Journal of Financial Planning: May 2019
Keith Beverly, CFA, CFP®, is managing partner and CIO of GRID 202 Partners, which helps impact-oriented accredited investors and institutions achieve financial returns aligned with their principles and mission. He is also the founder of moXY Financial, a network of multi-credentialed advisers committed to financial literacy and racial diversity in financial planning.
In recent months, industry publications and conferences have teemed with chatter around diversity, equity, and inclusion (DEI). While the initial focus centered on growing the number of women advisers, racial diversity has entered the conversation more prominently of late. I expect this trend to persist as communities of color continue to make visible strides in all areas of society and the percentage of the nonwhite population expands from the current 39 percent.1
For example, the most recently elected Congress is emblematic of the trend toward people of color representing a larger percentage of the population. For the fifth year in a row, the newly elected Congress is the most racially and ethnically diverse ever2 with 22 percent representatives of color up from 20 percent for the 115th Congress. Any wealth advisory firm that intends to remain relevant 10 (and most certainly 20) years from now should assess its practices with regards to racial diversity—from hiring strategy to manager selection. Firms that ignore the demographic shift will lose ground to those who position themselves purposefully and strategically. As firms attempt to attract and hire racially diverse talent, obtaining the CFP® certification and other respected industry credentials will take on newfound importance.
Origins of the moXY 20 by 2020 Initiative
In 2016, I committed to help at least 20 African American advisers obtain the CFP® designation by the end of 2020. At the time, I did not know the percentage of African American advisers who were Certified Financial Planners as the CFP Board had not released updated racial and ethnic data. As one of the few African American advisers who holds both the CFA and CFP® designations, many younger advisers of color were consistently reaching out through social media or personal relationships seeking guidance in passing the exams. Rather than continue to work with them on an ad hoc basis, I developed a more structured and efficient way to assist.
Originally, I paired each prospective candidate with mentors and sponsors who would contribute a combination of time and financial support for the candidates. The mentors and sponsors served as a support system providing career guidance, financial assistance to offset the costs associated with preparing for the exam, and moral encouragement. This approach worked for a small number of candidates but became unwieldy as interest grew. We also encountered potential conflicts as mentors/sponsors sometimes represented competing firms. After connecting with Gary Clement, CFP®, CRPS®, CRPC®, AFC®, MPAS®, last year, we have instituted several enhancements to our approach that address these deficiencies and provide a more sustainable path forward.
moXY 20 by 2020 Initiative 2.0
After recognizing we were both engaged in strikingly similar activities to help African American candidates obtain the CFP® designation, Gary and I chose to combine efforts. Since 2005, Gary has taught more than 7,000 aspiring CFP® candidates working with several diverse candidates outside of his formal instructor duties. His background as the president of Clement Asset Management LLC, an instructor in the Kaplan Schweser Certified Financial Planning Program, and a Ph.D. candidate in financial planning at the University of Georgia, combined with his commitment, made him the ideal person to assume the primary duties for the initiative. LaToya Parker, CFP®, who serves as a lead instructor, has several years’ experience teaching the CFP® curriculum as well. While maintaining the same core pillars, we now make better use of technology and have created a template to be replicated and scaled. We integrated many of the suggestions of our first formal cohort (the November 2018 exam) to arrive at the current iteration.
We serve as the last-mile resource for diverse candidates in the 11 weeks prior to them sitting for the CFP® exam. Our approach incorporates the following components:
(1) Virtual Peer Study Groups Facilitated by Diverse CFP Professionals
We begin with an introductory session for the cohort participants to get acquainted with one another. In addition to discussing their personal and professional backgrounds, we ask each to answer the following questions:
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What prompted you to pursue the CFP® designation?
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How do you anticipate obtaining the CFP® designation will help you professionally?
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What barriers are you facing at work or at home to prevent you from obtaining the designation?
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How do you intend to use your knowledge to positively impact diverse communities?
The subsequent 10 sessions, which generally last two to three hours, consist of six subject area review sessions led by a CFP® professional of color with specialized training in the topic area. For example, a CPA would lead the tax planning review session. Past candidates consistently stated the interaction with other CFP® professionals of color served as inspiration and tangible evidence that succeeding on the exam was attainable. The final four sessions are spent delving into challenging questions each student encountered throughout the week and discussing strategies to employ to solve similar questions if tested.
(2) Peer Accountability
Once the cohort is established, we create communication channels—video, phone, text, and a message board—for members to engage with each other and with instructors. These channels allow the candidates to build rapport and camaraderie with one another.
