By Amy Leisinger, J.D.
A new study by Cerulli Associates and the Investment Adviser Association has found that the investment advisory industry has made steps toward increased diversity but that the pace has been slow. While diversity covers a range of dimensions, the study specifically focuses on industry efforts to expand gender and racial/ethnic diversity among financial advisors. Women and minorities make up small numbers in both management and advisory roles, and more needs to be done, according to the report.
By the numbers. The groups found that gender and racial/ethnicity disparities among independent and hybrid registered investment advisers remain pervasive. Women comprise only 16 percent of advisers, just shy of 4 percent identify as Hispanic, and just over 2 percent identify as black or Asian, respectively. While slightly more than half reported that their firms were working to increase diversity, only 35 percent thought the efforts have been successful.
"Our profession has a long way to go in matters of diversity, equity and inclusion," said IAA President & CEO Karen Barr. "It is imperative that we step up and confront these issues."
"Parity remains an uphill climb for women and Black, Indigenous, and People of Color (BIPOC) financial advisors," said Marina Shtyrkov, senior analyst at Cerulli. With evolution, the advisory industry will be able to better serve clients in a way that accurately reflects diversity in markets, she said.
What needs to change. The study also identifies challenges to encouraging diverse candidates from entering the industry. It suggests means by which to address barriers and outlines firm resources and potential initiatives to increase gender and racial/ethnic diversity. The groups also found that work-life imbalance and limited representation in leadership are significant challenges facing diverse advisers, and that training, scholarships, and partnerships with community organizations will be crucial to turning the tide regarding diversity.
Diversity in management and ownership is lacking, and gender and racial disparities among advisors remain pervasive, according to the study. Advisory firms are increasing efforts to improve diversity, but results are not immediate. If efforts to attract more diverse candidates to the industry are successful, firms will also likely experience an organic shift in culture that results from greater visibility and networking among diverse advisors, they said.
The study found that women and BIPOC advisors consider unstable compensation, pressure to meet revenue or production goals, and lack of familiarity with the profession to be the top factors that discourage diverse advisors from entering the industry.
The groups encourage industry professionals to mentor diverse advisors and engage in community activities to build awareness of the profession.
"Speak up and speak out to advocate for change in the financial advice profession," they urge.