Codifying Diversity & Inclusion

A Diverse Thought: Businesses Can Do Well By Doing Good

 
Reimagining our playbook for growing and managing wealth


by George Nichols III


Mr. Nichols is the 10th President and CEO of The American College of Financial Services. His experience in the public and private sector includ a 17-year stint at New York Life, where he held principal roles in sales, strategic initiatives, and public policy. He most recently served as executive vice president in charge of the Office of Governmental Affairs, which encompasses all of the legislative, regulatory, and public policy issues. Visit theamericancollege.edu

Our nation is a melting pot of cultures and creeds – a diversity of thought and experience that shapes our uniqueness and hopes to posit our nation as an example of equitable opportunity.

The pursuit of these opportunities must extend to every profession, and in many ways, financial services is the epitome of the entrenched inequalities that still exist and the immense possibilities and pressing obligations we must act on now.
Racial injustice and inequality have followed a certain playbook for decades. While overt redlining and today’s potential AI-based proxied discrimination take on different forms, the outcomes could potentially leave our nation short of equal access and opportunity for all.

Our nation must not only recognize, but also understand those marginalized and mistreated for so long. As a Black man who has worked in financial services for decades – a Fortune 70 executive, a former NAIC President, and the President of the only nonprofit, accredited institution dedicated to financial services education – I believe that the profession must own its role in the past and look to lead the future of wealth creation for Black America and other underrepresented communities.

The portrait of wealth must move away from white, affluent, and male to a more eclectic representation of our diverse nation. We must end a cycle of entitlement – where wealth begets wealth – in favor of a platform that promotes upward mobility and wealth building for Black professionals, families, and communities. For while I understand the need to serve current clients, and I get the temptation to focus solely on what supports success today, we must finally move away from a narrow, short-sighted focus on short-term revenue toward an expansive view that takes into account clear demographic and societal trends.


Stewards of Wealth Should Look Like The Communities They Serve

While current diversity and inclusion initiatives are necessary and noble, they tend to follow a fragmented vision of siloed outcomes instead of viewing equal opportunity as a holistic, long-term effort. Recruiting, retention, career promotion, corporate sustainability, and how each of these affects organizational vitality, are in many cases not coming together under a bigger strategic plan.

Diversity should not just check a box then become a revolving door – operationally, such short tenures will end in sunken costs and incremental advancement at best. The financial services profession can only create a more inclusive workforce by living that inclusivity in its recruiting, corporate culture, and professional development. This blueprint takes a broader view and requires a deeper commitment across the industry.

At The American College of Financial Services, we have identified a few workstream gaps that mandate immediate attention. First, whether it is through an organization’s diversity and inclusion office or in collaboration with its marketing department, companies need to “talk” like their constituencies. This means diversity in photos, along with a clear mission, corporate vision and values, and job descriptions that reflect the diverse talent pool they hope to attract. We have seen modest success on this front, yet Black financial advisors still reflect only 7% of the industry, despite making up 13% of the nation. Recruiting efforts must cast a wider net. In addition to the funds pouring into Historically Black Colleges and Universities, financial services companies should also look at public universities in urban areas where many young Blacks are first-generation students studying in the communities of their birth.

Once a diverse workforce is in place, companies must create a robust training and development program that promotes an inclusive culture and equips Black financial advisors with the tools they need to succeed. The College believes this area requires further research to pull salient data points and identify promising case studies in the industry, but one key tactic serves as low hanging fruit: study groups.

Study groups have facilitated career growth for decades, yet they are mainly rooted in professional circles of white advisors. There is a massive opportunity to expand access to Black professionals. We envision a unique construct that leverages corporate commitment to identify potential white advisors to mentor and guide these study groups. Why? Companies should know who their successful advisors are, and by marrying them with Black advisors, they are promoting partnerships and creating a “rising tides” scenario that can both support career longevity and boost the company’s bottom line.

