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The Financial Advisory Sector Needs a Deep-Dive Facelift

Let's talk about women who discriminate against other women

· Women's Empowerment

It is often said that women hold other women back. So true. But in the intricate checkerboard of prejudice in the United States, there’s simply no room for women who discriminate against other women, regardless of sex, race, ethnicity, or class. Women must become aware of their unconscious biases, instead of acting on their fear of imagining themselves as worthy of equality.

Competition among women often brings out their individual internalized sexist behaviors and attitudes towards other women. Too many women unfortunately still “war” for male attention, recognition and validation, in both the private and public spheres. But when women combine sexism, race and social status to discriminate against other women, they not only compound the very inequality they themselves suffer. They also doubly constrain progress in female agency in society.

A picture is worth a thousand unconscionable words

The deleterious consequences of the intersection between sexism, status (or class consciousness) and racial discrimination follows women from cradle to workplace. It is especially poignant for black women, who face unique discrimination by other women based on unconscious biases. Nowhere is this more evident than in the financial services industry. This was recently brought home by a full-page advertisement in The Washington Post (November 5th edition, page A9) by Fisher Investments.

According to their website, Fisher Investments has been a trusted name in the investment advice industry for 35+ years. “Founded in 1979, Fisher Investments is an independent, fee-only investment adviser with $115 billion under management*, serving a global client base of diverse investors, including over 175 large institutions and 65,000 high net worth individuals. In June 2018, Fisher Investments was named as one of Financial Times Top 300 US-based Registered Investment Advisers.”

Fisher Investments also emphasizes how different they are because of their leadership. The ad in The Washington Post declares: “Where strong women in finance deliver excellent results for clients. We do better together”.

The problem: neither the individual women featured in the ad nor the big group picture include a single black woman, just a sea of white faces. That is glaringly discriminatory and more than astounding, especially in light of the quoted comments by the women featured in the ad: “The stories out there don’t feel like who we are, and if they were, I wouldn’t be here”; “I wouldn’t be at Fisher if it wasn’t a place with integrity and ethics”; “We’re empowered. We have the tools to be successful for ourselves and clients”.

In its Hear Our Story website, the headline blares: Where Strong Women in Finance Deliver Excellent Results for Clients: 800 women strong, 63% of employees are led by women, and 60% of executives are women. Yet not a single black woman is to be seen on their team. So what is the real story?

The financial planning and advice profession needs a deep-dive face lift

There is a clear need to change the face of the financial planning profession to reflect the demographics of financial service needs. Both men and women, regardless of race, ethnicity or social status, need to have access to unbiased, competent and ethical financial advice to help them plan for their wealth management and ensure secure retirement.

There’s an even greater need to expand and diversify the ranks of financial planning professionals who can meet the needs of increasingly diverse consumers. New census projections estimate that people of color will collectively become the majority of the U.S. population in 2045. The projected growth rate of blacks is 34%, making black communities a non-negligible part, along with Hispanics and Asians, a driving demographic engine of the nation’s progress. Yet the financial services industry has seen little growth in the number of diverse professionals: minorities in the financial services industry represent a mere 3.5% of certified financial planners (CFP) in the U.S, and there has actually been a decline in the percentage of black CFPs.

Even more important for the health of the financial services industry, is the urgency to acknowledge that women in the United States have increasing economic influence:

  • 51% of women control personal wealth in the U.S.
  • 96% have primary or shared responsibility in family financial decisions.
  • women now receive the majority of college degrees in the United States across every category, from bachelor’s degrees to doctorates.

Despite their growing economic power, women account for only 18% of finance jobs, and only 3% occupy senior management roles.

If we combine the fact that women are underrepresented in the financial industry profession and that their limited representation is starkly white, the picture we get is sadly sexist and racist. There are plenty of black women financial gurus, financial experts and registered investment advisors in the United States to reach out to. The Association of African American Financial Advisors is a good place to start.

Diversity is a tenet little practiced

The most enduring principle of sound investment management is diversification. Yet it is remarkably absent from team construction across all spectrums of the investment profession, as evidenced by the Fisher Investments ad. It’s tough to be a woman in the financial services industry and Wall Street. It’s doubly so if you’re black.

Despite the talk about diversity and inclusion in the financial services industry, women in general are not only underrepresented in the financial services and investment world, but that underrepresentation is glaringly Caucasian. Not only, according to Mercer, does female representation severely decline as career level rises. But African American women in addition suffer racial biases from both men and women.

