With horrific videos of police brutality and energized rallies across the country, this feels like an opportunity for America to remedy some of its most long-standing social ills. How do these things translate to the planning profession?
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity…”—I think most of you know that this is the opening line of Charles Dickens’ A Tale of Two Cities, introducing his long yarn about the massive social, economic and political upheaval in France during the French Revolution. I can see a few differences between that turbulent era and our own (hopefully fewer beheadings), but this time feels like it must have felt back then, and how it felt during the New Deal era coming out of the Great Depression and (the only period I, myself participated in) the demand for social, political and economic change in the late 1960s and early 1970s.
In each period, there had been significant social/economic unfairnesses and contradictions that the population was suddenly, unexpectedly no longer willing to tolerate. In each period, popular demands for change were answered to a greater or lesser extent, and the world was different after than before.
American society seems to be at another one of those inflection points, and I suspect that most of you in the Inside Information community—who are well above the professional average in intelligence and social awareness—want to get ahead of the changes.
But how? Most readers of this publication are the beneficiaries of white privilege, in a profession that is still in the early stages of providing full opportunities to women, far behind in doing the same for Black, Latino or Asian Americans. Most of us have never experienced the kind of police brutality or economic injustice that (based on a sudden flood of video evidence) Black Americans have routinely endured for literally centuries. In general, we non-Hispanic Caucasians have been hired, promoted and accepted without having to face invisible barriers of prejudice or negative assumptions based on our physical features. Our clients tend to be white and wealthy, and those are the circles we travel in.
In short, most readers of this newsletter are not perfectly-equipped to get ahead of the social change that is being demanded, and which seems to be inevitable, and which most of us would welcome, even if it means a diminution of the privilege we have enjoyed that has allowed us to prosper.
We—and I very much include me in this—need help understanding the nature of the problems that need to be resolved, and the solutions and accommodations that the resolutions will demand of us.
To help me and all of us get our heads around this important thing that is happening in the streets of America, and the new awareness that is dawning around our profession, I reached out to people, most of whom I have not talked with before as a writer and journalist. For the most part, I did not ask about police brutality or some of the larger economic empowerment issues that we all know will have to be addressed. Instead, I asked for their stories, and their advice on how the profession can change for the better.
This issue of Inside Information contains those stories and that advice, told by people of color who experience a very different world than most of us do, and by white advisors who have been seeking their own solutions. I think the wider social justice movement should appropriately focus on African-American justice—a social reform movement that has been delayed, and delayed, and delayed while the (admittedly legitimate) grievances of others were addressed. But in focusing on the narrower issues facing the financial planning profession, I found the conversations constantly drifting to the larger context in which we work and practice.
You can skip over to their stories now if you prefer, but I do want to share some of what I learned as an overview. First, although everyone I talked with was gracious and patient, these were surprisingly uncomfortable conversations. The problem was in my own mind. It’s much easier, mentally, for people who have enjoyed white privilege to NOT talk about racial injustices, and thereby not face up to that fact that our inaction and incuriosity contributes to the routine obstacles that other human beings, men and women, have faced from birth.
So the first thing I learned was bravery: the bravery to not be afraid to say something that would prove embarrassing due to exposing the many flaws in my unconscious mental wiring, to risk being called racist because of something I blurted out unknowingly, and (like so many other areas of our lives) to allow my ignorance to lead me to learning opportunities.
I also learned something similar to my experience trying to speak a foreign language in another country; that people of color will be grateful if you make a sincere effort to understand their circumstances, because that’s farther than most people are willing to go.
I learned that the goal of this social upheaval is not diversity, but inclusion. That is, simply hiring a person of color into a white cultural environment, and expecting that person to adapt without some degree of mutual adaptation, is a solution doomed to failure.
I learned that we need to stop making a “business case” for hiring African-American, Latino or Asian-American candidates, and instead expand the recruiting efforts so that people of color are fairly evaluated on their merits. I learned that this is harder than you might think, because it requires moving out of your comfortable networks and pipelines, and we have to face our fear of being uncomfortable with someone who comes from a different culture and set of life experiences.
I learned that facing this discomfort directly, as I did with these interviews, can lead to new insights and the possibility of being a more empathic, aware individual.
I learned that we owe (and this is not too strong a word) our patience and attention to people who have been systematically repressed in a social order that has benefited us. Yes, it is somewhat nerve-wracking. But I (we) need to suck it up. A recent tweet by Martin Luther King III brought this home to me, when he said: “If you’re tired of hearing about racism, imagine how many people are tired of experiencing it.”
As you’ll see below, there’s a lot more to learn, and I don’t think you need to hear it from me. I’m grateful—and I hope you will be too—for the learning opportunities and insights offered by the interview subjects as they give us their best guide to the next iteration of our professional culture and the new social fabric that is being stitched together in this turbulent hour of our American story.
Hearing their voices, and bringing them to you, I am willing to believe that if enough of us decide that finally, this time around, we really, truly want to have the society that I think we all really believe in, then finally, this time around, we just might get there.
[Note: readers will notice that I capitalized “Black” when referring to a person’s ethnicity. This is now the preferred style in the AP Stylebook, similar to how “Hispanic,” “African-American” and “Asian-American” are capitalized.]
Saundra Davis, otherwise known as “The Financial Coach’s Coach,” says that she’s not in the business of helping people be more comfortable with being poor. “My role,” she says, “is to help people create the life they want, and take action on what they need to do to make it happen.” Her Financial Fitness Coach program (https://www.afcpe.org/certification-and-training/financial-fitness-coach/) trains advisors in coaching skills, something that she believes ought to be part of the curriculum to become a financial planner.
In her spare time, Davis also runs Sage Financial Solutions, a nontraditional financial planning firm based in San Francisco. She also teaches financial planning coursework at Golden Gate University.
Like many African-Americans of a certain generation, Davis was originally drawn to a career working in the nonprofit sector, in various programs designed to benefit low-income communities. “Gradually, I noticed that there was a gap in the knowledge base and access for Black people,” she says. “White people who had wealth knew how to acquire, build and transfer it. In the Black community, even when there WAS wealth, when we had property or a business, we were often not transferring those things well. We weren’t having money conversations. There was no legacy wealth-building conversation that I was aware of.”
Starting at age 44, in 2004, Davis joined the financial planning profession with the intention of learning what wealthy people knew about wealth, and teach it to the larger Black community. “Of course, I knew about enslavement and all of that, how Black bodies were used for white wealth for centuries,” she says. “But I didn’t understand how we could have the buying power that we had, and not have the wealth that I would have thought would correlate to that.”
Right from the start, Davis became active in the local FPA, and then with the organization nationally, and with the Foundation for Financial Planning. “My goal was to increase the number of Black people, specifically Black people, in the profession,” she says. “I know there are initiatives for Hispanics and other people of color, and that’s fine, but my priority is Black people, and always has been.”
Her concern about parallel efforts to gain inclusion is that whenever there are various interest groups joined together, the focus on reform turns to those allies, and the result is that Black Americans tend to get the fewest gains. “When Black people are fighting for equal rights and welcome other disenfranchised people to engage with us in that fight, our causes and concerns almost always end up at the bottom of the barrel,” she says. “When the financial professions have discussed diversity it has been specifically for white women. When government contracts were designated for diversity, white women were the primary beneficiaries. The LGBT movements for equality are deeply rooted in the Civil Rights movement, yet Black people in that community face the same (and often worse) discrimination. Intersectionality matters. When you are Black AND a woman, when you are Black AND Gay, you get a double dose of exclusion, and if you are included, you are often treated as ‘less than.’
“You would be hard-pressed to find a Black person, over 40 years old,” she adds, “who hasn’t heard: You have to do twice as much to get half as much.”
Davis fully recognizes that her candor can be dangerous—or, maybe, disadvantageous—to the community she most cares about. “The rough part is you have to decide between speaking your truth or leaving the door open,” she says. “Everybody, including our esteemed President Barack Obama, knows that once you walk through that door, if you tell too much truth, or if you expose too much, you might be the last one through that door. It is one thing to get in,” she says; “it is another thing to hold the door open.”
Are there any more candid truths to talk about? Davis says that the entire premise of the diversity conversation is flawed to its core. “You see articles on the ‘business case’ to hire a Black person, right?” she says.
