Thursday, November 5 at 2:00 p.m. ET In this session, speaker Craig Lytle CFP®, M.B.A, CLU® will discuss the difficulties of being in the Sandwich Generation, where individuals find themselves providing support to their children as well as their parents at the same time.

Welcome to
Heart of Advice

a new source of expert insights for
financial professionals.

Get Started

Tips specific to the eMoney platform can be found in
the eMoney
application, under Help, eMoney Advisor Blog.

eMoney Logo
Magnifying Glass Icon
Mobile Menu Icon Close Mobile Menu Icon
Arrow Icon

Heart of Advice

Insights and best practices for successful financial planning engagement
Learn more

Back to All Articles

Explore Our Categories

CE Webinar: Stuck in the Middle Between Children and Elders - The Sandwich Generation November 5th, 2:00pm ET

REGISTER NOW

Why Education Is Essential for Supporting Diversity in Financial Planning

Mac Gardner August 4, 2020

financial literacy and diversity in planning

The financial planning industry today faces a serious lack of diversity. While people of color will collectively become the majority of the U.S. population by 2045, according to U.S. census projections, they remain woefully underrepresented in financial advice. Only 3.7 percent of CFP® professionals are Black or Latino.1 Women are also underrepresented, with only 23 percent of CFP® professionals being female—a number that’s held stagnant for ten years.

With a huge portion of the advisory field nearing retirement age, there’s a great opportunity for the financial planning industry to better reflect the communities it serves.

The Lack of Financial Literacy Contributes to a Lack of Diversity

The CFP Board recently conducted an exhaustive literature review of studies that not only demonstrate the importance of diversity in the workplace, but actually quantify the business value of a diverse workforce. Why Diversity Matters: How Workforce Diversity and Inclusion Accelerate Business Success in Financial Services highlights a number of eye-opening statistics about the modern workforce, but they come to four compelling conclusions about diverse organizations:

  • They better serve diverse customers
  • They can better recruit talent and are more attractive to potential employees
  • They are better at retaining talent
  • They are more creative and innovative, and often have a positive “tension” that requires people to work harder to achieve solutions

A wealth of research exists on the advantages of diversity, which begs the question: If even the bottom line stands to benefit, why is there such a lack of diversity in financial planning?

It’s a difficult question to fully unpack. There are many aspects of institutional racism and sexism that impact diversity. There are countless ways to talk about the mechanisms of socioeconomic oppression. But one topic that underpins everything, something that advisors are well-positioned to advocate for, is a proper financial education for our youth.

Research shows that by age three, kids can understand basic money concepts, and by age seven, many of the habits that influence financial behaviors later in life are set. Unfortunately, most financial literacy education doesn’t start until high school or college, if it ever happens at all.

When our youth grows up without understanding how to manage their money, how could they ever know there’s a whole career path dedicated to doing exactly that? How could they ever become interested in becoming an advisor in the first place?

The need for financial literacy is especially important for women and minorities, who are more likely to face socioeconomic obstacles in the pursuit of their life goals. Empowering these underrepresented groups at a young age helps level the playing field—it is also the best way to start grooming the advisors of the future.

Supporting Diversity by Starting Financial Education Early

When kids are properly educated on personal finance and the ways in which wealth accumulates, they’re empowered to pursue their goals and dreams, whether that’s in the form of starting their business, minimizing their debt load after school, or simply making financial decisions that best fit their desired lifestyle.

Wealth management can have a profound influence on an individual’s happiness and well-being. A financially literate youth is much more likely to know that financial advice is a potential career path for them. But more than that, they’ll be more likely to understand the deep connection between finances and personal fulfillment. Those in search of a career that’s meaningful to them may see financial advice as a way to help others in a personal, practical, and impactful way.

Once again, this can be particularly helpful in recruiting a more diverse generation of advisors to the field. When opportunity is spread more equally, there will inevitably be more women and minorities drawn to the field of financial planning.

Even beyond that, those who view money management as a tool of empowerment for disadvantaged groups may hear the call to arms more urgently. They may pursue a career in financial advice to help those who need it most and impact society on a broader level.

In this way, giving our kids a proper financial education can be a strong recruitment tool to bring in a motivated, passionate new generation of advisors.

Advocating for Financial Planning Diversity

In my most recent book, The Four Money Bears, each bear represents one aspect of money management: spending, saving, investing, and giving. There are two boy bears, two girl bears, and each is a different color. I had hoped to show that money can cut across all colors and speaks all languages. I have also recommended it to many of my fellow advisors, as I think they’re in a great position to advocate for financial literacy, and ultimately, diversity in financial advice.

While the financial planning industry today is fairly homogeneous, the industry of tomorrow doesn’t have to be. Giving our kids a proper financial education is one way to make sure the financial services industry better reflects the individuals it serves.

If you’re interested in learning more, I’ll be speaking on this topic at the 2020 eMoney Summit in a panel on FinLit for underserved markets. The panel will cover different ways to educate underserved markets and how you can make an impact today.

Sources:

1.“Why Diversity Matters: How Workforce Diversity and Inclusion Accelerate Business Success in Financial Services.” Center for Financial Planning, 2019. November 1. https://www.cfp.net/-/media/files/cfp-board/knowledge/reports-and-research/racial-diversity-in-financial-planning/why-diversity-matters.pdf.

 

The views and opinions expressed by this blog post guest are solely those of the guest and do not
necessarily reflect the opinions of eMoney Advisor, LLC. eMoney Advisor is not responsible for the
content, views or opinions presented by our guest, nor may eMoney Advisor be held liable for any
actions taken by you based on the content, views or opinions of the guest.

About the Author

His passion for financial literacy led him to publish his first book, “Motivate Your Money!” in 2013. As his family grew and his clients began to ask him for ways to teach their kids about managing money he decided to use elements from his first book to develop a financial literacy platform for young children. The Four Money Bears represent the four basic functions of money. When children gain exposure to money management skills at an early age they are likely to develop healthy financial planning habits as adults. Mac is a true believer in the power of stories. He wants every child to know the story of “The Four Money Bears” and the benefits of sound money management for generations to come.

You may also be interested in...

advisor perspectives on holistic financial planning

Advisor-led Best Practices on Engaging Clients Through Holistic Planning

Holistic planning, and its value in the advisor and client relationship, is growing in importance as a business building tool. Read More

next generation planner

Getting to Know the Next Generation of Financial Planners

The next generation of financial planners is coming, and they have a whole new attitude towards financial advice. I was… Read More

how crisis accelerates the need for financial planning

How a Crisis Accelerates the Need for Holistic Planning and Education for Clients

A few months ago, I would have given a different answer to the question, “What do you see influencing the… Read More

Webinar - Do More Planning: Start Now

Back by popular demand, Gregory Furer explains how to advance your financial planning practice. October 28th 2:00pm ET.

LEARN MORE
Webinar - Do More Planning: Start Now

Back by popular demand, Gregory Furer explains how to advance your financial planning practice. October 28th 2:00pm ET.

LEARN MORE

Sign up to have the most popular Heart of Advice posts delivered to your inbox monthly.

Sign up to have the most popular Heart of Advice posts delivered to your inbox monthly.

Heart of Advice by eMoney Advisors

Welcome to
Heart of Advice

a new source of expert insights for
financial professionals.

Get Started

Tips specific to the eMoney platform can be found in
the eMoney
application, under Help, eMoney Advisor Blog.