Talk Is Cheap

Fi­nan­cial plan­ners don’t re­flect the di­ver­sity of the coun­try. Here’s how his­tor­i­cally black col­leges are chang­ing that.

Financial Planning - - Contents - BY MADDY PERKINS

Fi­nan­cial plan­ners don’t re­flect the di­ver­sity of the coun­try. Here’s how his­tor­i­cally black col­leges are chang­ing that.

The plan­ning in­dus­try will soon have a big de­mo­graphic prob­lem on its hands. But it’s not the one it has ac­tively been pre­par­ing for.

While many firms are in­vest­ing thou­sands of dol­lars in tech­nol­ogy to ap­peal to mil­len­nial in­vestors and keep clients, few have in­vested as much into ef­forts to ex­pand their ros­ter of mi­nor­ity plan­ners, even as the coun­try be­comes more di­verse.

En­ter, then, an emerg­ing set of fi­nan­cial plan­ning pro­grams at his­tor­i­cally black col­leges and uni­ver­si­ties, and the as­pir­ing plan­ners they are be­gin­ning to pro­duce. Delaware State Univer­sity and Prairie View A&M Univer­sity are two such in­sti­tu­tions that are work­ing to make the ca­reer more ac­ces­si­ble to stu­dents of color and help change the face of the in­dus­try.

Part of that ef­fort, though, in­volves ac­knowl­edg­ing that ex­ist­ing in­dus­try out­reach pro­grams have not been suf­fi­cient. Even as the prospec­tive client base gets in­creas­ingly di­verse, a ma­jor­ity of ad­vi­sors re­main male, white and over the age of 50.

“The de­mo­graph­ics of this coun­try are chang­ing rapidly. Ad­vi­sors need to talk about what they need in a con­text of meet­ing their client needs in the fu­ture,” says Kate Healy, manag­ing direc­tor of Gen­er­a­tion Next at TD Amer­i­trade In­sti­tu­tional.

“One of the rea­sons that the in­dus­try needs or wants di­ver­sity is the con­nec­tion point with con­sumers,” says Danny Har­vey, the fi­nan­cial plan­ning pro­gram direc­tor at Prairie View A&M in Prairie View, Texas. “In­di­vid­u­als have nat­u­ral in­cli­na­tions to want to do busi­ness or at­tract peo­ple they can con­nect with.”

What has been miss­ing is an un­der­stand­ing about the lives and goals of mi­nor­ity would-be-ad­vi­sors, says Delaware State stu­dent Cas­sidy Lit­tle. She came to Delaware State, in Dover, to study so­cial work, but af­ter learn­ing about fi­nan­cial plan­ning, she de­cided to mi­nor in the sub­ject.

What Plan­ning Can Do

“A lot of peo­ple need to be ed­u­cated on what fi­nan­cial plan­ning is, and what it can do,” Lit­tle says. “When I first men­tioned it to my mom, she said, ‘Well, I would love to sit down with a plan­ner when I get some money or ex­tra cash.’ That’s not what fi­nan­cial plan­ning is for. A lot of peo­ple aren’t aware of the value of fi­nan­cial plan­ning — pe­riod.”

One of her fel­low stu­dents, Jabari Wells, says his in­tro­duc­tion to the ca­reer has been, at times, like learn­ing a dif­fer­ent lan­guage.

“Now that I’ve learned it, I’m not just play­ing catch-up,” says Wells, a ju­nior who is ma­jor­ing in ac­count­ing and mi­nor­ing in plan­ning. “I’m above the game for it. If you take the time to learn your craft and hone those skills, you can help peo­ple of all de­mo­graph­ics.”

In­deed, what her school’s pro­gram has done for her, Lit­tle says, is demon­strate that fi­nan­cial plan­ning is not just a ca­reer path but a way to help peo­ple build wealth for their fu­ture.

“I think that can ap­peal to ev­ery de­mo­graphic,” she says. “The more peo­ple know about it, the more peo­ple can be in­ter­ested.”

Guid­ing the ef­forts at Del State is Nan­dita Das, an ad­vi­sor who em­i­grated from In­dia to the United States.

Das’ mes­sage about cul­ture and plan­ning should re­late to stu­dents and pro­fes­sional plan­ners alike. She teaches her stu­dents to avoid a one-size-fits-all ap­proach to manag­ing wealth. Back­ground and up­bring­ing, she says, are other im­por­tant lay­ers af­fect­ing at­ti­tudes to­ward fi­nances.

She re­calls a client cou­ple that has pri­or­i­tized sav­ing for their chil­dren’s ed­u­ca­tion.

