Stakeholders Disagree on Root Causes but Agree on Path Forward
The CFP Board Center for Financial Planning today released comprehensive research on the lack of racial and ethnic diversity in the financial planning profession.
As consumer demand for financial advice grows, it is imperative that the financial planning profession work toward expanding and diversifying the ranks of financial planning professionals who can meet the needs of increasingly diverse consumers. However, based on self-reported data provided to CFP Board, less than 3.5 percent of all 80,000 CFP® professionals in the United States are black or Latino, which is significantly less than the representation of blacks and Latinos in the U.S. population.
The Center’s research examines the attitudes and perceptions of those with a stake in the racial and ethnic composition of the financial planning profession, including CERTIFIED FINANCIAL PLANNER™ professionals, recruiting and hiring professionals at financial firms, consumers and prospective black and Latino CFP® professionals.
“The need to recruit a more diverse population into the financial planning profession is essential to serve our increasingly diverse American public,” said Marilyn Mohrman-Gillis, Executive Director of the CFP Board Center for Financial Planning. “This research provides additional data that will help us understand the challenges people of color face when entering the profession and create opportunities for prospective CFP® professionals and the firms that employ them.”
To better understand the depth and breadth of the underrepresentation of minorities in the financial planning profession, the research sought to identify the root causes inhibiting the development of a more diverse workforce and inform recommendations for attracting prospective black and Latino CFP® professionals into financial planning career paths. Key findings include:
- Lack of diversity is widely acknowledged across the financial planning profession, despite the majority seeing no difference in required skill set between whites and blacks (78 percent) or whites and Latinos (69 percent).
- When asked about the lack of diversity in the financial planning profession, survey respondents differ on their views of the profession:
- Among black and Latino prospective financial planners, 58 percent have never seriously thought of becoming a financial planner.
- However, existing black and Latino CFP® professionals are highly satisfied with the profession. In fact, while the majority of CFP® professionals are “very likely” to recommend financial planning to others as a career, black CFP® professionals are most likely to recommend financial planning at 68 percent with Latino CFP® professionals following closely at 59 percent.
The research findings suggest that attracting more blacks and Latinos to the financial planning profession, and making the CFP® certification more appealing among these groups, will require earlier exposure to the profession in part through financial literacy initiatives (54 percent); increased awareness of the career as a professional path (51 percent); more formal mentoring programs for prospective CFP® professionals (56 percent); and more diversity hiring programs at firms (34 percent).
Read more research findings in this infographic, executive summary and research report.
“Through the Center for Financial Planning we are creating a more diverse and sustainable financial planning profession so that every American has access to competent and ethical financial advice,” said CFP Board CEO Kevin R. Keller, CAE. “Building a diverse workforce is integral to the future of the profession and will create access to more opportunities for firms, prospective CFP® professionals and clients.”
This research is a key element in the Center’s diversity initiative, one of the three core pillars of the Center’s work, alongside developing the workforce of the future and building an academic home and body of knowledge for the profession. Findings from this research will provide the foundation for future Center programs to address the lack of racial and ethnic diversity in the workforce.
“As part of our ongoing commitment to increase diversity within the Registered Investment Advisory industry, we are proud to work with the CFP Board Center for Financial Planning in the effort to increase racial and ethnic diversity in the financial planning profession,” said Leslie Tabor, managing director, Business Consulting and Education, Schwab Advisor Services. “Participating in the Diversity Advisory Group and supporting this comprehensive research aligns with our mission to build programs and develop best practices that help independent advisor firms attract and cultivate more diverse talent.”
The CFP Board Center for Financial Planning diversity research is funded by Charles Schwab Foundation and Capital One. The work of the Center is also made possible through Center sponsors, including Lead Founding Sponsor TD Ameritrade Institutional, Founding Sponsors Northwestern Mutual and Envestnet, and Visionary Circle Sponsor Vanguard.
“The Center is bringing a rigorous, research-to-action-to-results approach to a systemic problem,” said Cy Richardson, Senior Vice President, National Urban League and Chair of the Diversity Advisory Group. “I am pleased to work with the Center for Financial Planning to lead the Diversity Advisory Group in shaping new initiatives that can have a profound impact on communities of color.”
This research is just the first step in the Center’s ongoing effort to build a more inclusive workforce. Following the release of these findings, the Center will publish a thought leadership paper with recommended solutions for increasing diversity among financial planners. The insights will be discussed at a Diversity Summit to be hosted by the CFP Board Center for Financial Planning in New York City on October 23, 2018. For additional information about the Diversity Summit, as well as a detailed research report, executive summary and infographic of the research, please click here.
ABOUT THE RESEARCH
The CFP Board Center for Financial Planning commissioned the comprehensive qualitative and quantitative research exploring racial and ethnic diversity among financial planners. The research was conducted by Fondulas Strategic Research in consultation with the Center and The Raben Group. Quantitative findings are based on an online survey of professionals at financial firms responsible for recruiting and hiring financial planners; current black and Latino CFP® professionals; CFP® professionals who are neither black nor Latino; consumers who work with a financial planner with investable assets or income of $100,000 or more; and black and Latino business professionals and students, age 20-54, open to considering a career in financial planning. Qualitative results are based on in-depth interviews and focus groups with the same constituent groups. A sample of 2,276 adults from the U.S. participated in the study.
ABOUT CFP BOARD
The mission of Certified Financial Planner Board of Standards, Inc. is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning. The Board of Directors, in furthering CFP Board’s mission, acts on behalf of the public, CFP® professionals and other stakeholders. CFP Board owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements. CFP Board currently authorizes over 80,000 individuals to use these marks in the U.S.
ABOUT the CFP BOARD CENTER FOR FINANCIAL PLANNING
The CFP Board Center for Financial Planning seeks to create a more diverse and sustainable financial planning profession so that every American has access to competent and ethical financial planning advice. The Center brings together CFP® professionals, firms, educators, researchers and experts to address profession-wide challenges in the areas of diversity and workforce development, and to build an academic home that offers opportunities for conducting and publishing new research that adds to the financial planning body of knowledge. More about the Center and its initiatives can be found at www.CenterforFinancialPlanning.org.
CONTACT: Jessica Lewis, Communications Specialist P: 202-379-2256 M: 301-655-0389 E: firstname.lastname@example.org
 Consumers, for the purposes of the research, are defined as those who work with a financial planner, with investable assets or income of $100,000 or more.