“When have you ever heard anybody have to make a ‘business case’ to hire a white person?” Davis asked. “Why do you need a ‘business case’ to hire me?”
The big picture, Davis says, is that for too many centuries, Black Americans have been trying to get the rest of the country to see them as fully-human, as people, colleagues, friends, neighbors and respected professionals. “We’re tired,” she says. “We’re tired of talking about it, of trying to get people to understand. We’re tired of trying to get people to understand that our very humanity is at risk every single day. I have a 40-year-old son who I worry about every time he walks out of the house.”
How would Davis propose that we increase African-American participation in the planning community, and also help bring financial planning advice to traditionally lower-income (or lower-wealth) African-American communities? Interestingly, Davis has already created a program to address both issues simultaneously. She calls it the Financial Planning Small Business Incubator, a program that would allow young planners to get their three years of CFP experience doing financial planning work for low- and moderate-income clients. “They would get continuing education, learn how to build a practice, and understand how to run their own business,” she says At the same time, the advisors would be nurturing clients toward becoming financially able to pay their fees.
The problem, of course, is that the low-income community wouldn’t be able to pay this advisor enough to live on during those initial three years, hence the incubator concept. “Those new advisors working in that community would need to be supported,” Davis explains. She launched the program in 2005, with an $80,000 grant from the CFP Board that was designed to cover two years—and if you divide that out, you wonder how the CFP Board expected to incubate more than two advisors, assuming Davis was working on the project for free. “I needed to be able to pay people for this work,” Davis says. “And nobody would let me pay people.”
She’s trying to revive the program, and would like to raise $750,000 from one of the organizations that is taking in millions in donations, which would be enough to incubate 15 advisors who would be providing planning advice in low-income communities. Fully-funded, the program would require $1.7 million a year. “If we ramped it up,” Davis says, “we might be able to take on anywhere from 25 to as many as 150 advisors a year and train them, let them sustain themselves, grow their practices, and it would create a real pipeline and meaningfully address financial literacy in low-income communities.”
Finally, Davis would like the profession to get rid of the “diversity” term and make the goal “inclusion” instead. “If you focus on diversity, that means you’re focusing on having somebody in the firm,” she says. “You’re making that business case for hiring the ‘other.’ If you focus on inclusion,” she explains, “you’re hiring someone to become a key part of your firm, someone who will contribute on the same footing as everyone else, who not only has a voice, but their voice is heard and incorporated.” Inclusion is the goal of the current marches, she says, and most of us still aren’t getting it.
Phuong Luong, Founder of Just Wealth in San Francisco, CA and Cambridge, MA, says right on her website that “I am dedicated to economic justice and dismantling systemic inequality.” In addition to pro bono work, she teaches workshops on closing racial and gender wealth gaps. “I think,” she says, “that knowing how to direct where your money goes, and why it flows the way it does in the world, is power.”
This is the impulse that drove her into providing financial advice. While working as a teacher, Luong saw that the students who fell behind their peers academically were also the ones from the most economically-disadvantaged families—usually students of color.
But how could a first-generation Asian-American, a woman of color, break into financial planning? Easing into the role, she worked as a financial coach for a nonprofit, became its Director of Financial Services, and completed the financial planning program at Boston University. Just Wealth is a virtual, fee-only planning practice founded in 2017.
What has she learned during her time in the profession? “When I hear from seasoned professionals of color who have been in financial services, they tell me that they’ve been hearing these conversations [about social and economic equality, police brutality, etc.] for decades,” says Luong, adding that seldom does anything ever seem to change. “They’re tired, not just within financial services, but as Americans in this country, having this conversation again and again and again.”
Luong would like to see the CFP curriculum—and college curricula more generally—include financial history, specifically the history of financial exclusion, Jim Crow, and redlining. “It doesn’t have to be political,” she says. “The reason it seems political is that we’ve been taught as Americans that it is taboo to talk about, that racism itself is taboo to talk about. We’ve been taught,” she adds, “that if someone implies that you’re a racist, that makes you a bad person, even if you’re working through your beliefs and open to learning.”
Later in the conversation, she says, “I saw a quote the other day which captures it nicely: It’s a privilege to learn about racism rather than experience it yourself.”
As an Asian-American, Luong has sometimes felt uncomfortable in social settings, and she understands history well enough to know that Asians in America have been subjected to systematic racism and collective oppression. But in her own life, she has been stereotyped more than oppressed.
“People look at you and automatically think that you’re good at math,” Luong says. “The first position I ever got hired as a teacher, I interviewed for over a dozen reading and writing positions, because I wanted that to be my focus. The one offer that got me in the door for teaching in public schools,” she says, “was a math position. It was ridiculous.”
Every ethnic group is different in its trajectories, and Luong says that despite the lost opportunities, our social order has evolved very different conditions for Asian-Americans compared to Blacks or Hispanics. “The term Asian-American itself,” she says, “has been a push to separate and disrupt the civil rights activism that was happening in the 1960s and 1970s, to put a wedge between Black Americans and Asian-Americans.” The implication is: we’ve accepted these hard-working Asians into the category of people who will be given opportunities and not be routinely subject to random police brutality. Why can’t you Black Americans gain that same acceptance?
Luong’s planning career has focused on people of color, but she most readily talks about the African-American experience that she’s observed. “There is a sense of distrust of financial services people in the community,” she says.
Her advice? “There are institutional issues, interpersonal issues and there are issues of people of color feeling like we don’t belong,” she says. “You have to hit it at all three of those levels.
What institutional issues? Here, Luong offers the most controversial advice you’ll read in this series of profiles. “To remedy the past, we don’t just need education, or the ownership of firms,” she says. “We also need unrestricted cash transfers.”
Luong declines to propose an amount that would be given to an impoverished Black family, but the point is to remedy something that is obvious in 400 years of history. “The African-American communities have been stripped of wealth due to decades-long policies,” she says. “Research shows that Black Americans receive a fraction of the inheritances that white Americans do, due to those government policies that have boosted wealth-building for white families while blocking wealth-building for Black families.”
Does this mean seed money to invest? “Not just investments,” says Luong. It could take the form of a financial cushion. She recommends further reading in a book called The Color of Money, by Mehrsa Baradaran. “The research,” she says, “will tell you that this is what people need.”
Interpersonal? “There is an adage in education, that sometimes you have to see something a few different times before you really absorb it,” says Luong. “You can’t just read something once and you’re good. Especially if you’re not experiencing racism yourself.”
But aren’t these conversations easier for a person of color like her, than they would be for a white male who doesn’t have any experience in exclusion?
“It is not unique for people of color to be outspoken about the issues that we are talking about today,” Luong argues. “I don’t want people to think that I care just because of my background. There are so many people who didn’t grow up in that background, who learned on their own. Anyone can learn that information. This affects us all,” she adds. “It’s easy to avoid talking about these things, but I can’t do that. People I know and love are Black. People I have worked with are Black. They matter, and people need to realize and acknowledge that at a very deep level.”
Louis Barajas is the author of five books: The Latino Journey to Financial Greatness; Overworked, Overwhelmed and Underpaid; Small Business, Big Life: Five Steps to Creating a Great Life With Your Own Small Business; My Street Money: A Street-Level View of Managing Your Money From the Heart to the Bank; and Microempresa, Megavida: Cinco pasts para tuna gran vida a través de tu paqueña empresa. His day job is COO of MGO Wealth Advisors in Irvine, CA, where he specializes in financial planning for the Latino community.
“We have 13 people, and I tell people, we are the most un-diverse firm ever,” Barajas says with a laugh. “There is no diversity at all in my firm. Everybody is Latino in my firm.”
Barajas grew up in an East Los Angeles barrio called Boyle Heights. When he was 11 years old, his father lost two jobs and, facing eviction, decided to start his own company. At the age of 13, Barajas was doing his father’s tax returns, and continued offering that family service while he was an undergraduate and then earned his master’s degree at UCLA. He earned the CPA designation, worked with an accounting firm as an auditor sifting through the Charles Keating savings and loan debacle back in the early 1990s, and then discovered financial planning when he saw the kind of financial advice that was being given to his peers in the barrio. “Big banks were trying to put them in products with super-high commissions,” he says. “More than 60% of Latinos were unbanked.”