“The nor­mal ad­vice would be re­tire­ment first and then ed­u­ca­tion,” she says. “If I tell them they should not be plan­ning for ed­u­ca­tion, but re­tire­ment first, that’s in­sult­ing their cul­ture,” she says.

“Fi­nan­cial plan­ning is very much tai­lor-made,” she says. “Ev­ery client is dif­fer­ent. Ev­ery cul­ture is dif­fer­ent.”

A De­mo­graphic Shift

More than half of all Amer­i­can chil­dren will be part of “a mi­nor­ity race or eth­nic

group” by 2020, ac­cord­ing to data from the U.S. Cen­sus Bu­reau’s data.

Yet across the coun­try to­day, less than 3.5% of the 80,000 CFPS are black or Latino, ac­cord­ing to the CFP Board Cen­ter for Fi­nan­cial Plan­ning. (The data didn’t track the num­ber of plan­ners who iden­tify with other racial or eth­nic groups).

The lack of di­ver­sity in the tra­di­tional RIA model is a weak­ness that chal­lengers are al­ready ex­ploit­ing: Ac­cord­ing to a 2017 study by the in­dus­try con­sul­tancy Cor­po­rate In­sight, cus­tomers seek­ing fi­nan­cial ad­vice on­line are more likely to be younger and non­white (iden­ti­fy­ing as Africanamer­i­can, Latino or Asian) when com­pared with other in­vestors.

Chang­ing the face of the plan­ning in­dus­try starts at the col­lege level.

But even there, stub­born bar­ri­ers re­main. While non­white stu­dents over­all have in­creased par­tic­i­pa­tion in CFP Board-reg­is­tered pro­grams, they re­main un­der­rep­re­sented; only 31% of fi­nan­cial plan­ning stu­dents are mi­nori­ties, ac­cord­ing to a 2018 TD Amer­i­trade study sur­vey­ing pro­gram di­rec­tors at these schools.

“The de­mo­graph­ics of this coun­try are chang­ing rapidly. Ad­vi­sors need to talk about what they need in a con­text of meet­ing their client needs in the fu­ture,” says Kate Healy, manag­ing direc­tor of Gen­er­a­tion Next at TD Amer­i­trade In­sti­tu­tional, a po­si­tion the firm cre­ated to en­sure “the sus­tain­abil­ity of in­de­pen­dent RIAS.”

Healy notes one the big­gest chal­lenges fac­ing fi­nan­cial plan­ning ed­u­ca­tion is a lack of aware­ness of the pro­fes­sion it­self.

Plan­ning as Ca­reer Path

Even on cam­puses with fi­nan­cial plan­ning pro­grams, 44% of mi­nor­ity stu­dents aren’t aware that it’s a ca­reer pos­si­bil­ity, ac­cord­ing to the TD

Nan­dita Das of Delaware State em­pha­sizes to stu­dents that “ev­ery client is dif­fer­ent; ev­ery cul­ture is dif­fer­ent.”

Amer­i­trade Fi­nan­cial Plan­ning Pro­gram Di­rec­tors Sur­vey.

“Peo­ple are still try­ing to fig­ure out what fi­nan­cial plan­ning is and what a fi­nan­cial plan­ning ca­reer might look like,” says ad­vi­sor Frank Paré of PF Wealth Man­age­ment, the na­tional board pres­i­dent of the FPA. “I think giv­ing that un­der­stand­ing to some­one com­ing out of col­lege and re­ally ar­tic­u­lat­ing that to stu­dents at an aca­demic level is key.”

For would-be plan­ners, the ca­reer of­fers healthy fi­nan­cial in­cen­tives. The me­dian pay for fi­nan­cial ad­vi­sors is es­ti­mated to be just over $90,000 an­nu­ally, ac­cord­ing to 2017 data from the U.S. Bu­reau of La­bor Statis­tics. Also, the field is open for can­di­dates, grow­ing at a rate of 15%, which the bu­reau notes “is much faster than av­er­age.”

Meet­ing the in­dus­try’s need for a di­verse body of ad­vi­sors doesn’t nec­es­sar­ily mean al­ter­ing the mes­sage for peo­ple of color, Paré says.

“It’s about en­cour­ag­ing these in­didi­vid­u­als to take these cour­ses,” he says “I think you need to en­gage young adults in terms of what the op­por­tu­ni­ties are, and have a sup­port net­work that can men­tor them through the process.”

Con­sumer Con­nec­tion

An­other re­cruit­ing key lies in rec­og­niz­ing that many young peo­ple, re­gard­less of racial back­ground, want to own busi­nesses and be self-suf­fi­cient, says Prairie View’s Har­vey.