A Bottleneck On The Corporate Ladder

I do not view diversity and inclusion as a charitable endeavor. When framed as such, its funding feels contingent on quick wins and its focus feels just one crisis away from fading. Instead, professional diversity is good business. Based on current census tracts, America will become a majority-minority nation by 2045, with the percentage of Blacks growing by 34 percent between now and then...

Beyond recruiting and retention, we have identified a bottleneck on the corporate ladder that disproportionately affects up-and-coming Black leaders. This is not unique to financial services, but there is immense opportunity to lead by example in this area. Today, Black leaders make up just over 3% of corporate executives and less than 1% of Fortune 500 CEOs. Those are abysmal numbers, but there is some good news. There is a pipeline in middle management that just needs the training and opportunity.

Making a dent in such stark inequity requires an executive leadership program for potential Black leaders built at least in part through the learnings of successful Black executives. While any curriculum must incorporate academic thought, what better wisdom to amplify than that shared by those few who have navigated the system and blazed a trail to follow. Again, in the spirit of fostering corporate commitment, I believe companies should identify these Black leaders and white executives to sponsor them in their journey through the program. To connect the dots, I would go even further to create a condensed track for the sponsor so they can help the up-and-coming Black leader apply the knowledge in the field and in the boardroom.

These ideas are based on time-tested organizational strategies, but they are viewed through the prism of a Black professional and are married with complete corporate buy-in. The College strongly believes in these approaches and is open to others flagged through further research and its conclusions. We have incorporated them into our Four Steps Forward to upward mobility and wealth creation for Black America, a big, bold initiative that calls on the entire financial services industry to rally its philanthropic resources and business expertise around this collective cause for sustainable, generational change. We will convene the industry through the newly created American College Center for Economic Empowerment and Equality, and we are in the process of discussing partnerships with organizations across the industry.


Uplifting Communities is Good Business

I do not view diversity and inclusion as a charitable endeavor. When framed as such, its funding feels contingent on quick wins and its focus feels just one crisis away from fading. Instead, professional diversity is good business. Based on current census tracts, America will become a majority-minority nation by 2045, with the percentage of Blacks growing by 34 percent between now and then. To service the financial needs and goals of Black America, the industry must look and think more like these potential clients. That is not to say that all Blacks need a Black advisor – but a representative understanding of these communities across organizations can promote a wide range of perspectives and improve how they serve a more diverse clientele.

Organizations must also embed themselves in these communities and help them define and build wealth. Black communities are not monolithic, so tactics must focus on achieving specific goals, and embracing this opportunity is critical to long-term organizational success. By 2045, a financial advisor’s average potential client will be a minority. Best serving his or her needs will not be possible by continuing to frequent the same crowds. That short-term, insular thinking will impede business growth and create a service level gap that could have massive downstream effects on the nation’s financial and economic solvency.

Areas of potential impact include financial literacy programs focused on financial access, actions, and attitudes, as well as entrepreneurial efforts dedicated to education and financing. Pursuing these opportunities will undoubtedly improve how businesses forge relationships with these communities. It could potentially generate an effervescent, bubbling-up effect that makes markets, empowers financial security, fosters economic growth, and promotes corporate and community sustainability.


How to Make Sure This Time is Different

While Albert Einstein could not have imagined his tie to diversity in financial services, his saying rings true here: “The definition of insanity is doing the same thing over and over again, but expecting different results.”
The financial services industry has slowly attempted to solve its diversity issues with limited success. In addition, it has slowly attempted to help Black communities by lobbying for specific public policy initiatives or offering product solutions – yet, the impact has not been sustainable and generational.

I believe the industry has a massive opportunity and a pressing obligation to uplift Black communities through education, entrepreneurship, and community-based solutions, and promote greater diversity in the profession to serve a fast-approaching majority-minority nation.

The time has come to live up to our ideals and benefit society. It is a win-win for the profession and our increasingly diverse nation.

 

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