Altfest Insights

ArticleRethinking 65: Is Your Staff as Well-Diversified as Your Clients’ Portfolios?



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A mix of staff can help you grow your firm and please clients, says our columnist.

By Karen Caplan Altfest

A reporter for a national financial newspaper recently interviewed me about the diversity of our staff. Because it was a short interview, I shared only a few of my thoughts, but since then have continued to mull this timely topic.

I have been thinking that diversification is an important component of any mature business. Diversity can be established in many ways, including through:

  • Legislation.
  • Consumer sentiment.
  • Organic growth.

While legislation can get you to review your current staff makeup and seek diverse kinds of new hires who are most suitable for your firm, it doesn’t do much to adjust leadership’s thinking at a firm. Consumer sentiment can be a short-term solution, as you react to one targeted group, and then another. Organic growth is a longer-term approach to building diversity, often driven by who’s the best fit for the firm. It can satisfy new laws, energize your business and possibly boost client satisfaction.

Revisit your staffing plans before you hire

Let’s be honest: The financial planning industry hasn’t always been a leader at diverse hiring practices. Some groups to think of when hiring include people with:

  • Various racial or ethnic backgrounds, countries and faiths.
  • A variety of genders and sexual orientations.
  • A range of ages and marital status.
  • Disabilities.

Having hiring goals that favor one group over another could be illegal, no matter how much you think you are helping a particular group. Therefore, take care to not turn your intentions into discrimination by setting hiring quotas. Better to speak to an employment attorney about the nuances of the law in this area.

The old way of doing things

What you don’t want is something I came across in the past. A large investment firm was sending senior staff each year to interview recent graduates and alumni who attended the same universities as their firm partners. Naturally, that firm looked all the same: White, male, with comparable education. The only possible diversification they achieved was that each year they added younger (similar) workers, some of whom undoubtedly would reach senior management years later. Women were at that firm to assist the male professionals, a la Mad Men.

But why replicate what you already have? Instead, a mix of people on your staff can bring experiences, ideas and personalities that you can call on when planning the growth of your firm. Will this please your clients? I believe it will, including some of your older clients.

Years ago, some prospective clients would call our firm and say, “Do you take gay clients at your firm?” Some even asked if I “minded” that they had a same-sex partner. It seems preposterous now, and did then, too. In the same way, some women prospects would call and ask if we had women advisors. And, of course, we got some calls about the ability to speak other languages.

Happily, no one calls us about the acceptance of same-sex couples as clients anymore. Those prospects now feel comfortable that our firm will be able to help them. Queries about our women advisors still come up frequently, though. Some women clients prefer to get their advice from other women. Ability to assist in languages other than English still comes up occasionally. Certainly, many clients want to see advisors who look like them.

A good fit

Presently, 34% of our staff at Altfest Personal Wealth Management are women. Many staff members are Asian, and some are black or brown. There’s also a mix of single or married, younger or older. This is something that happened organically when we interviewed job applicants who were sharp, knowledgeable and a good fit for our firm. A mistake many RIAs make is hiring people who also can do what they or someone else does well at the firm. What we’ve found preferable is to fill open positions with expertise we do not currently have — people who can ramp up the capabilities of our firm.

For instance, years ago, someone suggested we hire an expert in social media. Once we were convinced that our firm had no special expertise in this area and that adding this knowledge could make our services available to people who prefer to get their information in this way, we added someone to our staff who could oversee this area. And we found it valuable.

A writer for a finance industry magazine once heard that we at Altfest Personal Wealth Management had many young people working at our firm and asked if he could come up to ask us a few questions about our team. We agreed, and he arrived with a photographer. When the pictures were printed, the reporter was astonished at the diversity of faces in the room. In a short time, we found our firm on the cover of a national trade magazine; the lead article inside dealt with diversity.

We were proud to be an early adopter in what has since become a movement, but we simply did this by taking on great people as our employees.

Consider your portfolios

We RIAs have spent years honing our diversified financial portfolios. We do this by attending to the needs and goals of clients, the imperatives of the market and the economy; by evaluating investment opportunities; by offering continuing education and by factoring in risk. We offer clients not just stocks and bonds, but also new asset categories and strategies to help them hedge risk. We are, as a group, generally very active in the delicate and important management of our clients’ financial lives.

It’s possible many RIAs find it more interesting to create diversified portfolios than to assemble a diversified staff. I believe we need both to have a successful, mature business.

With similar or possibly even less effort than keeping up our other professional skills, we can work toward creating a well-diversified financial advisory firm.

Of course, there are many ways to work on portfolios, and most of us went to school to do so, or learned over the years, while not having had formal training to be managers of the business. If that’s you, bring a non-manager staff member or two to sit in on hiring meetings and welcome their opinions. This is no time to pull the seniority card.Their contributions to building a solid, diverse staff may be the ingredient you need to create the most valuable, effective firm for the present — and the future.

If you do some homework into hiring practices today, you will find much written about diversity, equity and inclusion, or DEI. For further learning, some universities, such as Cornell, provide a program that leads to a certificate in establishing DEI in your workplace. Or you might turn to the American Management Association, which offers several virtual courses that impart skills for building and leading a diverse and inclusive organization.

Specific to our industry, major financial planning organizations are now offering webinars and conferences based on diversity — a pursuit the industry hasn’t always succeeded at, based on financial planners’ self-reported data provided to the CFP Board. The board, which works to foster professional standards in our industry, found from their members’ responses that fewer than 3.5% of all 82,000 CFP professionals in the U.S. were Black or Latino, which is significantly at odds with the representation of those groups in our country.

My firm’s goals are to have a well-rounded staff, to bring in the best and brightest people and appreciate their backgrounds, to gain insights from their varied experiences, and then to provide all employees the opportunity and means to be successful at our firm.

Karen Caplan Altfest, PhD, CFP, is a principal advisor at Altfest Personal Wealth Management. She helps many of the firm’s clients with a variety of investment and financial planning issues and specializes in helping women clients and widows. Karen’s Financially Savvy Woman programs, including the Women’s Financial $pa are popular with clients. Her focus is to educate and empower women.

Investment advisory services provided by Altfest Personal Wealth Management (“APWM”). All written content on this site is for information purposes only. Opinions expressed herein are solely those of APWM, unless otherwise specifically cited. Material presented is believed to be from reliable sources and no representations are made by our firm as to another parties’ informational accuracy or completeness. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

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