Why diversity and inclusion should matter to advisers

Consider new hiring practices, employee training and other steps to offer an inclusive culture to employees and clients.
JAN 25, 2018
By  Paul Zettl

The face of the U.S. financial consumer is changing rapidly. Millennials are expected to drive a seismic shift in attitudes that will shape our culture, how they seek financial advice, and where they choose to work. With the changing demographics in the workplace and marketplace, advisers have an opportunity to build their business and to attract and retain younger clients by demonstrating a commitment to inclusion and being supportive of the LGBT community. In a Deloitte survey, "The Ten Disruptive Trends in Wealth Management," the study found that an estimated $58 trillion in wealth that will be transferred to heirs over the next 15 years and, more importantly, 90% of heirs indicated they would change advisers when they receive their inheritances. Are advisers prepared to attract and retain these next generation clients, many of whom are already ready active in the workplace and on a path toward saving and investing? That may not be the case according to a State Street's 2015 Adviser Survey, "Managing the Transition of Wealth Across Generations," indicating 75% of advisers feel engaging with the next generation is challenging, and less than 50% have a clear strategy. These implications may have a significant impact on client loyalty. Linking diversity and the next generation The lesbian, gay, bisexual and transgender community represents nearly $1 trillion in buying power according to Bloomberg. At T. Rowe Price, we conducted a study on the financial needs of LGBT investors, and we found that that they place a high value on advice. And, despite their willingness to work with advisers, our survey found they feel underserved. By being supportive of the LGBT community, advisers can win the hearts and minds and earn the trust of a group that is amassing wealth and feels underserved. Millennials and LGBT communities are inextricably linked. According to GLADD, 20% of millennials are more likely to identify as LGBT compared to the general population (4-12%); 35% of Gen Z, those who are age 13-20, identify as bisexual or fluid in their sexual orientation; and 64% of adults ages 35-71 consider themselves allies of the LGBT communities. Understanding the behaviors, attitudes and patterns of Generation Z and millennials can help advisers deepen their relationships with their client's children and grandchildren as well as younger employees. Here are three simple best practices that advisers can use to create an inclusive culture for employees and clients alike: 1. Hiring and recruiting As part of the recruitment and hiring process advisers require HR managers and recruiters to broaden their search to reach a more diverse audience. Diversity and inclusion can be a strategic enabler to their success. It ensures that you have access to the best talent available and a culture that values individual backgrounds, perspectives, and experiences while it also reflects the marketplace at large. Leveraging local universities' diversity groups and networks are helpful in recruiting diverse talent. Reaching Out MBA (ROMBA) is a resource for sourcing LGBT individuals with MBAs. Creating a strategy to recruit diverse talent will help your firm broaden its appeal to a wider swath of employees and clients. 2. Foster employee engagement Developing an inclusive environment requires consistent and meaningful employee engagement. This applies not only to new members of the team but also to existing employees, some of whom may benefit from ongoing diversity and inclusion training programs. Employees want to feel empowered to share their views, opinions, and ideas in an accepting culture that values their input. Proactively seek opinions from all team members, not only those who regularly speak up. Allow everyone to feel that he or she is responsible for creating and maintaining an inclusive atmosphere around the firm. 3. Encourage participation in or start business resource groups Many organizations in our industry have employee or business resource groups. These groups, which are typically sponsored by a firm but run by individual employees, allow like-minded people to organize, either formally or informally, to create positive change. Their shared interests lead to purposeful charters and programs that enable employees to have a greater sense of belonging and support. Increasingly, they can also be an important avenue to attract and retain talent. Paul Zettl is head of product and offer management at T. Rowe Price Associates. This story is part of an ongoing initiative by InvestmentNews to provide inspiration, education and awareness around workplace diversity and inclusion. The project aims to cultivate a financial advice profession where diverse perspectives and experiences are welcomed and respected, and where industry best practices can be shared across organizations.

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