Barajas made the courageous decision to move back to Boyle Heights and put out his shingle in the building his father built for his own business, and discovered that he had to adapt the whole concept of financial planning to the very different realities of a low-income environment. “The community had some of the highest dropout rates in the country,” he says. “So when we talked about education planning, we weren’t talking about college funding. The parents who had never finished high school would say they wanted their kids to go to college, and I would have to ask them, how engaged are you with your children and school? What are your kids’ report cards? What is their self-esteem like? How are they doing in math and English?”
In many cases, the money set aside for college would need to be redirected toward tutoring. “Then we would pick up the phone and call their teachers and ask, where are they at and what can we do?” says Barajas. “We wanted to give the kids a fighting chance to graduate from college by first getting them through high school and into the junior colleges. Obviously we weren’t putting them into products or managing their investments.”
Did this produce results? “I have clients where the kids are in Ivy League schools now,” says Barajas.
It should be obvious from these stories that the economics of a planning practice were very different in the Barrio than they are in, say, Westchester County, New York or Orange County, California. “I don’t think I made any money for a decade,” says Barajas without apparent regret. “I would go to national conferences and look at the advisors up on the platform talking about best practices, and I would dream about what it would be like, one day, to be working with really wealthy people and charge AUM.”
How DID he charge these non-wealthy clients? “First of all, I don’t believe in pro bono in underserved communities,” says Barajas. “I very quickly learned that if my clients did not pay me for advice, then what I told them was just an opinion, and they would give it the same relevance or the same level of importance as the advice from the brother-in-law who was a butcher. Even if they paid ten dollars—and that was a lot for some people—I would charge it and they would pay it. And I knew that they would follow up with me, because they had paid for the advice.”
The initial solution was to charge for filling out peoples’ tax returns—something they knew they needed and which would bring them in at least once a year—and add financial planning as an additional service. “For most clients, I was charging $75 for the tax returns and giving away financial planning, which I realized was the wrong approach,” says Barajas. “So I started charging $150 a year—the actual amount depended on how much the client was earning—and I said that it was for financial planning. The tax preparation was included for free,” Barajas adds. “I wanted them to understand that they were actually paying for financial planning.”
Today, Barajas has a number of wealthy clients in addition to the unwealthy ones—a testament to 30 years of his advice. But even where someone has achieved above-average wealth, there are constraints that are built into the community culture.
“Most of the time, if there is a family of three or four or five,” says Barajas, “there will be just one who has made it out of their community. That Latino person bears the burden of helping out, not only his parents, and not only his children, but also the siblings.” In a take on the ‘sandwich generation’ concept, Barajas calls this the ‘club sandwich generation.’
What steps would Barajas recommend for the profession to bring in more Latino financial planners and bring financial planning to underserved communities? One obvious solution, which you can see in the way Barajas charged early in his career, is to abandon the ubiquitous AUM revenue model and charge by retainers or an annual fee. The fee would need to be adapted to each clients’ circumstances, which means many of the initial relationships would be unprofitable.
Which illustrates the bigger challenge. “It took me so long to develop a real business in the community,” says Barajas. “It is hard to build a practice with people who you know don’t have money. For younger advisors to go back into their communities,” Barajas adds, “you need lead time so they can build a client base and for their advice to start to build wealthier clients who can support the firm. You have to have the time to help them get to a place where they can pay you properly.”
The ideal solution, he says, would be an incubation system for minority-focused financial planning firms, or more generally for younger advisors who want to work with nontraditional clients.
And finally, Barajas says, there needs to be a different kind of training if advisors want to work with the real-world challenges of the ‘other 80%’ of Americans.
“Right now, I’m looking to hire someone, and it’s not easy,” he says. “We interviewed certified financial planners who have worked with brokerage firms, and those kids couldn’t do a budget if their lives depended on it. They couldn’t do a retirement plan. But they can tell you every part of an annuity product or cash value life insurance. They have become glorified salespeople or asset managers, and that doesn’t work for our clients.”
Lazetta Rainey Braxton
Lazetta Rainey Braxton, Co-Founder and Co-CEO of 2050 Wealth Partners in Landham, MD, Chair of the Board of the Association of African-American Financial Advisors (Quad-A), and recipient of the FPA’s Heart of Financial Planning Award, is a former auditor who saw financial planning from afar at the investment management firm she worked for. “From there, I transitioned to investment portfolio management,” she says, “and then I stumbled—and ‘stumbled’ is the word—to financial planning, the CFP designation and the fee-only service model.”
She became a student member of the FPA and NAPFA in 2006 and set up shop after getting her MBA. “The original plan was to work with churches, nonprofits and endowments,” she says. “But when I got a better view of financial planning, I said no, I want to work one-on-one with individuals instead of institutions.”
Her clients—who work with her virtually from around the country—are professionals, business owners, millennial wealth builders and sandwich generation wealth successors. “Their common thread,” says Braxton, “is people who have been overlooked and underserved by Wall Street.” Braxton charges on a retainer basis, which allows her to provide services to people who don’t have the traditional AUM levels that open the doors of a traditional financial planning firm. “We help people turn income into wealth,” she says.
Braxton has a bit of a different take on the obstacles faced by Quad-A members and Black advisors; she notes that some advisory firms will encourage their staff to do volunteer work on the order of once a year, whereas her volunteerism is necessarily more intense and time-consuming. “For a lot of people of color, volunteerism doesn’t feel like a luxury,” she says. “It feels like a necessity, out of the fact that we help our communities, sometimes to the detriment of ourselves, to advance the cause of all of us. I could have a whole lot more clients,” she adds, “than I currently have now.”
And then she adds that the work has another, more personal, purpose in her life. “A lot of the reason why I volunteer.” Says Braxton, “is to get through my own healing of how the industry didn’t treat me well.”
When asked how readers can help bring more inclusion into the profession, Braxton starts with supporting the Quad-A organization’s annual Vision conference, this year held virtually September 14-19 (https://www.aaafainc.com/annual-conference). “It’s about developing a high degree of competency in our skillset, like most traditional conferences,” she says.
What’s different about it? “We are very intentional about bringing in diverse speakers. And also the culture,” she says, adding, “we are allowed to be completely ourselves. No code-switching to present ourselves in a way that feels comfortable to the majority.”
Braxton says that white advisors would find a Vision meeting to be an eye-opening experience. “I have had people say, wow, I have never been in a community where I am the minority, and feel welcomed,” she says. “It’s something you really have to experience, to know how different that is. It is anchored in having the majority be people of color, which is an experience that a lot of people haven’t had.”
More broadly, Braxton would like to see mainstream advisors get beyond the history they were taught in school. “The issues of racism, which is a part of this country’s DNA, have been erased from the textbooks,” she says. “Issues such as redlining Black people, reducing access to certain neighborhoods and homes and equity, and even if they were allowed to buy, they would have to pay a lot more for their loans. The burning of our Wall Street.
“And,” says Braxton, “you take a step back and realize that our ancestors were on peoples’ balance sheets. Can you imagine that your great great great grandmother was actually property on someone’s balance sheet?” she says. “I tell that to people, and they answer that that happened so long ago,” she adds. “But my answer is that, structurally, it’s still at work in various aspects.”
Braxton would also like to see the planning organizations commit more resources to inclusion programs. There have been significant donations to the CFP Board, she says, but “they haven’t been distributing their money in ways that will make an impact. Doing a little $20,000 or $30,000 a year for the Association of African-American Financial Advisors is not going to get you to the volume of activity that we’d be capable of doing if we had the right resources,” she adds. “It’s another real world example of how capital moves in our society, and who has a right to it, and who should benefit from it, and how and on what terms.”
Beyond that, Braxton would ask that advisory firms pay their female and ethnic advisors what they pay white males—and here, the statistics are not good nationwide—and also provide equitable opportunities to succeed, opportunities for career development and succession planning. Consider supporting planning programs at traditionally Black colleges, which Braxton says are currently resource-deficient. “At one school, you have one faculty member teaching all six courses,” she says. “It’s totally unsustainable.”
