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5 Things to Know About Cultural Competence and Your Practice with Saundra Davis

Saundra DavisWe have officially kicked off season three of 2050 TrailBlazers with the theme money and culture. One taboo that transcends many cultures is talking about money. I recently sat down with Saundra Davis, MSFP, APFC®, FBS®, a world-traveled distinguished adjunct professor and financial coach with decades of experience, to have a deep discussion about various cultures and their lenses of money.

In our interview, Davis covered how to ask questions as financial planners or money coaches when working with a diverse client base. She also discussed different money values, and how planners and money coaches can stay in the mindset of curiosity to help our clients build their best financial lives.

What is your advice to the financial planners who want to work with a more diverse set of clients, but don’t know how?

Davis: This is why [financial] coaching is so crucial. Because as a coach, it doesn’t matter who I’m sitting next to because my first question—once we’re ready to look at their goal—is what do I need to know about this? What do I need to know about you? What do I need to know about what matters most to you? Once I lay that foundation, they don’t have to rattle off all their cultural stuff to me, it is going to come out.

And if I’m staying in the beginner’s mind and I’m staying with curiosity, if someone says, “Well, you know, I got to make sure that I cover my parents.” I would say, “OK, so tell me a little bit about that. What does taking care of your parents mean to you? What things are you willing to adjust to make sure that you do that?”

A comprehensive planner still has to look at that Monte Carlo [simulation], right? I don’t have that barrier, so I get to stay in that coaching seat. Whereas for you all, you have to balance those two things.

I would invite people to really make sure you truly make space in the beginning for people to say the things that are really important to them.

In other words, set very clear expectations up front with clients and hold them accountable to the promises they made to themselves. Is this accurate?

Davis: Absolutely. I often call it holding up the mirror. I’ll tell them, “Is what you’re doing getting you what you want, and is it congruent with what you say you want the desired outcome to be? Terrific. Keep doing that. If what you’re doing is not getting you what you want, what do you want to do differently and then how do I support you in figuring that out and then staying on task.”

You said that the client you’re sitting beside, and their culture, will determine how you approach various conversations. Tell us a little more about that.

Davis: The first thing is that I don’t make any assumptions and I don’t try to behave as though I understand what their experience is. I can empathize, but my experience is not the same.

I am a Black woman, born and raised in Northern California, and I have a very specific lens. If I’m dealing with a man from the South, I have to let him and his perspectives and his experience guide me in how I support him. I have to be able to hear what he has to say and listen for what’s important and then reflect back what I think I hear. That’s the most important thing—say, “So what I’m hearing is this. What did I miss?” Something that gives people permission to say, “You missed it completely,” or “You nailed it.”

Ask, “What are your top five values?” When we’re talking to people about their financial lives, there is nothing that doesn’t touch money, nothing. So how does money live in our lives? How do we live with it in our lives? If we’re pushing what we think is financial health … we have to do that in the context of what matters most to them.

Let’s talk about the difference between discovery of understanding and discovery of data, because those are two different meetings.

Davis: They are different, different things. And I would suggest not putting them together. The first discovery meeting is: Who are you? What do you want your life to look like? What are the things that influenced that? Describe the vision that you want to come out of this. How will you know we’ve got it? What is the best way for you and I to work together? What happens when you get stalled on the implementation of the plan? Who are the people we need to be thinking about in this mix? When you’re successful, what does it look like when you’re struggling? How will I know? What should I do when you’re struggling? The discovery is who we are together.

Then, once you’ve got that number one, the client now knows this isn’t just about my money. You’ve already sent a signal. Then you can say, all right, one of the things that’s important for you to know about my work as a planner is that there are some assumptions that I will have to make to make a good plan for you. And these are those assumptions. What do you think about this? Where am I wrong? Give yourself room to be wrong. Get them to correct you because what you’re getting out of that is their ownership.

As you mentioned, America is a beautiful melting pot—a mosaic. We’re going to be working with clients from different cultures. What are the top three major differences we should look out for?

Davis: I have had to learn—in traveling in and outside of this country—to not assume that my perceptions and my fears and my concerns about money are shared by other people. What I value or what I think is struggle isn’t necessarily struggle. What I think is a poor use of financial resources may not be a poor use of financial resources.

The idea that we have here in this country now about the side hustle makes me absolutely insane. The idea that people should be working all the time and always trying to make a dollar. I don’t think we’re thinking about what are we giving up—who’s raising our children, who is checking on our elders? Are we sitting out in the sun? We have to remember that our way isn’t always the best way and it certainly isn’t the only way. I would like to leave you with this: when we’re thinking about culture—whether it’s European culture, Latin American culture, South American, Africans on the continent, the different countries—let’s not predispose ourselves to a specific viewpoint that may or may not be accurate.

