Black
and Latino financial advisors and their white counterparts are not going to
have minority clients to advise unless the economic base of the country is
expanded, said Henry Cisneros, former secretary of Housing and Urban
Development and partner at Siebert Cisneros Shank & Co., an investment bank
and financial services company.
“I
believe in the absolute significance of finances. The world revolves around
questions of money. Minorities see themselves locked out of the system;
something needs to change,” said Cisneros, a speaker at the CFP Board’s Center
for Financial Planning diversity summit held recently in New York City
Cisneros and John Rogers, founder, CEO and
chief investment officer of Ariel Investments in Chicago, both of whom are
known for their advocacy work for minorities, were speakers at the all-day
diversity summit. The center simultaneously released a report, “Racial Diversity in
Financial Planning: Where We Are and Where We Must Go” at the summit.
Both advocacy leaders agreed the wealth base of
the country needs to be raised for minorities at the same time that the
financial planning industry needs to more accurately represent the population
of the country. Only 3.5 percent of certified financial planner (CFP) mark
holders are black or Latino, while the two groups make up more than 30 percent
of the population. “We are way off track,” Cisneros said.
“It
shouldn’t be true, but many people still want to work with advisors who look
like them,” Cisneros noted. But, currently, there is a lack of both minority
advisors and minority clients.
“Blacks
and Latinos make 70 cents on a dollar for what whites make for the same work,”
he added. “And when it comes to wealth, they fall of the cliff: Blacks and
Latinos have one-tenth the wealth of white people and most of that wealth is in
home equity.”
Thirty-five
years ago when Rogers, who is black, started in the financial industry, he said
he knew of only a handful of financial advisors who were people of color. “We
in the industry need to teach young people about finances – not only how to
balance a checkbook, but also to see those of us in the industry as role
models.”
But
advisors also need clients to serve. “The wealth gap between whites and
minorities is real and it matters immensely. If you do not have access to
wealth, you do not have wealth to leverage to go to school or to start a
business,” he said. Minorities are frequently focused on managing from day to
day, not thinking of building wealth, he said.
Several
things need to be done to raise the wealth base and increase diversity in
financial planning, both advocates said.
Ariel
has an internship program that, over the years, has created leaders in the
financial industry, Rogers said. “Our internship program has become a pipeline
for leaders in the financial field in the Chicago area and across the country,”
he said. Other firms should do the same. Ariel also works with schools and the
University of Chicago to promote financial planning courses and internship
programs that place students in positions with foundations across the country.
On
the public sector side, Cisneros said, every municipality and state should
require anyone with a public contract to have minority members on the board,
including service providers such as lawyers and financial advisors, as well as
contractors and builders.
Cisneros,
who is a former mayor of San Antonio, Texas, said he now tries to build bridges
between the minority community and public agencies and public projects. “We
want the minority community to support the bond issues” that are needed to
improve the community.
“We
have a great distance to go in creating the next middle class – in creating the
next backbone of the country,” Cisneros said. “If we all advocate for others,
America will be a better place.”