“A lot of young peo­ple want to be their own boss,” he says. “There is flex­i­bil­ity over time to build your busi­ness and ca­reer. Those are the things to high­light. But the sense of com­mu­nity and hav­ing an im­pact is also very im­por­tant.”

Both Prairie View and Delaware State of­fer mi­nors in fi­nan­cial plan­ning, which Das and Har­vey be­lieve al­low them to reach stu­dents from var­i­ous

aca­demic back­grounds.

“I chose to mar­ket this pro­gram as a mi­nor, and I’m not nec­es­sar­ily go­ing straight to busi­ness stu­dents. I’m just say­ing you can ed­u­cate in a dif­fer­ent way,” Har­vey says. “A ma­jor doesn’t say what your ca­reer is. If you had a mi­nor with that, whether you’re study­ing ed­u­ca­tion, so­cial work, you can set your­self to be a great plan­ner.”

The pro­grams com­ing out of his­tor­i­cally black col­leges and uni­ver­si­ties like Delaware State, Healy says, are par­tic­u­larly well-po­si­tioned to help RIAS ad­dress the need for a more di­verse work­force. TD Amer­i­trade granted two out of three of its emerg­ing pro­gram grants to HBCUS: Del State won in 2016 and Prairie View A&M won in 2017.

“The HBCUS, they re­al­ize what their mis­sion is,” Healy says. “We’re see­ing them re­ally rise to the top.”

“Peo­ple are still try­ing to fig­ure out what fi­nan­cial plan­ning is and what a fi­nan­cial plan­ning ca­reer might look like,” says ad­vi­sor Frank Paré of PF Wealth Man­age­ment.

That mis­sion is at the cen­ter of get­ting the pro­gram started at Prairie View A&M. “As wealth is chang­ing in Amer­ica, firms want ad­vi­sors to look like con­sumers,” Har­vey says.

“The pre­dom­i­nant pop­u­la­tion at an HBCU is African-amer­i­can. That’s a great breed­ing ground for fi­nan­cial plan­ning pro­fes­sion­als,” he says.

Even with an in­creas­ingly di­verse prospec­tive client base, the in­dus­try can do more to be fully in­clu­sive, Healy says. For ex­am­ple, firms need to aban­don the at­ti­tude that they should hire di­verse can­di­dates sim­ply to meet a quota.

“Ad­vi­sors come up to me and say, ‘I need [to hire] a 35-year-old woman.’ Twenty years ago, they would be ask­ing me to prove to them why they need a woman on their team,” Healy says. “They now un­der­stand the why when it comes to age and gen­der di­ver­sity. They’re start­ing to un­der­stand the why from a racial di­ver­sity per­spec­tive, but they’re not quite there yet.”

Chang­ing Per­cep­tions

Part of mak­ing the in­dus­try more in­clu­sive re­quires chang­ing the gen­eral per­cep­tion of what an ad­vi­sor might look like, Das says.

“This is talk­ing from a mi­nor­ity per­spec­tive — it’s in­grained in me that white means good, brown means not that good, black means not that good. ... If I be­have like that, I can­not ex­pect oth­ers to un­der­stand if I my­self don’t un­der­stand this,” Das says. “Do I ex­pect [white peo­ple] to un­der­stand my cul­ture more than I do? Check your thoughts, what you are think­ing. That’s prob­a­bly the start­ing part of ac­cep­tance.”

Es­tab­lish­ing a mul­ti­cul­tural per­spec­tive within fi­nan­cial plan­ning at the col­lege level is a huge step to­ward cat­alyz­ing change, Das says.

“Ev­ery lit­tle change starts in the class­room,” she says. “The aca­demic in­dus­try is the in­dus­try where every­one can see clearly with­out fear. Once you build in that think­ing with stu­dents, these are the change agents that will go and make the in­dus­try also more vi­brant, more ac­cept­ing.”

Das’ stu­dents say they are ready to make it hap­pen.

“Once you go deeper into stud­ies you re­al­ize it’s not as in­tim­i­dat­ing as you thought,” says Wells, the Delaware State un­der­grad­u­ate. “It’s not im­pos­si­ble, but it’s upon the stu­dents our­selves. If I can make it, all of us can make it. You have to be that bea­con of light for other stu­dents.”

Na­tion­ally, less than 3.5% of 80,000 CFPS are black or Latino.

“A lot of young peo­ple want to be their own boss,” says Prairie View A&M Univer­sity’s Danny Har­vey.

TD Amer­i­trade In­sti­tu­tional’s Kate Healy says many stu­dents aren’t aware of the plan­ning in­dus­try.

“You need to en­gage young adults in terms of what the op­por­tu­ni­ties are,” says PF Wealth’s Frank Paré.

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