Finally, Braxton recommends that her white colleagues take a deep breath and take the first step toward acquiring what she calls ‘racial literacy.’ “I think there is a fear of saying the wrong thing and offending,” she says. “I need more people to have some courage. Be willing to have these conversations [with people of color], even if it’s uncomfortable, even if you might say the wrong thing—just come with it and say, ‘I’m going to say the wrong thing. I have not exposed myself to your history, my parents didn’t talk about it at home, and all the things I thought I knew are incorrect, but I am coming with a pure heart to say, how can I help you?’ We are always going to say things that somebody may not like,” Braxton adds. “But if our ultimate intent is for both parties to come out of this well, that is what you need to keep coming back to. This is a journey that we’re on. The legacy of not teaching and engaging is to the detriment of our society.”
ibyl Slade’s background in financial planning actually started at the Atlanta Federal Reserve, where she served as a Senior Regional Community Development Manager. The mandate was to help banks and nonprofits interface with the Fed to ensure that all parties met the requirements of the Community Investment Act of 1977. The financial planning part started to intrude on her thinking when, through the programs that were designed to help expand home ownership, Slade saw that the efforts were taking a dangerous shortcut.
“After 2004, when the data came out for the mortgage origination in Georgia,” she says, “I saw that over 50% of the loans were ARMs [adjustable rate mortgages]. I said to anybody who would listen that in a few years we were going to have a problem, because people were not going to be able to deal with those ARM resets.”
Some of you may remember that mortgage defaults were a big contributor to the Great Recession of 2008-9, which was an unhappy confirmation of Slade’s analysis—a warning that had been ignored in the halls of the central bank until the proverbial shit hit the proverbial fan.
By then, Slade was growing tired of her work at the Fed. “I am really a people person,” she says. “I wanted an outward-facing role, and financial planning is what I wanted to do in my retirement. So I decided to get a running head start.” She seems to have completed the CFP curriculum in record time and started at Waddell & Reed before deciding that she could better serve her clients as an independent RIA. Today, sits on the board of Access to Capital for Entrepreneurs, a community development financial institution. Her client base is primarily Black and some Hispanic first-generation business owners and professionals who are in the early stages of building generational wealth.
The service has proved to be very labor-intensive. “People need to understand that when you’re working with people of color as clients, you are going to need to be doing more education than actual planning,” Slade explains. “It can take you three to five meetings before they feel comfortable and have the knowledge to become a good client, and there is nothing in our planning toolbox that allows us to charge for education.”
And since they are in the early stages of building wealth, these clients don’t have access to traditional financial planners who are paid under an AUM model. “The AUM structure, and the way most advisors charge, it automatically disenfranchises people of color,” says Slade. She will offer advice on an hourly basis, charging as little as $35 an hour for clients who mostly need education and some coaching on a limited engagement. Small business clients who need more complicated planning will pay $150 an hour. People with high student loan debt will pay the lower hourly fee initially for a budget and a plan to reduce the debt burden, and then pay more as they start to move up the economic ladder.
Are other advisors working with this community? “This is a very lonely walk,” says Slade. “I know it is going to take three generations for one family to really build sustainable wealth. My goal is to give them a running start.”
Elisabeth Olson, of Financial Consulting Group 360 in Fort Collins, CO, speaks fluent Spanish and Vietnamese, the result of accompanying her father on business trips to Mexico from a very young age, spending an exchange student year in Chile, and working as a teacher in Hanoi, Vietnam for eight years. She also worked in Manila, the Philippines, for five years before returning to the States in 2000. “The Asians used to tell me that I was an egg,” she says. “That meant I was white on the outside and yellow on the inside.” Her Hispanic clients tell her the same thing, except they haven’t come up with a food item that is white on the outside and brown on the inside. (A fig newton?)
Olson was considering going back to school and getting her Ph.D. in economics to layer on top of her Master’s in organizational leadership (emphasis on advocacy and human rights), or she could embrace a career of working hands-on with people who needed a lift out of poverty. “I decided to become a financial planner,” she says. She worked for an independent firm, and then Waddell & Reed. “I kept coming up with situations where they were not allowing me to act in my clients’ best interests,” she says, which prodded her to form a partnership with some friends in the business and go independent.
Her business life leans more toward advocacy and human rights than traditional financial planning. “I have more low-income and Latino clients than anybody I know in the business,” she says. “Prior to coming to me, most of my low-income clients had never invested—but,” she adds, “they happen to be my favorite clients.”
Olson does work with a handful of sophisticated high-net-worth clients, and the conversations with them tend to move toward finding a charitable cause that they could get passionate about. “I often attend conferences where we are encouraged to cull our book of business, and get rid of our C and D clients,” says Olson. “I completely understand the desire to be efficient. But I feel that my C and D clients bring a different kind of value to my practice, and I don’t think I will ever give them away.”
What is that different kind of value? “I believe very strongly in social justice,” says Olson. “And I have seen the effects of generations of oppression. I’ve interviewed scores of people over my life time, just asking: okay, what works? What actually sticks?”
Olson says that, in addition to starting a savings and investing plan, her clients most often build what wealth they have through home ownership. But she believes that our social system could make that easier.
“I’d like to see a model which could include phases of home ownership,” she says. “It would start with a subsidized renter, then an unsubsidized renter who is working to build sweat equity as they help renovate or improve a property, then a subsidized owner—all the while being paired with a mentor/advocate.”
Beyond that, education about our financial system can be empowering. And Olson mentions life insurance.
Come again? “Minority workers tend not to live as long statistically,” Olson explains. That means the rate of return on the “investment” is higher for the family, but more importantly, life insurance replaces the safety net. “If you take the breadwinner out of the family for people in the disadvantaged communities, that is instant poverty,” says Olson. “For them, that life insurance check can be very transformative.”
In passing, Olson recalls having heard someone say, when an African-American acquaintance passed away, ‘Yep, there goes another Black man who didn’t get to collect any Social Security.’ “And I had never thought about that until she said it,” she says. “You have so many guys getting killed, or dying young from infectious diseases, they never get to collect their Social Security, which adds to the cycle of impoverishment for the family.” She adds that the systemic racism in our justice system, which sends so many Black men to jail, piles on another layer of impoverishment.
How can we, who live in white privilege, begin to address these issues? “As a white American myself,” she says, “I like to sit down over a cup of coffee with people of color, and hear what they’re thinking and doing. If everybody could just take one step into a place of discomfort, and just get to know somebody in a disadvantaged community, and see their life, and the choices they have to make, it will make them a better person. It will help them advise those people, and other people as well.”
Helen Yang, founder and CEO of Andes Wealth—a client risk tolerance and total onboarding solution for the planning profession—got into finance via a technology background; she studied artificial intelligence in college and then, after a programming career, worked at Thompson-Reuters. Prior to that, she studied under Andrew Lo at the MIT Sloan School of Management, and co-authored a paper with him that won the 2011 Harry Markowitz Award.
And somehow she found time to co-organize a rally at Harvard Square in support of Asian-Americans who had been denied admission to the University due to what admissions officers were calling a personality deficit. “It was a way to reject Asians who were superior academically to other applicants,” she says.
Yang says that Asian-Americans face a more subtle form of discrimination than African-Americans or Latinos. “You are supposed to be good at math,” she says. “You are supposed to be a worker bee who never complains.” This manifests in few obstacles to being hired, but almost insurmountable obstacles to being promoted to positions of leadership or management. “The assumption is that Asian-Americans lack leadership skills,” she says, “but then you see that a lot of Asian-Americans do very well as entrepreneurs, which requires leadership.”
Like other Asian members of the planning community, Yang harbors some resentment at the concept of a “model minority,” and of the stereotypes that come with it. “When they talk about Asians as a model minority, they are driving a wedge between African-Americans and Asian-Americans,” she says, “by saying, why don’t the African-Americans just do what the Asians are doing? And if the Asians are doing well, that means there is no discrimination. Discrimination against African-Americans is different from the discrimination against Asian-Americans,” she says, “and the social environment they have to navigate is very different.”
Her recommendation? Yang hopes that both sides will be more open to having conversations about bias. That is, people of color will be willing to call people out when they run into bias, and those called out will be less defensive about it—which will, in turn, lead more people of color to be less worried about the repercussions of these conversations—creating a virtuous circle.
“Be less defensive about it,” says Yang. “I would ask people to be more willing to reflect on it,” she adds. “You can ask yourself: is this bias, or have I reached an objective conclusion? We are all born with advantages and challenges, and we need to have honest conversations about those things.”
Haleh Moddasser, partner with Stearns Financial Group in Chapel Hill, NC, came to this country with her parents from Iran at the age of 7, and recalls when the Iran Hostage Crisis became a daily item on the news while she was attending high school in the heart of the Bible Belt. “It was hideous,” she says. “People were talking about bombing Iran as I walked down the hall. It can be really hard to live in an environment where you are viewed as an enemy just by virtue of where your parents grew up.”
