When Stern Brothers board chair and CEO Pepe Finn started in the securities industry in the early 1980s as a stockbroker, she was one of five women in an office of 50 men.
“I sold a lot of municipal bonds and wanted to move to the bond trading desk at a very large wirehouse, and I was told, ‘We don’t have skirts on our bond desk,'” said Finn during a panel discussion at the FINRA Diversity Leadership Summit, which took place Oct. 30-31. “Being told that I couldn’t have a job because I was female has absolutely informed my personal feeling about cultural competency. It’s not about what you look like or what you sound like. It’s about what you can do.”
Finn was speaking alongside panelists from FINRA, the U.S. Securities and Exchange Commission and industry leaders, including from Citi Personal Wealth Management, on how to create greater diversity and inclusion at firms as well as with clients. Here are some of the top takeaways from the two-day conference.
Remote work, AI have introduced new challenges to diversity and inclusion
Several panelists during the conference said that while diversity and inclusion is improving in wealth management, there are new issues of bias emerging with AI developments and remote work trends.
“There are key challenges that specifically come with the modern world that we live in now,” said Joshua Conrad Jackson, assistant professor of behavioral science at the Booth School of Business at the University of Chicago. “A lot of our managerial decisions are built into AI systems and technology, rather than made by people. A lot of inequalities that exist are structural or technological. And it’d be harder to recognize when those inequalities manifest.”
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Jackson also noted the transition to remote work following the COVID-19 pandemic created a shift in which employers need to be more aware of cultural differences that arise with working from home.
“The transition to virtual work can mean the cognitive dimension is harder than it used to be,” he said. “It’s harder to pick up on the fact that somebody has a different accent, dialect, celebrates different holidays, when you communicate with them over email or Zoom instead of in person.”
Governing bodies removing bias in securities exams
The Municipal Securities Rulemaking Board (MSRB) President and CEO Mark Kim said the MSRB is currently looking for potential or unintended bias in the thousands of questions in its “exam bank” required for becoming a municipal securities representative, for example.
“It is so important for us to make sure that our exams are not biased and that we are not intentionally excluding or making it more difficult for anyone to be able to participate in this market,” he said.
Kim noted a case the MSRB found that created unintentional “socioeconomic bias” in the results: A question asked whether it was appropriate to give a charcuterie board to a potential client.
“It was clear that some people were getting that question wrong because they didn’t know what charcuterie was,” he said.
On a broader scale, Kim said the MSRB is also removing the masculine “he” pronouns in questions that were written many years ago to identify example brokers within the questions.
“We don’t need to use pronouns at all in our exams. And so, we’re going through the process now, and we’re making our examinations gender neutral,” he said.
Acknowledge the differences that exist with clients
Desi Wyatt, director of national sales at Citi Personal Wealth Management, said it’s important for advisors to recognize the difference, such as in culture and religion, with their clients. He pointed to advisors recognizing Diwali, which occurs on Oct. 31 to Nov. 1 this year, with their Hindu clients and employees.
“If you have someone that celebrates that holiday, knowing that is even happening and understanding why, is an important thing. And so, it makes people feel a bit more inclusive,” Wyatt said. “Bridging a gap between knowledge and ignorance is truly being aware and helping others feel more included as part of that organizational structure that you’re a part of.”
Find ways to relate to each client
Wyatt, a graduate of the U.S. Military Academy at West Point, said early in his career in 2006 as an advisor in Richmond, Virginia, he started following a local NASCAR driver in order to relate to clients in the community; he also created talking points about local monuments to Confederate war heroes.
“I had to find a way to connect with the population that had wealth that didn’t look like me, and so, there’s a cultural opportunity there,” he said. “It was a great way to break down some walls, acknowledge some cultural norms in the area, and just get in and then fit in.”
Leadership needs to ask questions
While panelists acknowledged diversity has improved at firms over the decades, there’s still a gap between senior leadership grooming junior staff with the intent of promoting a diversified group of advisors.
“The tone begins at the top. So if the leader of your organization is putting forth the time and the effort to talk about this, to ask questions, to engage with not just the leaders but the whole team, the whole group — that’s so important,” said Lori Schock, director of investor education at the SEC. “If you’re in a seated senior leadership position, you have an opportunity here to not only be a role model, but to engage and to grow those junior folks.”
How advisors can pick a diversified and inclusive firm
Studies have shown that more advisors are going independent or changing firms. This poses challenges to those moving to a new employer when it comes to being sure their next career move offers cultural competency and diversity. Several panelists encouraged young advisors to look at who works at the prospective employer.
“Look around and see: Are there people who look like you? Are there people who seem to have the same worldview as you? Is it somewhere that you are likely to be comfortable and fit in?” Finn said.
Wyatt also advised job hunters to research how the prospective employer is branding the firm to the public.
“Look at how they market their brand. Are they targeting certain segments of the population?” Wyatt asked. “If they have a product that they’re selling to the public, what faces are they presenting? Are you seeing a diverse lens there? Because if it’s there, that could be a proxy for what might be going on behind those photos on the website.”