The more open that we can stay, the more free people will be to say, “Yeah, that’s not how I interpret it. That’s not going to get me the plan that I need. And I’m surely not going to execute it because it’s not my reality.” As professionals, if we can leave that space for people’s individual needs—whether it’s based on culture, whether it’s based on fear, money scripts, hopes, dreams, desires—they have the room to come through.

Editor’s note: This is an excerpt from Saundra Davis’ interview on the 2050 TrailBlazers podcast. Listen to the full episode.

Rianka Dorsainvil

Rianka R. Dorsainvil, CFP® is the founder and president of Your Greatest Contribution (YGC), a virtual, fee-only comprehensive financial planning firm dedicated to serving entrepreneurs, first-generation wealth builders and thriving professionals in their late 20s, 30s and 40s. She also hosts 2050 TrailBlazers, a podcast aimed to address the lack of diversity in the financial planning profession by engaging industry experts and leaders in conversation.


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Three Ways to Address the Lack of Adviser Diversity

The financial advice profession is objectively one of the least diverse professions in the United States. Many of us in the advice industry are painfully aware of this from an anecdotal perspective; one only needs to attend almost any industry function and simply scan the room for it to be clear.

The actual statistics are even more sobering. Of the more than 83,000 CFP® professionals in the U.S., less than 3.5 percent are black or Latino. Women enjoy somewhat better representation, at 23 percent. However, once you look at all advisers, not just CFPs, women only make up 16 percent of the total, and the black and Latino representation among all advisers is almost infinitesimal.

The reality is that advisers are a fairly homogenous bunch. With some exceptions, the average adviser is a 50-year-old white male, who likely began his career as a broker or insurance salesperson. In fact, the largest cohort of advisers is between the ages of 45-54. According to U.S. Census Bureau data, however, the average American is a woman, with a median age of 37, who makes around $47,000 annually. She also happens to live in a city (and leans Democratic, for what that’s worth).

Meanwhile, America, already a diverse nation, is becoming even more diverse. The Census Bureau projects that the U.S. will become a minority majority nation by 2043. Non-Hispanic whites will still be the largest single group, but no one group of people will have the majority. The implications of this should serve as a wake-up call to our profession. We need to be prepared to better serve the retirement planning needs of a much broader swath of Americans in the future. And it’s important to note that retirement planning needs have changed significantly, as most Americans no longer have pension plans to sustain them in retirement, and the median income is $60,000.

As such, these Americans are mostly unprepared for retirement, unfamiliar with investing and underserved from an advisory point of view. The Center for Retirement Research calculates a measure of retirement readiness, the National Retirement Risk Index (NRRI), which reports that 50 percent of Americans are at risk of declining living standards in retirement. These are people who desperately need to save for retirement, and currently have little in retirement savings. The majority of Americans need behavioral coaching around saving, financial planning and even basic personal finance assistance. There is most definitely a market for this type of advice; however, the reality is that this type of advice will not be anywhere near as lucrative as the high-net-worth individuals many advisers pursue today.

Coincident with the above is the fact that there happens to be fairly significant demographic changes taking place within the wealth management space. Almost 40 percent of advisers are expected to retire in the next 10 years, according to Cerulli Associates. Combined with the fact that over the next 20 years we will experience “the great wealth transfer”—the migration of assets from baby boomers to their heirs (most of whom do not currently have advisers) by 2022—the U.S. wealth management industry is likely to face a shortfall of at least 200,000 advisers.

The advisory practice of tomorrow is going to be very different than that of today. And the systemic changes described above just might help position the industry for the changes that I believe are necessary, including:

  1. Advisers becoming much less sales- and investing-oriented, and instead looking and feeling more like financial counselors, deploying soft skills such as emotional intelligence, empathy and compassion.
  2. Practices pivoting away from being profit-oriented toward being client-oriented.
  3. The profession embracing diversity and inclusion among advisers.

The question is how, and what are the practical steps we need to take in the meantime, as an industry, to ensure a more diverse adviser population positioned to serve an increasingly diverse population?

Recruit and Hire Purposefully

Too often, we hire from a rather closed network of friends and family, or even friends of friends and family, which directly contributes to the homogeneous culture we have today. Instead, we must make a conscious, purposeful decision to hire diverse candidates, and this commitment must come from the top and permeate the organization. Recruiting from historically black universities and colleges is a great start. Targeting appropriate affinity groups, professional networks and community associations is another way to identify diverse candidates.

Closely tied to a firm’s recruiting efforts is the overall messaging of the firm, which also needs to be consistent with a commitment to diversity and inclusion. Candidates will naturally review advisory firm websites, social media and communications before deciding to accept an offer, so firms need to ensure all internal and external communications and images align with the core commitment to diversity and inclusion.

