Here’s how—and why—to develop a team that’s built to succeed
FlexShares’ late 2019 survey of advisors and their clients revealed that investors prefer hiring advisors who look like them. Women are four times as likely to hire a woman advisor and 75 percent of Asian investors work with an Asian advisor, while 63 percent of non-white, non-Asian investors work with a non-white, non-Asian advisor. With demographic trends projecting white Americans will be a minority by 2045, firms that look like the cast of Mad Men are going to risk losing business.
What’s more, 59 percent of advisor respondents to our survey reported that the culture of their company improved after a diversity and inclusion program was put into place. But companies often feel stuck. Where do you find diverse job candidates? How do you make them feel part of your “family?”
Following, our advice on how even small shops can recruit and retain talented, diverse advisors.
Get out of your hiring bubble
Managers tend to recruit from their own professional and social networks.
Our research showed that 61% of advisors still rely on their own personal networks to source talent. This means that instead of casting a wider net, they tend to hire more advisors who look like them and have similar backgrounds.
- Diane Hughes, global head of talent acquisition and HR strategy at Northern Trust, recommends getting referrals from existing employees who are women or members of other historically marginalized groups. “Diverse people know other diverse people,” she says.
- Build relationships with affinity organizations on college campuses. Nearly every school has groups for women, veterans, disabled and LGBT students and other underrepresented populations. As you prepare to develop those relationships, be clear about where you’re coming from. “Be sure to understand any historic negative perceptions about your firm, so you can address them and articulate your new commitment,” says Connie Lindsey, Northern Trust’s executive vice president and head of corporate social responsibility and global diversity, equity and inclusion.
- Consider partnering with a diversity organization, such as Women Investment Professionals or the National Black MBA Association. Lindsey notes these while such groups include professionals from an array of industries, advisors who work with them can gain access to many qualified candidates.
Small firms can shine
The impact of small changes
Small firms often feel they don’t have the resources to pursue diversity. But organizations with only a few advisors don’t necessarily need to set up formal programs to make real progress.
In a smaller firm, just one or two hires can transform the company culture. It doesn’t have to be something huge.
- The first step is polling current employees for recommendations. Even just a few references can snowball into more leads when you start actively looking.
- Reaching out to affinity organizations at colleges, as mentioned above, costs nothing. Unsure how to begin? Email the dean of students in the business school or contact the CFP program head; their contact details are always listed online.
- Diversity should be considered an asset, not an expense. “Focus on where future clients will come from,” says Lindsey. “It boils down to how you want to grow your business."
Cultivate a sense of belonging
Retention is the goal
Recruiting and hiring to increase diversity is an important goal, but it won’t on its own help your firm without a focus on retention. Retaining diverse employees means making them feel at home. “People stick around for two types of reasons: professional and personal,” says Hughes. “Professionally, they want to feel they can advance, and that their contributions are valued. Personally, they want to know that their beliefs and values align with the company’s.”
Lindsey cites three ways that advisory firms of any size can build loyalty among diverse employees:
The returns - even for small firms - can be significant.
Employees who know that the organization cares about these issues can be more motivated to deliver on your mission. And this motivation can drive innovation, a priceless commodity in competitive times.
And Hughes says smaller shops can often manage diversity retention more easily than big firms. Because of their more intimate work environments, it’s easier for management to mentor and encourage these new hires. The result: Small firms can lead the way to an industry that better reflects changing wealth demographics in America.