Several past, current, and prospective candidates have shared anecdotes of challenges they face in the workplace to successfully completing the CFP® program. These accounts range from large firms not reimbursing for the cost associated with the CFP® program to managers imploring candidates to focus exclusively on sales goals instead of pursuing the designation. A critical aspect of our approach is fostering a positive peer community where candidates are comfortable discussing hardships without fear of retribution or any adverse impact in the workplace.
(3) Progress Measurement
We instituted a system to track the following: number of study hours, number of questions answered, and aggregate performance on questions answered. We also gather other demographic data prior to participants matriculating into a new cohort. As our dataset grows, we will be able to apply empirical methods to better understand exam success for diverse candidates. These findings will help to contextualize the factors contributing to the racial CFP® professional gap.
For instance, we could examine the role industry channels play in the disparity. I suspect CFP® professionals are disproportionately represented among independent RIA firms and advisers of color are severely underrepresented in that channel more than others. As a result, simply growing the number of diverse advisers at independent RIAs would help close the gap.
Further, I would argue many of the benefits of structural racism have accrued most abundantly to independent RIAs—from relatively limited recruitment networks to receiving referrals from large custodians. I expect simply dismantling—and ultimately removing—systemic barriers would also contribute materially to closing the racial CFP® professional gap.
(4) Financial Commitment
After soliciting feedback from our first cohort on ways to improve, they unanimously recommended we charge a fee to each participant. We set high expectations of consistent and active participation in our weekly sessions in addition to tracking study habits and hours. The fee is income-based as candidates’ financial circumstances and career stage vary from seasoned industry professionals in their late 50s to candidates in their 20s working part-time as they look for their first job in the profession. The fee, which ranges from $75 to $150 a month for the three months leading up to the exam, is a meaningful tool to communicate the value we bring but perhaps more importantly, to hold them accountable to each other. Additionally, our corporate sponsors view the fee as an indicator of the candidate’s individual commitment to passing the exam.
(5) Community Benefits and Perks
Candidates who meet the criteria we set and remain in good standing are eligible for benefits such as: test provider discounts, complementary attendance at industry conferences, and access to industry professionals. We envision a virtuous cycle of candidates going through our program, obtaining the CFP® designation then returning to help (and recruit) future cohorts. As the community grows, success will breed success and there will be more benefits to being a moXY 20 by 2020 alumni.3
One Size Doesn’t Fit All
We are eager to partner with industry associations and companies committed to closing the racial CFP® professional gap. However, we caution larger firms to be thoughtful in how they implement an internal strategy to assist advisers of color. Unfortunately, and unbeknownst to well-intentioned senior leaders, internal biases may exact detrimental influences on the career trajectory of diverse candidates who participate in internal diversity-promoting programs. For example, an African American woman adviser shared with me that she was asked on a job interview whether she passed the CFP® exam on her first attempt. Aside from being a questionable, if not invasive, inquiry to make, the woman could not help but question if white candidates were asked the same question. Implementing a strategy within a corporate environment that is not welcoming and supportive to diverse advisers could spell disaster for large companies.
While many large firms may have a chief diversity officer, and/or a team dedicated to diversity, equity, and inclusion, such firms can still benefit from external perspectives. At the least, firms should consider incorporating communication channels for employees to provide feedback anonymously. In many cases, advisers of color prefer not to be singled out or highlighted around issues of race as the unintended result is limits being placed on their opportunities. Just as a diverse adviser may not necessarily prefer to work in a racially diverse branch location, she may not want to be pictured on the company’s website as a participant in a program aimed at closing the racial CFP® professional gap.
Endnotes
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See data from the U.S. Census at census.gov/quickfacts/fact/table/US/PST045218.
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See the Pew Research Center article, “For the Fifth Time In a Row, the New Congress Is the Most Racially and Ethnically Diverse Ever,” by Kristen Bialik at pewresearch.org/fact-tank/2019/02/08/for-the-fifth-time-in-a-row-the-new-congress-is-the-most-racially-and-ethnically-diverse-ever.
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See the moXY 20 by 2020 profiles on the most recent cohort, including Kelley Coates Carter, CFP® (linkedin.com/pulse/moxy-20-2020-spotlight-kelley-coates-carter-beverly-cfa-mba-cfp-/); Stoy Hall, CFP® (linkedin.com/pulse/moxy-20-2020-spotlight-stoy-hall-cfpr-keith-beverly-cfa-mba-cfp-/); Feraud Calixte, J.D., CFP® (linkedin.com/pulse/moxy-20-2020-spotlight-feraud-calixte-jd-cfpr-keith/); and Erica James, CPA (linkedin.com/pulse/moxy-20-2020-spotlight-erica-james-keith-beverly-cfa-mba-cfp-/).