Diversity challenge
In 2013, with more than 15 years’ experience, Wright took up the role of chair and director at the State Farm Center for Women and Financial Services, a department of the American College in Philadelphia.
Situated in the economic and cultural anchor of the Delaware Valley, the specialist college offers academic programmes in financial planning, with the specific aim of boosting diversity in the industry.
Wright, who has an MBA from the prestigious Howard University, says improving diversity in the industry will go a long way in addressing one of the biggest challenges facing the sector: the need for fresh blood.
“There’s a huge need for talent. We don’t have enough new advisers coming in, whether they’re male, female, minority or otherwise. We have to deal with the talent shortage the profession is facing.
“We have a growing, diverse population. The demographics are shifting and we need more people who look like the population in the profession. It’s not just about having diversity of advisers; we still want to ensure they are qualified professionals who are able to provide the services and have the skill sets that are needed to be effective planners,” she says.
At the last count, the US Bureau of Labor estimates that women make up just 31.6% of financial advisers in the US, a clear decrease from the 2015 peak of 38%. The same trend can be seen for Black and African American advisers, which stubbornly hovers at 6-8%, despite the group representing 13% of the population.
In the UK the disparity is yet more pronounced, with female advisers accounting for just 22.5% of the profession and in some cases earning a startling 46% less than their male counterparts.
Wright says there are several ways to bridge the gap, first by increasing the visibility of women like herself, who make up a growing number of high-profile African American advisers.
“When more young women and girls see this is a viable professional for women, they understand that, in many cases, our natural traits make us uniquely qualified to be successful in the business.
“The goal for the Women’s Centre is to increase the number of women in financial services, both as advisers and in leadership positions. We do that through awareness building, education and research,” she says.
Much of Wright’s role focuses on raising awareness by working with advisory firms to implement initiatives that are aimed at attracting women to their organisations, as well as how to train and retain them.
“Things that get measured, get done,” says Wright, a staunch proponent of positive discrimination and a big fan of the 30% Club, a UK initiative set up in 2010 with the aim of making sure one-third of Britain’s boardrooms are made up of women by 2015.
The programme is fronted by Helena Morrissey, chief executive of UK-based asset manager Newton Investment, who in 2016 revealed that the percentage of women on FTSE 100 boards had increased to 26%, up from 12.5% in 2011.
The 30% Club initiative has now been extended to several other countries, including the US, Hong Kong and South Africa.
Projecting for progress
Applying this same principle, Wright recently launched a scholarship for African-Americans looking to pursue a career in financial planning through the American College. It will support the goal of doubling the number of black advisers in the US during the next decade.
Describing it as “a passion project”, Wright hopes the initiative creates a legacy that goes some way to plugging the widening wealth gap in the US between African Americans and white populations.
Latest figures from the Pew Research Center shows that college-educated African Americans still have significantly less median household income ($82,300), compared with their white peers ($106,600).
“It’s been widely stated that there is a growing wealth gap between African Americans and the majority population, and by having more African American advisers that will lead to an increase in the importance of financial planning and education, and help to close the wealth gap in our communities. That will have an impact for generations to come,” adds Wright.
She admits, however, that there has been some resistance to this strategy, with some advice firms wary of introducing measures such as quotas.
“That’s when you know it’s worth it, when people are pushing back. The average adviser is a 50-plus-year-old white man.
“We are not in any way intending to take opportunities from anyone. We’re just saying there is enough room for growth in our profession so that we can have individuals or professionals to reflect the communities that we look to serve.
“We’re not saying, ‘Just because you fit this other category, come one, come all’. We still emphasise education and experience and why that’s important,” says Wright.
Dispelling some of the myths around what being a financial adviser entails will also be key to attracting more individuals from diverse backgrounds, says Wright, where all too often it is assumed that advisers are insurance salesman working in a commission-only industry.
The US largely operates a commission-based pay structure for advisers, which Wright explains, acts as deterrent for those looking to enter the profession.
“We need to change the pay structure for professionals in the business so you have a liveable salary. As you build your career you should not be so concerned with your next sale but rather, ‘How do I best serve my clients and give them the best solutions?”
In June, the US Labor Department introduced what it calls the ‘fiduciary rule’, which requires retirement advisers to act in a client’s best interests when advising them on where to invest their pension savings.
The US Securities and Exchange Commission is also considering similar proposals for other forms of investment advice, which Wright hopes will help the industry move away from the commission model.
Meanwhile, at the American College, she is currently wrapping up a study that looks into whether it’s true that 70-80% of women change advisers after the loss of a spouse.
Says Wright: “We found that the figure was not as high as 80%. There are a significant number of widows who will still need their adviser. Those who have done a good job in establishing a relationship with both the husband and the wife will find that the widow will not make that change after the death of their husband.”
Spotlight on African American Scholarship Programme
In February, the American College of Financial Service launched the African American Scholarship Programme, with the aim of doubling the number of black financial advisers in the US to 16% by 2027.
Working with individual donors and corporate partners, the college was able to secure $200,000 of funding to kick off the scholarship, which it hopes will eventually grow into millions.
The scholarship is open to African Americans and black people either in college, finishing college or those looking to change careers.
Applicants who are accepted into the programme will have 100% of the cost covered while they are working towards a professional qualification such as earning Certified Financial Planner status or a master’s degree in a subject such as financial management.
