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A Key to the Future: Building a More Diverse Team

Conferences & Events

At an opening-day discussion at the 2021 NAPA 401(k) Summit, a diverse panel of five advisors shared their experiences, challenges and successes—as well as ideas and tips for building a more diverse team.

The advisory profession has long struggled with a lack of diversity in its ranks—an issue that has become increasingly problematic as the population it serves has become more diverse. Currently, 75% of NAPA members are white men, according to Patricia Wenzel, a Managing Director with Merrill Lynch and Immediate Past President of NAPA. 

Wenzel served as moderator for the panel discussion, which featured Doug Bermudez, a Managing Director with Strategic Retirement Partners; Tuyen Pham, a Practice Leader with Pensionmark; Apryl Pope, an advisor with Retirement Plan Partners; and Lisa Smith, SVP, Retirement National Accounts with Fidelity Investments.

At Fidelity, Smith related, they are cognizant of their clients’ increasingly diverse workforces. A diverse workforce “is not just a nice-to-have business aspiration; it’s a growing reality in the United States,” she said. The firm resolved to implement changes to make the Fidelity team more diverse, including research and discussions with their advisors and partners.

“The first question we all have to consider is ‘How do we create more entry points for under-represented talent, and then provide the development and the learning opportunities for those folks to move into advisory roles?” Smith said. And all this at a time when the industry is facing a talent shortage, she noted, caused by the increased demand for advisory services as Baby Boomers retire, coupled with increased merger and acquisition activity and more stringent and costly regulatory and technology environments which have resulted in a situation where more advisors are exiting the industry than entering it. 

Return on Investment

While Pensionmark’s Tuyen Pham acknowledges the social and moral implications of a more diverse approach to hiring, as a business owner, the bottom line is the long-term ROI. Currently, “Our industry doesn’t look like the population,” he says. “But if as a business owner you’re looking 10 to 15 years down the road,” that has to change for the sake of the business.

While members of a diverse team may look different, the key to teambuilding remains shared values, Bermudez noted. In interviewing, he said, the keys remain answers to questions like, “What are your key values? What are your aspirations? Where do you see yourself three to five years down the line? Skill sets can be taught, but if that drive, that desire, is there, then that is a person we’d like to add to our team. Maybe we should hire less for an MBA and more for what that person can bring to the team.”

Pope agreed, citing every business owner’s maxim, WIFM—“what’s in it for me?” She explained, “if you want diverse assets in your business, you need a diverse team. If you bring diverse members to your team, they’ll be bringing their diverse prospects and clients. The relatability factor is important.”

Barriers to Entry

“Why aren’t there more African-American advisors?” Wenzel asked the panel. Pope suggested two reasons. “One, we’re not looking in the right places. Take me, for example. I’m a former Peace Corps volunteer, a former teacher and a former basketball coach. I am not on anybody’s radar if they’re looking for advisors. But here I am. So looking outside the traditional places is one thing.”

Secondarily, Pope pointed out, the financial services industry is not an easy one to start out in, citing low initial pay, several years of learning initially, and the cost of licenses and designations. “Our industry doesn’t make it easy to join,” she observed. 

Data from Fidelity backs that up. Among a list of factors preventing diverse candidates from entering the industry, the top two factors are “high risk of failure when starting out” and “lack of stable compensation when starting out.” (In addition to common factors like pay, production goals and work/life imbalance, other factors on the list include “concern about joining the industry as an unrepresented minority,” “biased hiring practices” and “concern about entering a male-oriented industry.”)

From Color Blind to Color Conscious

“I’ve always seen people equally regardless of what they look like—trying to be ‘color blind,’” said Wenzel. “But now we’re hearing more about becoming ‘color conscious.’ So how do we make the shift from color blind to color conscious?” 

“I use those terms too, but I’ve learned that they can be off-putting,” responded Smith. “Color blind can insinuate that you don’t see or appreciate people’s differences. But those could be differences that they’re quite proud of, like heritage or culture. We shouldn’t be blind to those things. And yet ‘color conscious’ suggests a hyper-awareness of people’s differences.” Citing Melody Hobson, Smith suggested that the way to reconcile the two is to try to become more “color brave.” “Being color brave is about awareness and understanding and support,” said Smith. “So I would suggest that you spend time with people that don’t look like you, that you don’t typically spend time with. The first step toward action is awareness.”

Dimensions of Diversity

Smith also noted that diversity can involve more than just racial and ethnic factors. “We often focus on what you see, but there are also a lot of invisible differences,” she explained. “There’s a distinction between inherent diversity—things you are born with, like your ethnicity, your age, your gender—and then there’s acquired diversity. Those are the traits, the skills, that we develop through our experiences—the things we’re not born into. And they’re the things that make us interesting and different—a person that people want to listen to.” Examples of acquired diversity include veteran status, caregiver, personality type, generation and how you were raised. “Think of it as diversity of experience and thought,” she advised.

How Do We Begin to Create Change?

Advisors “are the ones who will do this,” Pham believes. “We’re the ones who are at the forefront of this industry. Is it our responsibility? Sure, if you want to take on that responsibility. If you don’t, the world’s going to change and move on, with you or without you. So if you want to grab the bull by the horns and take responsibility, and build a team like that, great. If you don’t, as your competitor, I’m pretty happy if you get out of the business.”