Lately, she says, she has been feeling some of the same negative energy. “I feel like a certain group of people have been emboldened to think that it’s okay to talk about different ethnic groups in a certain way,” she says. “We forget that, except for the Indigenous Americans, we are a country of immigrants.”
Even so, her sympathies have tended to reach out to others who have suffered from more harmful prejudices. “I think anyone can develop a deep understanding of racism in this country,” she says. “You don’t have to be Middle Eastern or experience what I have to realize the importance of the Black Lives Matter movement.”
Moddasser believes that these issues are harder to talk about when some people are emboldened to express their racist views. “We have become so divided in this country,” she says, “that it has created a form of self-censorship, where it seems like you can’t talk about racial injustice without offending people,” without, in other words, running the risk of triggering the kind of angry rant that no sensitive person wants to deal with.
Part of the problem is how polarized the news media has become. As a former journalism major, Moddasser recalls a time when news was not entertainment providing a hungry base with confirmation of what they already believed. “Growing up, I used to watch Walter Cronkite deliver the news on TV,” she says, “and I honestly had no idea whether he was a Republican or a Democrat. You actually used to get more objective information back then.”
Is there a solution? “I think at the very core, we have to be open to learning from people who are different from us,” says Moddasser. “We have to become welcoming of each other as people, and celebrate their differences, and always be thinking: how can I learn from this person? What do they bring to the table?”
Matt Fellowes, founder and CEO of United Income, a virtual, national RIA firm and also the first “robo planning” company, is a white man in the trenches of social change. “My parents marched on DC and the Pentagon several times,” he says by way of explanation.
Fellowes came to the profession after working at the Brookings Institute think tank, with plans to join the Obama Administration after the election. “But I was just getting increasingly frustrated by my inability to really drive meaningful democratization of access to financial planning to low and moderate income people,” he says. “My work was telling me that this was highly-correlated to a lot of other factors in disadvantaged communities. My career has been focused on people who are structurally low-income or structurally unequal.”
Instead of joining the White House team, Fellowes applied for, and received, a grant from the Rockefeller Foundation to start Hello Wallet, which would provide financial planning to low-wage workers. The firm provided scalable online financial planning advice to workers on the H.J. Heinz Company’s assembly line, Wal Mart’s employees and staffers at the California State University School System. “We had to sign an NDA with Wal Mart,” Fellowes recalls, “because they were getting trashed in the press after they opposed the unionization effort. But they were very angry about all the check cashiers and payday lenders and car title loan shops that swarmed their retail establishments. They were trying to find a way to fight back.”
From that experience, Fellowes learned that the economics of working with low-income people, and expanding access to financial planning, is very challenging. “It worked for large employers, but to expand the market, it became problematic,” he says. “You have to scale it to make it viable, but scaling it is a big challenge.”
Second, he says, the needs of the population that has been systematically excluded or treated unequally is not necessarily more complicated, but the solutions are not simple.
“We were dealing with truck drivers, cashiers, stockers and people who worked on an assembly line,” says Fellowes. “Many of them had two jobs and cash flow issues.” Hello Wallet was eventually sold to Morningstar and then to KeyBank, which renamed the service and rolled it out to a million additional people. “They’re serving a lot more people than we used to,” says Fellowes.
United Income, Fellowes’s successor organization, is designed to approach the same challenge from a different angle. “I want to democratize financial planning,” he says, “but this time I wanted to start with wealthy individuals, because we know you can create a sustainable business model up there. I wanted to do it in a way that was lower cost relative to the other options in the marketplace, so we would not be saying, okay, let’s charge 100 basis points AUM and milk it for as much margin as we can.”
The firm uses technology to cut operating costs by reducing the computational and repetitive tasks at the office level, and it centralizes the asset management functions. “We have the economics sorted out,” says Fellowes. “Now, over the next two years, we will be rolling out to meet the needs of that more complicated, diverse population.”
The next service model, in the initial pilot program, will focus on areas that United Income’s research suggests will be very consequential to upward mobility.
Why is it important to make financial planning available to the “other” 80% of the population?
“As a consumer finance geek, I can see that everybody has potential,” Fellowes says. “The goal of financial planning is fundamentally about securing and increasing financial potential. Many of those new clients that we’re going to be serving, they are never going to be wealthy,” he adds. “But they can move up the ladder, they can live a better life, and they can create a better life for the next generation.”
Myrna Rivera, of Consultiva Wealth Management in San Juan, Puerto Rico, lives and works in the non-diverse Latino community in the tropical American territory. As a member of the Puerto Rican Diaspora as a young girl—her family moved to the Bronx when she was in kindergarten and two years later relocated to Long Island—she learned to feel comfortable on the mainland until one day a high school student called her a “spic” to her face. “I was confused, but my friends were enraged,” she says. “I had grown up with those kids since the second grade. I had never before had a sense of being different.”
Later, on her first job, a male colleague reported to management that he was unwilling to work with a Puerto Rican woman or have her as his equal in the career ladder. After a few drinks, he made his opinions known in a more public setting. “In a social gathering in front of everyone in the office,” says Rivera, “he expressed his opinion about the sexual aptitudes of Latino women in an extremely inappropriate way. I died. I thought I was among friends and colleagues. I had to beg my husband not to jump on the guy.”
Rivera had attended the City University of New York and moved south to gain a master’s degree at the University of Puerto Rico, before falling in love with the idea of helping people generate wealth. “I’m a mathematics geek,” she says. “Financial planning involved a lot of arithmetic, and I really delved into ERISA and what it meant. I could make a living helping people and institutions meet their objectives and aspirations, by being the one who is driving the money. How cool is that?”
She started as a broker at Merrill Lynch, and one of her first clients was a local labor union leader who wanted her to help him manage the institutional assets of the welfare plan of the General Worker’s Union of Puerto Rico. Before long, she was in the network of union plans on the island and in the U.S. Latino community. She moved to Hutton which became Smith Barney before going out on her own in 1997. “I wanted to get away from the perceived conflict between commission-generated business and fee-generated business,” she says. “As a fiduciary, I have to be on the same side of the table as you are.”
The obstacles Rivera faced as a professional money manager were an interesting (some would say discouraging) mix of racial, gender and class discrimination. When Rivera was bidding for business, there would always be a white male from one of the big wirehouse firms in contention, and that person would often get the job because he was what the pension plan fiduciaries believed a money manager should look like. “In Puerto Rico, we love to hire white men from the U.S. to manage money,” she says. “In my homeland, I have to compete with the white guy from New York, Boston or Miami. When I compete in New York, even if it is an organization of color, the sense is: what can I possibly teach a trustee when there is a J.P. Morgan, Morgan Stanley or Goldman Sachs broker who can do the job? What can a Latino woman possibly bring to the table?”
The underlying idea, she says, is that the people hiring a professional are protecting these important assets from a potentially incompetent person of color. “The question the trustees have in the back of their minds,” says Rivera, “is, too often: What can a Puerto Rican woman possibly know about investing and the capital markets?”
Meanwhile, Rivera quickly learned that Puerto Rico had its own network of elites who were resistant to working with someone they perceived as of a different caste. “I began to understand that there is an upper class in Puerto Rico that has private wealth,” says Rivera. “Their view of the diaspora is that those of us who left were the poor people. Those of us who come back think that we are going to make a contribution to the country, but the elite is looking down on us from a pace of entitlement. And it plays out more and more, the more successful I become.”
As an example, Rivera recalls giving a presentation on ERISA and investment concepts to a board made up of people who qualify several times over to be considered in the ‘elite’ category. They appeared confused, and Rivera responded by making her presentation less complicated.
Finally, the reason for the confusion became clearer. “One of the members stopped me in mid-sentence,” says Rivera. “And he said, Ms. Rivera, where did you go to school? Because,” she says, “I didn’t go to school where their kids did. They didn’t know me from their social circle.”
Rivera is active in the SRI community and has participated in the National Association of Securities Professionals (NASP), which was founded on behalf of people in the securities industry who also happen to be people of color. One of her social goals is to bring the two communities together, to have socially-progressive white men and women who are attending different conferences from their Black and Latino colleagues engage more closely and personally.
