I recently attended the 2022 Association for African American Financial Advisors (AAAA) vision conference in Atlanta, GA. I must say that becoming a member of AAAA, and being part of the conference, have been highlights of my finance career. I have been able to connect with hundreds of financial advisors across the country who possess numerous certifications and designations up to and including the ‘gold standard’ Certified Financial Planner.
The conference was truly inspiring. It felt as if everyone in the room had an unspoken bond. The overall goals of the conference were to share best practices, experiences, and ideas on how to advance careers and networks. The primary purpose of AAAA is to create an environment for black advisors to develop and foster professional relationships amongst other black professionals working in the financial services industry.
The most impactful discussions surrounded improving the lack of representation for people of color amongst financial advisors, the challenges faced by women in the industry, and reaching black people of wealth. For context, even though the number of black CFPs grew by an impressive 13.4% in 2021, African American advisors still only make up 1.8% of CFPs. The lack of black representation probably has a direct correlation with the limited number of black people who are advisory clients. Moreover, money is not a hot topic for discussion at dinner in black communities, so knowledge of investing is very limited.
I listened closely to the questions asked after each panel. The main concern troubling black advisors was building organic relationships with black people of wealth. I was not surprised to learn that few advisors are primarily doing business with minorities mainly because they do not know they exist or they do not know how to reach them. People become wealthy in a limited number of ways, including: (1) being born or married into wealth, (2) building a strong portfolio overtime, (3) becoming a high income/salary earner, or (4) being a successful entrepreneur. Most black people are not born into wealth. That leaves high wage earners in areas such as medicine, law, real estate and technology, or successful businesspeople. Given people of color are the minority, it is not common to run into these clients unless advisor have a specific niche.
As the number of women with wealth continues to grow, there should be significant growth in financial advisors who are aligned with their needs. Many women in the investment industry however, feel left behind when it comes to proving their worth to other male advisors and even clients. This seems counter intuitive considering female advisors often lead with empathy and understanding. And, of course, women are increasingly becoming the breadwinners in relationships today – they do not have a problem ‘bringing home the bacon.’ Since women share the similar hobbies, motherhood, and lifestyles, they already have a mutual understanding of the goals of other women.
There is much work to do to address the underrepresentation of black and female financial advisors, and to improve the financial and investment guidance provided to people of color. The AAAA conference helped me see what I can do to help. I hope others will be inspired to help build strong relationships between advisors and clients of color to the benefit of all parties involved.