A lack of diversity still persists in the financial planning industry

Financial planning — and the financial services industry, more broadly — has long been an arena of predominantly white men.

Industry leaders have been working to boost diversity, and while progress has been slow, it seems to be bearing some fruit. Still, 83% of certified financial planners in 2021 were white, and 77% were men, according to the CFP Board.

CNBC spoke with Dennis Moore, CFP, the new volunteer president of the Financial Planning Association, to discuss diversity roadblocks and what the trade group is doing to foster a more inclusive culture. Moore, who will serve a one-year term as FPA president, is chief operating officer of Dallas-based Quest Capital Management.

Greg Iacurci: Is diversity a core issue for the FPA?

Dennis Moore: It is. Our industry has a long way to go to increase the diversity of our practitioner community. The American public is becoming more diverse, and our profession is falling short of matching that growth.

GI: How might more diversity benefit consumers, too?  

DM: Financial planning is for everybody; everybody needs competent and ethical financial advice. At the same time, they’re looking for someone that they have some commonalities with. If we really want the public to thrive and engage in financial planning, we need to be sure that our financial planners reflect the diversity that is within America.

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We’re also hoping to make financial planning a career choice that’s more known. That goes from everything from outreach on college campuses to encouraging mentorships to diversity scholarships to attend some of our FPA events. It’s important for the profession and important for the consumer.

GI: How do you gauge success?

DM: If we can basically mirror the diversity that’s in the U.S., I think that’s a great target.

GI: How is the FPA fostering that?

DM: We have a Diversity and Inclusion Committee at FPA that works closely with the board and helps us look for opportunities to support our diverse membership.

We have what we call “knowledge circles,” [for example]. They’re seven different community-based circles [for] diverse parts of our membership, from women in finance to African Americans, Asian Americans, Pacific Islanders. Just over the last year, we’ve had a 22% growth in these communities. That’s one way we’re reaching out to existing members and hopefully encouraging more to join FPA.

GI: What do they do?

DM: Each one may have a different cadence but [generally have] monthly meetings. [Participants] have an opportunity to engage in discussion, hear from experts, build relationships throughout FPA.

We’re [also] developing a plan for more diversity, equity and inclusion training for the board and the staff. Our goal is to expand that training out to all our FPA volunteers. We’ve been working with our conference task forces to feature D&I thought leaders [and] host different events to celebrate diverse membership at our events.

We also have The Journal of Financial Planning. We’ve had entire issues dedicated specifically to diversity and inclusion, with our next one coming up this fall.

GI: Why has diversity been an issue for the profession?

DM: I think some of it is lack of awareness of this being a vital career path. There are still a lot of people who don’t know what financial planning really is. Whether they’re starting out in college in a financial planning program somewhere or are career changers — whatever it may be — I think we’ve got to get better about showing that opportunity.

GI: What if you’re not going to college? It may be even harder to become aware of it as an option.

DM: Right.

GI: So it kind of starts in high school — which is a challenging proposition.

DM: It is. Even financial literacy and just that type of education in high schools. People aren’t seeing that as a path, don’t even know what it is. Hopefully they at least see it in college. But a lot of times, you know, they don’t see it before that.

GI: What do you see as some other big challenges for the industry?

DM: We have more demand than we have supply of financial planners. And so that’s where for me it’s like, OK, we’ve got to get people more aware of financial planning, get them into the profession in order to meet the demands of the consumer.

GI: How have pandemic-related disruptions affected to the normal course of business for advisors and clients?

DM: I think it’s changing how planners are doing what they do. There’s a lot more remote work, hybrid setups, which is really opening up where people can live and work. I think that dynamic is probably going to continue. We can’t replace being in-person, so the in-person pieces will start coming back.

GI: As advisors and planners have done stuff more digitally there are probably some opportunities and challenges that come along with that. Like, you could reach more clients but other advisors could reach into your geographic market, too.

DM: I think the tools are there to make some of that reach a little bit stronger than it was before. But it’s got to be tied back to the service and the value [planners] provide.