“If you are a progressive white person in the United States, and you want to further enhance the quality of life of minorities,” says Rivera, “then you have to get the minorities in the room. You cannot take over the mic and speak from your standpoint. You need to be engaged. And it is not just being engaged in the communities; it is finding the professionals who are doing very similar things, and making sure you are not exercising your sense of entitlement because you are white. You are not the savior of these communities. There are people on the ground, who are professionals just like you are, and we stand ready to go in there, arm in arm, to change the world. But we need to be acknowledged,” she says. “We need to be made visible.”
Tyrone Ross grew up in an unbanked home, with parents who were financially illiterate, and he says that he, too, was financially illiterate after receiving his graduate degree in corporate communications from Seton Hall University. “I had a professor who mentioned that I would be good on Wall Street,” he says. “I was 25 and I knew nothing about Wall Street. Literally did not know it existed.”
Ross took a junior position in investor relations, then as a junior advisor making 700 cold calls a day. “About that time, I started hearing about a wirehouse,” he says. “What the hell is a wirehouse?”
His next job was as a Merrill Lynch broker, and after five years he left to start his own firm.
Ross became a prominent spokesperson for diversity almost by accident. “In 2018, I did a podcast, and I literally told my life story,” he says. “I have experienced extreme racism and bigotry and all kinds of stuff, a lot of different hurdles,” he says.
Perhaps the most painful incident is when he was told to change his first name, because (he was told) people on the other end of a cold call were unlikely to respond to someone named ‘Tyrone.’ “I can’t tell you how insulting that was,” he says. “Because I had my father’s name, who came to this country and worked a job for 40 years, being unable to really read or write, who was called everything under the sun—dumb immigrant, stupid this or that—and yet he found a way to feed his family, and you’re standing there and telling me I need to change my name?”
He was also told that the only reason white people were comfortable with him was his lighter skin. “I have been called the N-word to my face,” Ross adds. “These are things,” he says with understatement, “that most people don’t have to endure.”
The podcast went viral on Twitter, and prominent advisors (Ross specifically mentions Josh Brown of Ritholtz Wealth Management in New York) amplified the message. Ross now hosts a regular podcast with the Altruist back office platform, called The Human Advisor (https://humanadvisorpodcast.com/), whose guests come from a wide diversity of backgrounds.
Eighteen years into his financial services career, Ross feels like the country is finally getting more serious about some of the social change that he has been trying to promote. “What we’re seeing now is the result of everything that we have ignored, not only as a business, but as a country,” he says. “People can’t ignore it any longer, and everyone is scrambling now for solutions.”
What solutions would Ross propose? “First, we need to go back to the truth about Wall Street,” he says. “Nowhere in the CFA, or the CFP, or the Series 7 exams do they tell you that Wall Street was built by slaves, or that slaves were sold as the first commodity on Wall Street. I think, as Americans, we all deserve to know that.”
Ross also thinks that the planning profession needs to move beyond ‘diversity and inclusion,’—a phrase he refuses to use.
“When we start talking about representation and equality, I will join the conversation,” he says. “At conferences, I see some of the most white, powerful firms in our business stand up on stage in front of thousands of people and say, we are diverse because we hired a white woman. For us,” he says, “that is a hard slap in the face.”
Maybe the biggest change that Ross would like to see is Black advisors accepted as subject matter experts at conferences and on panels. “Right now, if there is a Black speaker at a conference, you can bet that person will be on the diversity and inclusion panel,” he says. “Did anybody ever consider that we might have expertise in some other topic area? Why can’t we keynote on ESG? Or financial planning processes?”
Beyond that, he hopes that a wider audience of advisors will take an interest in the experiences of Black advisors. “Reach out and have that conversation,” he says, “and get a little better understanding of our life circumstances. Literally, that right there is the most powerful step we can take,” he adds. “Imagine if Ron Carson publicly reached out and said, I want to hear what you have to say. Or if Peter Mallouk did that. Or Ric Edelman. Then you would start a bunch of momentum.” And who knows where that would take us?
Mike Walther, of Oak Wealth Advisors, was motivated to provide specialized financial advice to families whose children have intellectual and developmental disabilities (IDDs) as a result of his own close relationship with his brother, who grew up with a mild variant of autism known as Asperger’s Syndrome. Walther has since become one of the planning and accounting profession’s leading authorities on planning for special needs children, and his website is a gateway for professionals and individuals who want to access resources to help families with these challenges (https://oakwealth.com/special-needs-resources/).
Over the years, Walther has seen outcries for acceptance and inclusion for many underrepresented ethnic and sexual orientation groups, but he’s still waiting for the families he serves to become a mainstream cause célèbre. “You see people of color or sexual orientations have marches and campaigns and flags created for them,” he says. “But have you ever seen a Down’s Syndrome flag? How many representatives on Capitol Hill have personal experience with autism? Do any of them have cerebral palsy?” The point: “You see very little representation anywhere by people at the state or local levels for people with these types of disabilities,” says Walther.
How many people are we talking about? “Statistics show that ten percent or more of the population have an IDD person in their family,” says Walther. “And for the people with IDD who want to work, the unemployment rate is between 80% and 85%. That is a horrifyingly bad number,” he says, perhaps unnecessarily. “And like other minority groups, they are being affected to a much greater degree by the pandemic we’re experiencing currently.”
Walther says that families with developmentally disabled children have greater needs for financial planning services, while at the same time they cannot afford or even find access to the specialized advice that is required to navigate the maze of regulations and qualifications for support services. As one simple example, he points to the supplemental security income (SSI) that the government offers to disabled people who are so impoverished that their assets are less than $2,000 (not including a house and car).
“Last year, 65% of developmentally-disabled family applicants were denied the chance to get a meager income amount of $783 a month plus Medicaid for healthcare,” says Walther. “Most get nothing,” he says, “and that has been true for decades.”
Like many of us, Walther has seen statistics showing horrific incarceration rates for Black Americans. “Have you seen anybody look at how many people who have a mental health condition are incarcerated, compared with the overall population?” he asks. “It is staggering. It blows away any category you can imagine.”
At Oak Wealth, Walther’s hiring practices are less diverse than some of the other firms in this story—for a reason. “We look at everybody,” he says. “But one thing we look for is: do you have a direct family relationship with someone with special needs? That’s a conditional requirement: having a first-hand understanding of what we do.”
More broadly, Walther thinks that other groups could embrace the same degree of specialization. “If you’re focused on a niche, a religious background, sexual orientation or people of color, focus on that and embrace it,” he recommends. “And help those of us who are trying to be more inclusive of all groups find ways to reach out to those communities that maybe aren’t hearing us or finding us, to do that.”
As we fight for social justice in America, Walther asks that we not leave behind the invisible minority of IDD kids and adults. “This is a community that we fight for every day,” he says. “If we were able to, as a society, see every human being as valuable, as important, and as someone to be cared for, it resolves a lot of issues.”
Renee Morgan, financial advisor at Robasciotti & Philipson’s Boulder, CO office, describes herself as a social justice strategist. She got into the business after spending years a a social worker, which included fundraising and grant writing. “I always had a sense of finances,” she says. “Then, when I saw some others move into finance, I took a position at a traditional firm.”
Morgan immediately gravitated toward ESG and SRI investments. “Pretty much in the first year, I was using Calvert and Domini funds,” she says. “Within two or three years, that became deeper and broader.” She left the firm to become fee-only, and became active at the Social Investment Forum (SIF), teaching workshops on divesting from private prisons and leading discussions about mass incarceration.
And she also found time to be an activist. “When Michael Brown was killed by police [in Ferguson, MO], I got very involved locally with the Black Lives Matter Movement,” she says. Morgan became a member of Showing Up for Racial Justice, the sister organization that partners with Black Lives Matter, and worked with other SIF members to brainstorm how to bring racial justice to the personal finance and investing space.
Which is when Morgan ran into some barriers where you would not expect them to be. “Even though all of us were doing ESG and SRI,” she says, “nobody wanted to talk about racial justice. We were met with resistance in a variety of different ways, in different forums.”
As a way to start the dialogue, Morgan helped found the Racial Justice Investing Coalition, which was basically eight people making monthly conference calls, sharing ideas. “We started getting 40-60 people on the calls,” she says. “Now that something this big is happening nationally,” she says, “the number has gone up to close to 100 on the calls”—and the list of total participants has reached 300 finance professionals.
