When Mark Wilkins was working his way up through the financial services industry in the mid-1990s, there was a fairly common occurrence when meeting with new potential clients. After cold calling prospects, he would set time to speak further in-person with those who expressed interest in learning more information and that is when things would go sideways.
“There were many times where people came in, met me and we all knew that my race was going to be a factor,” recalls the 51-year-old managing director and private wealth advisor with The Wilkins Group in St. Louis, Missouri. “The meetings quickly ended and we went our separate ways.”
Wilkins, who is Black, says that while things have changed and these interactions aren’t as frequent for him, much of that is likely indicative of the market he is in and the business he has built, working with wealthy families in a segment unlikely to be as overt about racism as when he started. While his experience has changed, he says it is likely new or younger advisors who look like him who still have to deal with these same issues, something he recognizes he rarely has to put up with anymore. Wilkins says that it is important for all professionals to be treated equally from the start of their careers, not to have to cultivate a certain level of achievement in order to get that equal treatment.
He says there is a phenomenon for professionals of color in which they are required to achieve at a certain level in order to be spared from that treatment. He added that white males are given more opportunity to fail while Black men and women need to be “perfect.”
Wilkins has served as an army tank officer, climbed Mount Everest and received acclaim in the wealth management industry but still faces the uphill battle of being a Black man in an industry dominated by white men and clients who often look the same.
The realities of being a Black man in America impact Wilkins both at work and outside the office. When asked if he has had experiences being treated unfairly by law enforcement, he responded: “I’m a dark person in America, of course I have.”
“There is no level of success you can have, no job, no level of education, no suit, whether that be a business suit, a military uniform, or athletic uniform,” Wilkins says of the reality of being racially profiled.
“The short word is awful,” says Envision Wealth Planning founder James Brewer, another African American advisor, when asked about the state of diversity in the industry.
For Wilkins, an increase in diversity in the advisor ranks will be mirrored in client lists as advisors also look to maintain diverse client lists.
“If you want to be successful, you absolutely have to be able to do business with white people, they have the money like it or not,” he says.
For Nelrae Ali, a senior financial advisor and managing director at Wells Fargo Advisors in Jacksonville, Florida, it is just the latest setting where she has looked around and not seen many people who look like her, a reality for her throughout her childhood and through college. “The sad part is that it’s always been like that for me,” she says.
“The current state of things is terrible, the lack of diversity in the entire industry,” Wilkins adds. “It’s a problem on a lot of levels, a problem for all stakeholders.”
Despite the obvious legacy of systemic racism in the financial sector, the current moment provides reasons for some hope that things may change for the better.
That sentiment was shared by numerous advisors who spoke with Forbes about their experiences charting a path in an industry that has failed to be inclusive or representative of the diversity of the United States.
Wilkins says he is “incredibly optimistic,” adding that this is a prerequisite to succeeding in the financial advice business.
Ali adds that this current moment “feels different,” with the majority of the country stuck at home and no longer able to avert their eyes. Her hopefulness also owes to statements from the CEO of Wells Fargo and other firms that include the affirmation that “Black Lives Matter.” This moment is unlike anything she has seen in her two decades in financial services with large firms acknowledging systemic racism and putting their power behind finding solutions.
While current events have contributed to those optimistic outlooks, the deaths of George Floyd, Ahmaud Arbery, Breonna Taylor and the civil unrest and racial reckoning they have inspired are also troubling and taxing for some of these advisors of color.
Ylisa Sanford, a private wealth advisor with Spectrum Private Wealth Advisors at Ameriprise Financial, was emotional when speaking about these realities as a mother of five children.
“I don’t feel like we have come far enough, my husband and I have five brown children who contribute to society in many ways, but I have to be honest it has been very scary to think about how many of the issues my parents and grandparents faced that we are still dealing with,” she says. “I’m hopeful, you have to be hopeful, resilient and strong and put your head down, but I’m not going to suggest that it is always easy to remain so.”
This national conversation comes at a time when the financial services space is woefully lacking in diversity. A 2019 survey by the Certified Financial Planner Board found that only 3.5% of the more than 80,000 professionals with this designation were African-American or Latino, compared to being 32% of the U.S. population, according to U.S. Census estimates. That dramatic underrepresentation among CFPs is particularly troubling at a time when the industry has been transitioning from a focus on brokerage accounts to holistic financial planning and an increasing portion of advisors have come to hold that designation.
LeCount Davis was the first African-American ever to be designated as a certified financial planner in 1978. He says his success in the business, against the odds and demographics around him, was a result of forming a client base that was 90% African-American as well as having mentors who, while not looking like him, were supportive of him early on.
Davis is hopeful for progress to come and in the very designation where he was a pioneer, there are signs of such progress. The CFP Board that administers that designation recently elected Kamila McDonnough as the first Black woman to serve as chair-elect, setting her up to become chair of the organization’s board of directors in 2022. McDonnough also serves as president and partner of wealth management firm GRID 202 Partners.
Decades after Davis broke the CFP barrier, McDonnough still found herself the only African-American female in three separate groups and departments early in her career in the years after the 2008 financial crisis. At times that led to feelings of loneliness and having to work harder than her peers. Sometimes it went beyond feelings. In one egregious example, a potential client called Davis’ company after a meeting and said “don’t have that Black woman come back here again.”
