Prior waves of corporate efforts toward diversity were infamous for how they mainly targeted language--or rather, what not to say. Today, in response to changing demographics and market forces, there is also increased scrutiny on pay equity, the full gamut of hiring practices, and even company marketing practices. And there is now more comprehensive accountability for communication issues.
Our recent study – Advisor Team and Diversity -- yielded some noteworthy information about how today’s companies can win or stumble on the path towards cultivating a diverse team. We spoke with 529 advisors of firms from various sizes and diversity to understand how best practices impact goals.
Breaking down the patterns
Attracting and hiring more diverse talent along with hiring more professionals re-entering the job market (or changing careers) ranked among the least important of business priorities. And, yet 36% of the advisors listed women and 44% listed Baby Boomers among people on which they focus. These are of course huge markets and there are many niches within them of prospects who may likely appreciate advisors who understand the nuances of financial planning in the context of a non-linear career trajectory.
We discovered that 59% of advisors serving urban clients viewed staff diversity as a strategic priority while only 19% of firms with majority rural clients had the same view. A fair share of high net worth individuals are drawn to the cosmopolitan lifestyle of cities. Having advisors on hand who can appreciate how this preference may factor into a client's financial goals and obligations could come in handy.
We noticed the vast majority of firms (61%) still recruit using personal networks of friends, family and neighbors. Personal networks tend to mirror the individual’s background and perspective. Even the most diverse networks can still be limited by factors such as geography or profession, cutting out prospects living in other states or coming from diverse career backgrounds.
It’s important to aim for diversity across race, gender, LGTBQ status and disability. Hiring managers may want to look out for opportunities to gain diverse perspectives from differences in a variety of other areas, too:
- educational background
- career trajectory
- family and marital status
- political inclination
- religious affiliation
Diverse Perspectives: Challenges and Opportunities
A company may have a strong diversity statement, boasting a commitment to equal opportunity employment in every job posting. But the job descriptions may undermine this claim with problematic language that may not even mention gender, race, LGTBQ status, or other identities, but will nonetheless signal bias.
For example, employers may announce that they are looking for “someone aggressive and ambitious who will keep emotions out of the office”. Or, a firm might say they want a candidate who is “genuinely caring and affectionate and enjoys working in a support capacity.” The first phrase panders to stereotypes about men and the second about women.
Keep in mind, too, that recruiting prospects may need companies to go beyond perfectly wrought descriptions. Twenty-first century job seekers can be increasingly diligent about research, checking the internet to evaluate the company on seemingly neutral areas. Does your firm offer ample and inclusive family leave benefits, such as time off for adopting parents and same-sex couples, too? Whether or not it does can convey a great deal about what kinds of employees the firm is more likely to value and support.
In addition to increasing awareness of recruiting best practices, consider making internal structural changes to be more attractive, and maintain diverse candidates. You may attract more women advisors, for example with a salary-based pay model, as opposed to commissions or pay based on AUM, at least according to findings from CFP® research.
As diversity might be measurable, equity and inclusion is rather felt. Leadership needs to own a diversity mindset and evaluate progress often. Keep an eye on the varying needs of employees. Work to help each staff member know that their voice will be heard and that they are a valued part of the team.
We invite advisors to use our research to better understand how and why to build a more diverse business. FlexShares believes that diversity of thought, age, gender, race, sexual orientation and disability will give advisors a competitive edge in the coming decade and beyond. To hear lively conversations on this topic with industry experts, subscribe to The Flexible Advisor Podcast. You may also subscribe to receive alerts when new briefs are posted or download our latest research on this topic now.
Created in conjunction with Tasha Williams of TTW Consulting