Lack of Diversity in the Financial Planning Industry

In 2002, the Certified Financial Planner Board of Standards (CFP) collected demographic information from 21,911 CFP holders. As cited in the Journal of Financial Planning, about 5% of the respondents were nonwhite, with 0.94% identifying as African American, 2.42% as Asian American, 1.03% as Hispanic, 0.25% as Native American and 0.5% as other. Jina Martingano, a CFP spokeswoman, could not confirm how the information was obtained, but notes it might have been gathered when CFP holders renewed their certification. While not all CFP holders are independent planners, independents interviewed by Financial Planning say the 5% figure roughly reflects their ranks today.

The white, non-Hispanic portion of the U.S. population is 67%, and that number is expected to decline over time. Planners of all races stress the need for an industry that better reflects the general population. Some efforts to encourage industry diversity, notably those at the university level, have proven successful. And the momentum seems to be building for new initiatives.

Planners cite several reasons for the low minority involvement in the industry. Scarcity of mentors tops the list. "If you saw more people who looked like you, you'd be more interested in joining," says Jovita Honor, a planner of Mexican descent who practices in California. Others say minorities get less support at wirehouses than their white peers, so fewer succeed to move into the independent world. Barajas says young Hispanic planners often have fewer family members and friends who can invest money and help build their book of business. "The net they cast out when they're working is very small," he says. Industry participants also cite a general lack of awareness of the profession among minorities. For example, Barajas says many Hispanic communities aren't exposed to financial services beyond mortgage brokers or bank tellers, so they don't realize the industry's scope.