Education is important, as well. Oftentimes, college and high school students simply do not realize that financial planning is a career option, or if they do, they view it as a hard-charging, Wall Street-type of role. It is critical for high schools and universities to offer classes in financial planning and/or financial literacy, and for industry leaders to do their part in enabling success for the next generation with programs such as the Envestnet Institute on Campus.

Rethink the Advisory Business Model

Technology must be incorporated in all areas of advisers’ practices in order to address the changing industry. From client acquisition and onboarding to aggregation to online meetings and scheduling, even elements of investment management. These practices will need to be automated in order for advisers to scale their practices and take on additional (perhaps lower margin) business. Independent RIAs with advanced technology integration generate around 50 percent more financial plans and investment proposals compared to their peers that don’t benefit from advanced integration. According to Envestnet-sponsored research from the Aite Group, this increased advice activity translates into a greater number of clients served by the practices (57 percent more), larger books of business (78 percent larger) and greater practice revenue/production (46 percent greater).

As many elements of the traditional advisory business model become commoditized, such as trading, asset allocation and even security selection, advisers must concentrate their efforts on higher-value—and more impactful—activities. They must do more with less and segment their clients appropriately. They must move away from providing advice on investments, and toward advice on life events, long-term goal planning, financial planning and relationship management. Everything else that is or has become commoditized must be automated.

For the more diverse adviser of tomorrow, this means supporting the industry’s move toward holistic financial wellness—an approach that incorporates all aspects of wealth management with less of a focus on pure investment management. Rather than relying on a data-driven approach to the handling of money, an increasingly diverse population of clients prefer a deeper focus on life goals for themselves and their families. This shift will attract advisers who care more about making financial wellness a reality and who respect the differences in communication styles when it comes to helping clients reach their goals.

Modify Compensation Approach

The way advisory firms are structured today from a compensation standpoint provides a self-selecting mechanism for hiring talent, which also contributes to the current lack of diversity. On the matter of hiring and onboarding practices, there is an emphasis on bringing in candidates who already have a strong network of potential clients. In fact, a vast majority of hiring professionals (86 percent) are looking for prospects who can bring in clients right away, according to CFP Board research.

This has a twofold effect of bringing into the firm primarily sales-focused individuals, and discouraging candidates who do not have friends and family with substantial-enough savings. Instead, firms can institute a team-based salary and bonus framework that would incentivize service, client retention and bringing in any new business, not just large books of business.

With a compensation strategy that includes a team-based incentive, firms reward everyone involved in the client relationship, with a scaled reward structure based on the level of personal contribution. That way, the need for financial security for all team members is addressed, and the team is motivated to work together and deliver strong results.

Conclusion

There are both aspirational and practical reasons to champion diversity. We should want every industry, including wealth management, to be diverse, because it’s simply the right thing to do. But also, countless studies have shown that diversity—of culture, gender, race, background, thought and more—objectively leads to better outcomes across the board. In order to ensure our industry thrives amid all the changes ahead, we must all do our part to enable and create a diverse, vibrant workforce.

Estee Jimerson

Estee Jimerson is the managing director, head of asset manager distribution at Envestnet.


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A Concise History of Diversity Programs at FPA and Looking to the Future

It was the FPA annual conference in Nashville in 2006. Lee Baker, CFP®, counted maybe 30 other African American attendees out of around 3,000.

In one intimate conference session, Baker, who said he was in a good—but flippant mood—said to the group: “My name is Lee. I’m from Georgia and from the looks of things I’m here to add a little color to the conversation.”

This sparked a few nervous chuckles. After the session, Ed Gjertsen, CFP®, walked over to him and the pair struck up a conversation about the lack of diversity at that conference and in the profession.

Signs depicting diverse people—Black, Asian, Latino—were posted up around the meeting space with the message, “We are FPA.”

The pair approached a then-staff member and told her that the signs represented where FPA aspires to be, but not where we are.

Gjertsen and Baker connected with Trudy Turner and formed what would in 2007 become the FPA Diversity Task Force in the hopes that one day it would become a permanent committee.

“Part of our thought process was, let’s make this part of our DNA and part of our infrastructure,” Baker said.

Later in 2007, the task force organized the inaugural invitation-only Diversity Summit pre-conference to the FPA Annual Conference.

In 2008, the task force established the Diversity Scholarship. The next year, it officially became the FPA Diversity Committee, chaired today by Charles Adi, CFP®, and later in 2009 created and adopted the FPA Diversity Statement.

Turner grew up in the FPA, she said, being a member before FPA was FPA (back before the merger). Turner recalled during her time at FPA Residency in Denver, the late Dick Wagner came up to her and asked, “Where are the rest of the people who look like you?”

“I so appreciated and have always appreciated that,” Turner said. “Dick was always so good at encouraging, supporting and challenging people to make this a better profession.”

It is people like Wagner and like Louis Barajas, EA, CFP®, who paved the way, Turner said.

