Wealth managers must heed the call of diversity
Wealth and investment management is often seen as a bastion of upper-class white privilege, even though the industry is actually more diverse than it sometimes appears.
But as Britain becomes an increasingly diverse country and the number of ethnic minority entrepreneurs is growing rapidly in the UK, wealth management companies need to accelerate the pace at which they respond to ethnic diversity. from the country.
Wealth managers need to consider diversity when considering their clients and their values – and planning their own employment strategies. The industry cannot risk being left behind, bereft of the diversity of thought that different backgrounds can bring.
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I’ve been talking to entrepreneurs and executives for over a decade and during that time diversity has spontaneously emerged as an increasingly common theme. Business owners and managers have become accustomed to building teams with varying profiles and skill sets. Many are also responding to pressure from stakeholders – including shareholders – to increase diversity on their boards and in their leadership.
In the 2011 census, 80.5% of the UK population identified as white British, meaning almost a fifth of Britons now come from other backgrounds.
While most ethnic minorities lag behind in terms of wealth, entrepreneurs and business leaders increasingly come from diverse backgrounds.
Immigrants, as has often been noted, are often more dynamic than the native-born population. the Global Entrepreneurship Monitor Report on the UK from 2019 notes that total early-stage entrepreneurial activity – a measure of entrepreneurship – stands at 10.2% for immigrants, compared to 8.5% for the native-born. the country.
Every entrepreneur has a unique life experience that helps shape their view of wealth and investment managers. Clients care and expect the diversity of the companies they work with. Savanta’s MillionaireVue Omnibus survey found that two out of three UK millionaires believe it is very important for their adviser to have a diverse workforce.
In its 2021 Global Wealth Research Report, EY, the advisory firm, found that one in eight wealthy people believe a diverse team of advisors is an important reason in selecting a wealth manager. That rises to one in five among those from an LGBTQ+ background.
Clients’ decision to hire is often an emotional one, so there’s a strong business case for having advisors as diverse as the clients.
Wealth managers also need diversity to adapt. They can do this more easily because, as EY notes, diverse teams are better at “detecting blind spots, improving innovation and identifying investment opportunities.”
However, worryingly, in this year’s survey of wealth managers conducted by Savanta, the average proportion of employees from an ethnic minority background is just 14%.
Worse still, only half of the 32 wealth managers we surveyed were able to provide data, and a measly five told us they aim to increase the proportion of ethnic minorities by the end of 2023.
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The industry needs to take these issues more seriously. Fortunately, there are signs that he is starting to do so. The Personal Investment Management & Financial Advice Association is hosting its inaugural Diversity and Inclusion Awards this year, with the aim of highlighting companies, people and initiatives that are beginning to successfully close the gap.
And individual wealth management companies are taking action. Rothschild & Co was among the first major financial institutions to sign up for the Sutton Trust’s Pathways to Banking programme, which works with state-funded schools in London to widen access to finance.
Rothschild also offers positions designed to attract talented black students to careers in the investment management industry as part of the #10000BlackInterns initiative.
Clients can expect to deal with more diverse wealth managers in the UK in the future. But the industry needs to move faster to meet customer demand.
David Barks is director of the wealth management team at Savanta, a global market research agency