That tells Morgan that the dialogue has hit a tipping point. “Different firms in philanthropy are participating,” she says. “I’ve written papers on racial disparities in the industry, and people have contacted me about my participation in panels at SRI in the Rockies.”
Interestingly, Morgan doesn’t feel comfortable taking the lead in bringing about reform toward racial justice. “My whole philosophy is that the communities most impacted by the ills of structural racism are the ones that have the answers,” she says. “I tend to work with social justice partners like the Poor Peoples’ Campaign (https://www.poorpeoplescampaign.org/), Native Action Network (enduringspirit.org), and the Movement Strategy Center (https://movementstrategy.org/) who are directly doing this work, and who have the answers on how to make systemic change.”
Bigger picture, Morgan says that we are facing a time of economic reckoning. “Wealth in America was established by stealing and genocide,” she says. “Ninety percent of indigenous folks were killed by the 1800s, as we stole a billion and a half acres of land. And then we had 250 years of free labor through slavery. Remember, we are only 150 years from that system,” Morgan adds. “So of course the people who were stolen from and enslaved are thriving the least.”
In the profession, Morgan recommends that advisory firms start branching out from their cozy networks to start recruiting in the junior colleges and historically black universities. “Look for nontraditional backgrounds,” she says. “Change the criteria. Who cares if somebody hasn’t been working in the field or doesn’t have the professional designations; they can get those in the first couple of years in the job.”
Of course, this will require some cultural adaptations as well. “What often happens is that the firm hires a black, brown or queer person, but the corporate culture is set up according to middle class white norms,” says Morgan. “They don’t fit in, and then they get labeled as the squeaky wheel—all because we’re asking people to adapt to norms that are not normal for them. Getting people in the door is one thing,” she says; “retaining them and setting them up for success is a whole other situation.”
Christian Urbina, President at Prosperitus Wealth Advisors, lives half an hour away from the Stoneman Douglas school where the infamous shootings occurred in 2018—and he graduated from there. He remembers the incident as one of many that somehow failed to convince lawmakers to take action to reduce access to assault and military-grade weapons, and as a result he’s skeptical that the Black Lives Matter demonstrations will lead to real change.
“I feel like if you cannot effect change when people are going into schools and shooting kids, over and over again, why is now any different?” he says. But he has hope. “You cannot deny that these things [police brutality against African-Americans] are happening any more. I think that is the most important starting point. If you can’t agree there is a problem, then you are just going to go in circles.”
As a Latin-American financial advisor, born in Nicaragua, Urbina has worked for inclusion in our profession. “When you go to conferences and look around, it is 95% white, mostly male,” he says. “I don’t see any Black or Brown people around, and there are so few women.”
Prosperitus has two partners, Urbina and Maxime Jean-Louis, who is Haitian, which might make you believe that they have established thriving client pipelines in the Latino and Black communities. But Urbina says that he’s found those to be the most challenging markets to penetrate for people of color.
“Both communities have preconceived notions of what a financial advisor should look like,” he explains, which tends, he says, to be a tall white male. “They’re more difficult to convince to work with you than your working-class or upper-middle-class white family that is simply looking at whether you’re a good fit for them or not.” His majority white client base includes a number of high-level Hispanic executives who well understand the wind in the face of Latinos who are trying to move up the corporate ladder.
Is this inverse discrimination common? “Most of my peers of color have majority-white client bases,” says Urbina. “I’ve talked with a lot of advisors, Black, Hispanic, and they say the same things that I’ve told you. But it is so counterintuitive and politically incorrect for us to broach that subject, especially when we are talking about inclusion, to have some of the blame fall on the people in the community.”
What would Urbina suggest to advisors who are not facing any of these issues? “I’ve seen people of color hired and then set up to fail,” he says, “where they were not given nearly the support of a white person who was hired at the same time. I could tell you stories of comments that were made. I don’t think you can force a firm to hire somebody just to say they are an inclusive firm,” Urbina adds. “They need to hire that person because they think that person is going to be successful, that the firm will benefit from what they bring to the table. And,” he says, “the firm needs to be willing to commit to their success.”
Hoan Taussig, a Principal at Timothy Financial Counsel in Chicago, IL, identifies as Chinese Cambodian. Her mother took a variety of jobs on arrival in America before starting her own sewing business. “My Mom spoke and wrote English, but not super well,” she says. “So I was in charge of filling out the firms and reading all the important information for school or whatever we needed, making sure that what needed to be done got done.” In retrospect, it sounds like excellent preparation for a financial planning career.
After earning a business degree from Wheaton College, Taussig took a job with an office space firm in the Chicago area, attracted by the fact that it was owned and managed by women. She was soon repelled by the back-stabbing and office intrigue, which she felt was the result of bad management. “It was a very hurtful environment, even though it was all run by women,” she says. “That soured me on the concept of forcing diversity.”
Taussig took a job with a technology company, and when it was acquired by a large German firm, she began looking for a career rather than a job. “I ran into Mark [Berg, founder of Timothy Financial], who I had met years earlier, and decided, this planning career makes sense,” she says. “I have a business background, I have accounting experience, small business work, and I could bring all of that experience and translate it into working with clients.”
That led to her first encounter with the profession’s diversity. “At my first NAPFA conference, in 2008 or so, I was shocked at how few women there were,” she says. “And every young woman I met was an assistant. There were no women advisors except people who owned their own firms.”
Taussig developed a mission to empower the women at Timothy Financial. “Our staff is now 50% women, more than 70% millennials, and we give them the tools. We empower them. When there’s a project at the firm, I will first bring it to a junior associate, and say, I want you to take a go at it and see what you can do. Because,” says Taussig, “otherwise how do they grow or how do they learn?”
In the Asian culture, says Taussig, it is not considered polite to be assertive. “That is not a trait that is valued,” she says. “Your job is to act humble.” This, of course, is not conducive to gaining the attention of superiors in a corporate culture or a rapid rise up the ranks. “In a corporate culture,” she says, “everybody is pushed down to a certain extent. But white men tend to overcome those obstacles fairly easily. I think it is a lot harder for minorities to overcome those obstacles.”
Taussig says that she sees closed networks of professionals who take on the challenge of promoting each other, and she sees minority Americans excluded from these cozy groups. More broadly, she thinks the whole concept of affirmative action needs to be turned around. “Instead of requiring firms or schools to take candidates, you want them to say: we want these candidates,” says Taussig. “I feel like my own life has been pushed forward by the grace of other people who took the opportunity to get to know me, who moved beyond the idea that ‘I don’t have anything in common with you,’ to ‘let me find something in common with you’.”
Few firms are more committed to democratizing financial planning and to bring it to underserved communities than Facet Wealth. Facet co-founder Anders Jones describes the impetus behind this mission as “The Tale of Three Mothers.”
“One of our co-founders, Brent Weiss, got into financial planning because he realized that his own mother couldn’t afford to pay his own fee when he worked at a traditional planning firm,” says Jones. Another co-founder, Patrick McKenna, found out that his mother, a mail carrier with the post office, had been told to invest her retirement savings in an annuity with a 7% commission. “He basically said, ‘to hell with those guys,’” says Jones. “It was obvious that something was broken in the traditional system.”
Jones got a yen to work in financial services after having helped found Argyle Ventures, and before that as an early team member at an advertising technology company called LiveRamp, now part of Acxiom. “My mother worked at Fidelity for 20 years, and ultimately retired after she ran T. Rowe Price’s retirement business,” says Jones. “And if you ask her what her proudest achievement was, it is helping millions of Americans save for retirement.”
The shared mission of Facet, says Jones, is to help every single person in this country live a better life, because they have a better understanding of their finances and their financial life.”
How does the company increase access to planning advice? First, by centralizing its marketing so that advisors, who work remotely all around the country, can focus exclusively on planning. Second, by creating centralized advisory and client-tracking tools, to streamline efficiency. And Facet’s revenue model is a flat-fee retainer, which makes it possible for advisors to work with people who haven’t accumulated wealth.
The ethnic breakdown of Facet advisors roughly mirrors the American population; of 36 planners, four are African-American, but, says Jones, so far only 36% are female. To build the diversity pipeline, the company offers a new Facet Scholarship for diverse planning students. The firm doesn’t track the ethnicity of clients, but Jones is hearing feedback that the revenue model is expanding access to planning advice. “We’ve had a number of advisors tell us, this is really cool; I get to work with folks from more diverse backgrounds than I did at where I came from,” he says.
