. We need to change the perceptions out there. We need to make people realize how rewarding of a career it is, and together, in a very cooperative, big tent way. We can, we can change the curve. We can really make this different. We're not having a lot of success doing individually, but we can have a lot of success if we try to do it together.

So, I would just urge everybody to let's work together and help each other to raise the bar here.

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