Combating Systemic Racism in Financial Planning

June 1 marked the 99th anniversary of the destruction of Black Wall Street in Tulsa, Oklahoma.  With over 300 black-owned businesses at the time, Tulsa embodied black success following Reconstruction. The massacre and rioting that resulted in hundreds of deaths, 35 square blocks burned and over 1,200 homes destroyed, was ignited by an elevator encounter between a 19-year-old Black man Dick Rowland and a 17-year-old white girl Sarah Page.  Though Page never pressed charges, the rumor circulated that Rowland sexually assaulted her. Sadly, the stimulant that ignited the fire to Tulsa 99 years ago—systemic racism—continues to plague us nearly a century later.  

Racial injustice is in full view in 2020. The murders of George Floyd, Breonna Taylor and Ahmaud Arbery and the treatment of Christian Cooper in Central Park are recent examples of racism and should be a wake-up call to all of us. We are outraged at the consistent inequity the Black community experiences—not only with wealth but with law enforcement, the judicial system and health care. These disparities have been magnified with the onset of COVID-19 as we witnessed lack of access to government funding, increased number of layoffs/furloughs and a higher mortality rate in the Black community. Communities of color are reeling from seemingly relentless attacks on our health, civil liberties and financial well-being.  

Combating systemic racism is not new to us.  As firm we recognize creating an equitable society requires hard work and dedication. GRID 202 Partners is defined by an unwavering commitment to realize that vision. From partnering with clients to build wealth, to requiring advisers hold the most respected industry credentials to incorporating racial equity into our investment philosophy to being intentional in our outreach to communities of color—we have strived to be inclusive in our actions not simply in words or press releases. 

The wealth management industry can be an unwelcoming environment for many advisers of color as they are often left with having to make the best of a suboptimal work environment.  As our firm continues to grow, we will provide greater access to competent financial advice for households passionate about racial justice and social impact.  While setting a visible example that a diverse and woman-owned Registered Investment Adviser (RIA) can thrive, our efforts are not limited to our firm or clients.  We also see a responsibility to the industry to increase representation of racially diverse Certified Financial Planners (™) and drive change at the institutional level. 

Grid 202 Partners President, Kamila McDonnough, serves on the CFP Board of Directors, the policy-making board for over 87,000 CFP® professionals. 

Managing Director and Chief Investment Officer, Keith Beverly, has advocated the industry uphold ethical standards through his recent letter to the CFA Institute requesting discipline for Amy Cooper after she threatened to tell police that Christian Cooper was threatening her life after asking her to leash her dog (which was the park rule). He also spoke with the Washington D.C. city council regarding hiring diverse fund managers and helped spearhead an initiative to help 20 black advisers obtain the CFP® designation.  

Supporting the Black community and addressing systemic racism has been, and will always be, a core tenet of GRID 202 Partners. We welcome thoughtful dialogue about the serious problems we face within the Black community, the wealth management industry and our country.  Our firm partners are eager to engage with those working toward the type of inclusive society that has eluded us for far too long.

As advisers, we believe that you should be able to answer these questions satisfactorily for prospective clients. We have advised prospective clients apply a racial equity framework to their selection of a financial adviser by asking the questions below.

10 Questions to Be Prepared to Answer as Financial Adviser (A Racial Equity-Centered Approach)

1. Do you serve in a fiduciary capacity at both the individual and company levels?
2. What percentage of your advisers are BIPOC (Black, Indigenous and other people of color)?
3. Does your firm have a statement or policy regarding diversity, equity and inclusion?  If so, please share the statement or policy. How have you honored this statement in your operations, hiring practices or other business and investment functions?
4. Does your firm currently or has your firm in the past provided financial support to private prisons?  If your firm did provide financial support to private prisons when did it announce ending such ties and when were the measures made effective?
5. What percentage of your current assets under management are managed firms where greater than 50 percent of the ownership is with BIPOC?
6. How do you incorporate racial equity and social justice into your investment philosophy and ultimately your manager/security selection?
7. Has your firm ever served as the underwriter of a municipal bond directly tied to the settlement of an officer murdering a Black, Indigenous and other person of color?
8. Has your firm ever served as the underwriter of a bond for a municipality where more than 10 percent of revenue is derived from fines and fees on its residents?
9. Has your firm settled a racial discrimination lawsuit in the past 20 years?  If so, what is the aggregate amount of those settlements?
10. What percentage of loans extended under the recent CARES Act by your firm were directed to businesses owned by Black, Indigenous and other people of color?

Editor’s note: A version of this blog post first appeared on the Grid 202 Partners blog. You can find it here.

Keith Beverly, CFA, CFP®, has over 15 years of investment management and financial planning experience, Keith’s responsibilities range from building customized investment portfolios to implementing sophisticated financial planning strategies for medical professionals, attorneys and professional athletes. GRID 202 Partners has developed an expertise in identifying private market investments that deliver attractive financial returns while achieving positive social impact. 

Kamila McDonnough, CFP®, has nearly two decades of financial planning and investment experience assisting high net worth individuals, endowments and foundations and business owners with comprehensive wealth solutions and holistic planning. McDonnough spent most of her professional career at Vanguard working with ultra-high net worth individuals and endowments and foundations, inclusive of major universities, hospitals and other charitable organizations.