Black women in the financial advisory services and investment field have the short end of the stick. They not only suffer the usual gender discrimination that other women suffer. They also are the brunt of micro-aggressions that distance black women from their other colleagues. What makes it worse is that white women often prefer to talk to white men instead of black women.

All women report biases that men don’t see, such as opportunity or promotion, exclusion from networking and social opportunities, pay inequity, unsupportive or biased corporate culture. But overblown generalizations, over-categorizations and misconceptions regarding people of color combine with ingrained attitudes and beliefs to create erroneous judgments about capacity, skills and professional attributes.

According to a 2017 government GAO report, progress for black Americans has gone backwards and for women has stagnated. While overall diversity in the financial services industry increased from 17 to 21 percent in lower-, mid- and senior-level management positions in the financial sector, the percentage of black managers decreased from 6.5 percent to 6.3 percent. Meanwhile, at 48 percent, women were close to parity with men in lower- and mid-level management slots. But upward mobility to senior-level management remained stagnant for women, at about 29 percent over the eight-year period studied (2007-2015).

According to another study, conducted by Fondulas Strategic Research for the Center for Financial Planning, the majority of non-black, non-Latino CFP professionals (58%) attribute the lack of diversity to the reluctance of people of color to pursue the profession. Only 10% of that group attributes it to the company’s reluctance to hire people of color. But 27% black CFPs attribute it to companies’ reluctance. Among black and Latino business prospects, 29% blame the firms and the lack of opportunities for them in the profession. The majority of all survey participants (56%) believe firms are more likely to hire white professionals than either blacks or Latinos. Yet, the majority (78%) of respondents believe there’s no difference in skill sets between whites and blacks or between whites and Latinos (69%).

Don’t ignore the obvious

That the financial advisory services industry has a diversity problem is no secret. But the unconscious biases among women themselves make it worse.

While both black men and women today work in the financial services sector at all different levels, black women’s unique challenges are often ignored or not raised at all. It is increasingly common for employers to tout the steps that they have taken to respond to women’s challenges in the workplace generally. But the lack of intersectional analysis and awareness results in a picture that ignores the interplay between race, ethnicity, and other factors. The picture also ignores the unconscious biases that white women have. These biases compound perspectives that give little attention to why disparities between white women and black women - in earnings, advancement opportunities, unemployment rates, and other areas continue -continue to persist.

The financial advisory and planning services sector is especially guilty of such biases. A case in point is the ad published by Fisher Investments in The Washington Post.

Black women face especially unfair expectations, unique challenges, and biased assumptions about whether and where they fit in. The prejudices inherent to the profession’s structures and practices exemplify the potent remnants of the historical narrative that has for centuries devalued the status of black women as individuals, as women and as professionals. That white women CFPs reinforce the narrative by limiting or excluding black women’s access to seemingly reputable firms, like Fisher Investments, is especially reprehensible.

A path forward: unlock the power of all women

The lack of racial and gender diversity among financial advisers has a growing cost for the profession and the people it serves. It also reinforces the stark wealth gap undergirded by the structural racism entrenched in gender inequalities. But the biases of women against other women, especially when they intersect with race, has the net effect of placing all women at a greater disadvantage.

I would, of course, be remiss if I didn’t point out that on the flip side, too many African American financial services firms do reverse-discrimination, featuring only black advisors. But whether it’s a firm like Fisher Investments, who touts its difference with 800 women strong, or a firm that caters exclusively to African Americans, there is simply no excuse for blatant, although perhaps unwitting (if we give them the benefit of the doubt), gendered racial discrimination.

Gender equality is the unfinished business of our time. So women must step up and start empowering other women, regardless of race. It is the responsibility of women who are already in the financial advisory services sector to disrupt inequality and ensure that the profession progresses to reflect the diversity of America.

Women, regardless of race, ethnicity or social status, must also stop misrecognizing sexism as the behaviors and practices of men alone. Our society’s progress in the journey to equality requires that women acknowledge their own complicity in keeping back or excluding other women.

Commitment to gender equity and social transformation demands that we look inward to interrogate our unconscious biases and prejudices. Let us do so without limiting our analysis to preconceived individual shortcomings and without acting out on prejudgments, which inevitably become prejudices. If we don’t, all women will miss out.

Astrid Ruiz Thierry, Principal, Upboost LLC

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