Prompted by this moment of reckoning around diversity and inclusion, Bank of America recently released figures on diversity for the first time in years, a result of the conversation around the Black Lives Matter movement and poor record of diversity on Wall Street, Merrill Lynch Wealth Management head Andy Sieg told Barron’s. Only 750 of the more than 17,500 advisors at Merrill Lynch are Black, accounting for 4.5%, while Latino advisors are 9%, and people of color overall are 23%. All of these figures marked an uptick from five years prior, according to the wirehouse. Earlier in the year, UBS released numbers around diversity and inclusion, showing that among the firms financial advisor ranks roughly 10% are people of color.
Another major brokerage firm, Morgan Stanley, has found itself in the spotlight for the way it has allegedly failed to foster an inclusive workplace. The New York-headquartered financial services giant is facing a lawsuit from Marilyn Booker. Booker, who is Black, was fired in December after 26 years at the firm, serving as the global head of diversity. Her lawsuit against the firm and chief administrative officer of the wealth management division Barry Krouk, alleges retaliation and racial discrimination. In an interview with The New York Times, she also alleged that the firm does little to support or empower Black financial advisors to grow and succeed.
That was followed in short order by a group of former employees asking the firm to release them from confidentiality agreements in order to tell their stories of racial discrimination. Additionally, a former financial advisor, Julie Castillo, filed a lawsuit in August in the U.S. District Court Southern District of New York alleging a litany of violations including racial, ethnic, age and gender discrimination along with retaliation, unequal pay, defamation, negligence and infliction of emotional distress.
Morgan Stanley is not the only major firm to face charges of issues with race, with nearly every major financial institution settling a lawsuit or class action around allegations of discrimination. In 2013, Merrill Lynch paid $160 million to settle a class-action race discrimination lawsuit brought by an employee. In 2016, Ameriprise Financial settled Department of Labor allegations over racial pay equity for $128,200. In 2018, JPMorgan Chase settled a lawsuit that claimed it discriminated against Black financial advisors in a manner that was “uniform and national in scope” for $24 million. UBS was hit with a racial discrimination lawsuit in 2005 and again this August while that same month Wells Fargo paid a $7.8 million settlement amidst claims of bias in hiring.
While other groups also face challenges in an industry that is historically dominated by older white men, gender diversity has seen greater progress, according to Ali, who said that it is far easier for her to identify other female advisors rather than other Black advisors. “I would say that the gender gap is far better than the racial gap,” she adds.
That experience is backed up in statistics, the CFP Board survey found that 23% are female. At Merrill Lynch the figure was similar, with 21% of the advisor population being female.
Ghislain Gouraige, a managing director with UBS Private Wealth Management in Coral Gables, Florida says he thinks women are making more progress than racial minorities because the white men who hold power in the industry find it easier to get comfortable with white females who look like their sisters or mothers. “From my experience going to industry conferences, you’re in a room of hundreds of people and for African-Americans or people of color, you certainly stand out,” Gouraige adds.
If the financial services industry can diversify its ranks, it could have positive effects beyond the industry itself, suggests Wells Fargo Advisors diverse client segments group managing director David Dawkins. He thinks a more diverse industry could help narrow the yawning racial wealth gap.
The racial wealth gap continues to be staggering, with Black households having less than 15% the mean and median family wealth than white households, according to Federal Reserve data from 2017. Data from the same year showed that one in seven white families were millionaires compared to only one in 50 Black families, the type of family worth that is often associated with having a relationship with a financial advisor.
This wealth gap has a negative effect on GDP according to a study done last year by McKinsey and Company which shows that the gap will dampen consumption and investment at an estimated cost of between $1 trillion and $1.5 trillion between 2019 and 2028, accounting for between 4% and 6% of the projected GDP in 2028.
“As an industry we have the resources and the capabilities to help all people succeed financially by sharing wealth management principles, concepts and strategies that can be implemented to address wealth accumulation,” Dawkins says. “To the extent that we are more diverse, and have a bigger footprint in the African-American community, we have the ability to change outcomes and trajectory in people’s lives.”
But as of now, Ali says, the financial services industry does not have the relationships needed with the Black community to be a part of the solution. She says she has seen first hand how even Black clients with assets have lacked for advice. For example, she relates how she helped a 90-year-old woman sort through her finances and realize that she had enough assets to help put her grandchildren through college. “She had the money, she just didn’t know what to do with it,’’ Ali says.
The assumption in the past, Ali observes, was that there were so few Black advisors in part because there were so few potential Black clients with money. But she suggests the bigger problem is that the Black community struggles with trusting and understanding the financial services industry and that situation could be improved by bringing in more advisors who understand the minority community.
To improve upon the current status quo, Brewer said, firms will need to actively go out and look for talented individuals in the Black community.
While Wilkins is optimistic about the future of the industry, he also thinks it will come down to the actions of a group of decision makers that aren’t very diverse. “If change is going to come, and I’m very hopeful that it will, it’s going to come from my white male counterparts and colleagues across the industry and if they don’t do it, it’s not going to get done,” he says.
Those changes will have to include increasing diversity from early on in careers, where firm leaders have not traditionally found a diverse group of candidates, according to Wilkins. Additionally, after bringing in more diverse young talent it will also be important to support them through the levels he has reached such as being a managing director of a group.
“If you have talented, diverse advisors, but they’re not well supported, maybe they don’t have the same network that their white male counterparts have,” Wilkins adds.
Ali also cites the lack of diversity at the top of the industry as a flashpoint, saying it will require more diversity at that level to create systemic change. “The reality is, we do need more to increase the diverse population of financial advisors, it should look more like our country.”