By Laura Hanichak Gregg, Director of Practice Management and Advisor Research
Strong team building remains an important strategy for financial advisors. According to the results of our FlexShares study – Advisor Teams and Diversity — while the majority of investors don’t claim to have a preference for a team-based vs. solo practitioner firm, 72% agree it’s important for a financial advisor to be supported by a team.
Like many industries, financial services have traditionally relied on “culture fit” as a candidate gauging tool for building cohesive and effective teams. However, hiring managers need not sacrifice these characteristics to obtain diverse teams. When companies try to gamify diversity, treating it as a matter of scoring points by checking off identity boxes, lack of diversity can become pervasive, despite earnest hiring efforts. As a result, teams can be set-up for failure.
DIVERSITY, EQUITY AND INCLUSION GOES HAND IN HAND
Success in building a truly diverse, engaged team starts with understanding that diversity, equity and inclusion are distinct but must exist and work together. Inclusion is often referred to as the organizational practices and culture that welcomes diversity, allowing diversity to move from a corporate buzzword into a workplace reality. Or, as Connie Lindsey, executive vice president and head of corporate social responsibility explained to me, “Diversity is being invited to the dance, equity is being asked to dance, but inclusion is when you get to pick the song!”
Likewise, a workplace culture of diversity and inclusion honors the mixture of experiences and backgrounds that inform the team’s perspective. When teams are empowered to envision solutions in a variety of ways, they can better recognize new and different market opportunities, potentially making the firm better in fulfilling its brand proposition.
Our study found some interesting trends among firms demonstrating a commitment to diversity via planned initiatives. First, these firms are more likely to have focused efforts in serving women, LGBTQ, Race/Ethnicity, and the Gen X and Millennials. They are also more likely to offer specialized services and value strategic initiatives overall. These companies tend not to see diversity as a marketing tool but more as a way to reflect their client base and the general market population.
What’s different about the recruiting methods of these firms? Our survey responses indicate these companies tend to pursue a strategically focused recruitment strategy, as they reported
- more recruiting activity
- greater use of recruiting methods
- greater success in hiring new talent
- greater retention of diverse groups
- more likely to hire from outside the industry and to hire professionals re-entering the workforce
RETAINING A DIVERSE TEAM
First, recognize the diversity catch-22: If there isn’t sufficient diversity, equity and inclusion in a company, retention and attracting more highly skilled diverse talent can become difficult.
Insufficient diversity can place the burden of an emotional tax on diverse new hires, especially people of color. Even employees who knowingly ventured to become a company’s first hire with their background may end up feeling isolated within the organization, experiencing a constant state of preparation for potential bias or discrimination.
Diverse and inclusive organizations work to demonstrate that they equally value diverse talent and input. Keep DE&I as a priority in the workplace culture, working towards making it a new and more robust normal for your firm. Employees and prospects won’t be dazzled by initiatives without results. Show a strong commitment through concrete and decisive measures.
For example, an effective strategic move could involve a strategy to close any gender or racial pay gaps in employee compensation and total rewards. Focus less on creating a facade of perfection in the workplace and build safe channels to communicate issues. Keep an eye on the varying needs of your employees. Acknowledge and allow flexibility around different cultural holidays. The COVID-19 pandemic has pushed many offices to remote status. Consider continuing to offer that flexibility in work location and hours after the virus scare ends.
Above all, don’t be that firm that abandons the DE&I mission in times of crisis and challenging markets. Accept that unconscious, as well as conscious bias, is an inherent challenge for all workplace culture. Aim to identify and address any identified biases in personal policies, correcting disparities as soon as possible.
We invite advisors to use our research to better understand how and why to build a more diverse business. FlexShares believes that diversity of thought, age, gender, race, sexual orientation, and disability will give advisors a competitive edge in the coming decade and beyond. To hear lively conversations on this topic with industry experts, subscribe to The Flexible Advisor Podcast. You may also subscribe to receive alerts when new briefs are posted or download our latest research on this topic now.