The path forward, says Jones, requires the profession to solve three issues. “Ideally,” he says, “there should be no racial disparity in access to professional career opportunities. There should be more visibility of our profession in minority communities. And finally,” he adds, “there is the leadership issue. Once somebody is in the industry, how do you ensure that they are advancing, getting more and more responsibility, and becoming managers and executives?”
Progress has been slow in the profession, Jones admits. “But I think we’re having the right conversation now,” he says.
Marianela and Edgar Collado
If you’re wondering what a truly diverse and inclusive planning team looks like, you might check out the “about us” page on the website of Tobias Financial Advisors in Plantation, Fl. (Here’s the link: https://tobiasfinancial.com/about/team/). “We’re very proud of that,” says firm co-owner Marianela ‘Nela’ Collado. “That doesn’t happen by accident.”
Collado and her husband Edgar are the succession plan for company founder Ben Tobias. She came to Tobias after serving as a Principal at Bessemer Trust, in its client tax services department. Three years ago, she won the AICPA’s Standing Ovation Award as one of 16 CPAs nationwide under age 40 recognized for their contribution to personal financial planning. Nela serves as a member of the Florida Institute of CPA’s Women’s Leadership Committee, and director of the West Broward Chapter of the National Association of Divorce Professionals. Edgar, the CFO and COO of the firm, was recruited away from a Vice President of Finance role at Ingersoll Rand’s Latin America strategic business unit.
So what is their secret? How does a firm achieve such a diverse workforce? Nela says that there’s a chicken-and-egg component to it: creating a culture of inclusion makes it easier to attract more diverse candidates. Which in turn…
“If you say you stand for diversity and inclusion,” she says, “and the folks doing the recruiting and interviewing don’t represent that diversity and inclusion, then is it really true?” Her firm put detailed employee profiles on its website, to celebrate each staff member, who they are and why they love what they do. “We include that profile material in social media posts and our newsletter,” she says. “It tells people that we have an environment that encourages personal development. I have heard from advisors who worked in other firms where they said it wasn’t conducive to growing and learning. Nobody was taking the time to invest in them.”
Edgar says that the firm recruits from professional job boards on NAPFA, the Florida Society of CPAs and at the CFP Board, and has a partnership with the University of South Florida. But interestingly, most of the people the firm hires are coming from other states or other locations in Florida, people who proactively found the firm and applied to work there. Some of the most talented people of color are uncomfortable applying at all-white firms, so Tobias is getting more diverse résumés and a larger pool of candidates to choose from.
“I think attracting these people would be a challenge for a firm whose team picture just represents white males,” says Nela. “A candidate may not even apply to that firm, because they don’t think they could fit in comfortably.”
Finding candidates is one thing; convincing the top candidates to relocate is another, and here again the culture aspect takes center stage. “A lot of the people we interview, they have names that you might not have seen before,” says Edgar. “So I will Google the name so I can learn how to pronounce it. Then, when we do the initial screening, the candidates will thank me for pronouncing their names correctly.” The would-be hire is invited to talk with the diverse staff members, who are inevitably asked what it’s REALLY like to work there as a minority advisor.
Involving the staff also helps maintain the open and inclusive culture. “It is not just Nela interviewing a candidate and making a decision,” says Edgar. “It is having our team meet and talk with the candidates, to make sure that they fit not only the qualifications, but also our culture.”
Interestingly, most of the firm’s clients are white, and Tobias advisors offer the traditional wealth management services that are appropriate to the advantaged communities and clients with assets to manage. Is the firm’s staff diversity a repellant to that demographic?
Nela says that she has seen no sign of it, that the quality of the advice, and the confidence of the advisor, are more important than the superficial features like skin color and an accent. “Our biggest value-add,” says Nela, “is to local business owners who need to be thinking about estate planning, tax planning and retirement planning, but they’re so involved with the business that they hardly have time to think about anything else.” (The firm did add a retainer option that allows advisors to work with younger and more diverse clients who are still building wealth.)
Where can advisors start to diversify their staff so that they start to attract a broader group of advisor candidates? “To break through that initial barrier,” says Nela, “I think it just takes hiring one or two people. I didn’t say, I need someone who is black or from the Middle East. I said, these are the resumes, and we are open to training people and finding the person with the right personality and motivation and intelligence.” As far as adapting the culture, she thinks that may be the easier part. “If a person has potential,” she says, “feed that potential. That goes for Black, Hispanic, any advisor; they need that supportive environment and opportunity to grow, which is what attracts people to want to work at your firm.”
What steps would a progressive organization take to promote inclusion in its own offices, in the profession, and society at large? Alan Moore, co-founder of XY Planning Network in Bozeman, MT, says that he could easily dismiss firm diversity by pointing out that his offices happen to be located in a very nearly all-white corner of the country.
“We are not willing to use that as an excuse,” he says. “We want to be 20% BIPOC [Black, Indigenous and People of Color] as well as at least 50% women, across the company as a whole as well as executive management and leadership. We want to start by making sure our own house is and stays in order.”
Beyond that? XYPN is hiring an internship coordinator, who will be actively looking for minority members of the financial planning programs at universities, including Historically Black Colleges and Universities (HBCUs). The idea is to create a year-long remote internship program, which will function as ongoing part-time employment for the college students on campus. “We will employ them at $15 to $18 an hour in various roles,” Moore explains. “We want to include them in our tax team, in our investment team, and our advisor success team, with the intent to build our own hiring pipeline and also connect those students with our members, so that the planning firms in our network will have avenues to hire people of color.”
He says that he’s talked with XYPN members about inclusion in their firms, and the pushback is: ‘I’m just not seeing any minority candidates.’ His response: “Great. What if I introduce you to a smart, young, excited, energetic Black college student. Would you hire them?” The answer is typically: ‘Absolutely. I just need that introduction.’
XYPN also has its own diversity committee, and a scholarship program that pays for 30 CFP exams, 15 of which are administered by the diversity committee. “Those are reserved for either minority representation or people who are deeply involved in some of the diversity and exclusion programs,” Moore explains.
What is the point of all this?
“There will always be plenty of jobs for us white men who are looking to get into the industry,” says Moore. “The profession is fighting two uphill battles at the same time,” he continues. “People tend to get into financial planning, or a career like accounting, when they have someone in their family or circle of family friends who is a financial planner or accountant. What we want to do is show people what real financial planning is, and introduce them to an awesome career path that allows them to help a lot of people, make money and have a pretty flexible work schedule.”
Of course, XYPN also incubates startup planning firms, and has also pioneered a monthly subscription revenue model that works well for prospective clients in unwealthy communities. This may be a viable alternative for advisors of color who aren’t being hired by the larger firms. In fact, Moore has seen statistics which suggest that a career path with the largest planning firms in the profession is at best unlikely for people of non-white ethnic backgrounds. “Keith Beverly, who is a CFA/CFP and a Black advisor, did a review of the 75 largest RIAs in the country,” he says. “They looked at Buckingham, Creative, Mariner and Carson—all those mega-firms, who represented 1,800 advisors that he could find on the team pages of their websites.”
Moore asks me: How many of their advisors were Black?
I guess eight.
The actual number is seven.
“Who is going to be the black college student who graduates and takes a job at a huge firm where there may not be a single black advisor and not a single black client?” asks Moore. “Good luck attracting that person. And,” he adds, “those are the firms that create most of the internship opportunities. So they are self-perpetuating the cycle.”
XYPN’s subscription model is also surprisingly empowering for advisors who want to work with non-wealthy non-white clients. “You can go as far as, Kathleen Boyd out of San Diego [Illumination Wealth] will tell you that AUM is racist,” says Moore. “Because AUM serves people with money, and people with money tend to be white; systemic racism all the way back to slavery days has caused a huge disparity in wealth. AUM has been inherently exclusionary.”
Moore says that the profession needs more advisors if it is going to serve the “other” 80% of Americans who don’t have at least $500,000 in investible assets. “There will be no shortage of advisors working with rich old white people,” he says. “But there IS a shortage of people who can serve clients who haven’t been served historically. We have set diversity goals for the speakers at our conference, promoting experts who have historically not been included, and have them speak on topics that are not diversity and inclusion. We have some momentum for social progress this year,” he adds. “Keeping that momentum beyond just this year is going to be an important challenge for all of us.”