Barajas said that he’d been talking about diversity since before his time on the FPA Board, which started in 2004.

“I started paying attention to the demographics and realized how fast we were growing and saw what the needs were,” Barajas said. “I felt like I was just talking and what I was saying was going in one ear and out the other.”

Turner heard him.

“I credit and stand on the shoulders of people in FPA who were beating the drum but weren’t getting anywhere,” Turner said. “I stand on the shoulders of Dick Wagner, I stand on the shoulders of Louis Barajas, who were talking about diversity, but it wasn’t going anywhere.”

Renewed Commitment to Diversity

In the past few years, the profession has seen a renewed interest in increasing diversity in the profession, an interest Turner said FPA has always had.

“FPA has very much been at the forefront,” when it comes to diversity and inclusion work, she said. This interest manifested in strategic partnerships with Quad-A and PridePlanners, which have both had pre-conference events to FPA’s Annual Conference.

So far in 2019, FPA launched the FPA Latino Knowledge Circle, a community for Latino financial planners to engage in professional development and networking, thanks to the help of Barajas. Along with partner CFP Board, FPA launched the Dick Wagner Scholarship. Lastly, FPA’s membership publication, the Journal of Financial Planning, had its first-ever diversity issue this month.

The early contributors to the Diversity Task Force and later Diversity Committee have said they are proud of the work FPA has done in this realm.

When Turner looks at what has come out of the diversity task force, it’s almost like she’s a proud mom, she said.

“I think the single best thing that we did was create the Diversity Scholarship,” Turner said. “When you see the talent that has come about—when you see Rianka [Dorsainvil], when you see Lazetta [Rainey Braxton], when you see Marguerita [Chang], those are diversity winners and they have come into the profession and started engaging.”

The scholarship, which includes one free conference admission, one-year membership dues, one-year chapter meeting fees, and support to thrive personally and professionally at FPA, has been awarded to 42 individuals.

Looking to the Future: What Can You Do?

The time of the frustrating “business case for diversity” conversation is gone. Now is the time for action. Oftentimes people ask, why care about diversity? For people of color, there is no choice but to care about it.

“When you’re born into things, you don’t have the luxury to sit back and go, ‘I wonder if that’s important?’” Turner said. “I am a person of color. I am a woman and it’s always been important for me.”

And it appears as though it’s becoming important to others and that people are listening.

“We’re talking honestly about [diversity] now,” said Saundra Davis, MSFP, APFC®, FBS®. “We’re not tip-toeing around it anymore, it’s not filtered conversation anymore.”

Also, Turner added, “People are listening.” However, the problem of genuine inclusion and implementation remain.

Focus on human resources.

Turner said this is the biggest area we should be focusing on. A strong human resources team can help retain talent. Good HR professionals versed in diversity can help foster a culture of genuine inclusion.

Ensure you are recruiting diverse candidates.

The excuse that you can’t find qualified candidates of color is outdated. They’re out there. And they’re highly qualified. You just have to know where to look, where to post your job descriptions and how to write those job descriptions to attract them.

Get comfortable with being uncomfortable.

People in the profession want to move the needle on diversity, Gjertsen said, but oftentimes they don’t want to say something offensive or be uncomfortable.

“That is one of the elements that is truly challenging for those not engaging,” Gjertsen said.

For Gjertsen, it wasn’t always the most comfortable thing to try to talk about diversity with people from underrepresented groups, however he got comfortable with being uncomfortable and his colleagues gave him grace, he said.

Listen to employees of marginalized communities.

If you don’t have the human resources in place, and an employee tells you about something, believe them and work to make their environment a safe space.

Work to fix the problem.

Doing exit interviews with diverse employees who leave your firm or company can help unearth some issues. Identify those and work to address them.

Advice for Planners

For planners from underrepresented groups, a few bits of advice stood out in our interviews:

Pause your movie.

Baker thought back to that conference in 2006. Though he said he never felt anybody treated him differently, there is still a truth as a person from a marginalized group any time you are in a space with thousands of people from the majority group: It’s lonely. There is a movie playing in your head about why people are not engaging with you, Baker said.

“You have to navigate that dynamic that says, ‘Am I being ignored because I’m Black or am I being ignored because they don’t care?’” Baker explained.

Represent. Another truth people from marginalized communities realize is that when they are at events, they aren’t just representing themselves, but also their groups. For instance, Baker said, recalling a conversation he had with Dick Wagner, if he were to have a few too many drinks at Annual Conference, it might lead to people judging his entire ethnic group.

“There’s a kind of pressure for me—not that it’s intentional—but if I screw something up, it is not Lee did this, it becomes they did this,” Baker said.

Make the most of your memberships. Baker said to take advantage of what’s available to you. Apply for the scholarships, join the webinars, attend local meetings and go to the conferences.

“It’s expensive to take days, hop on a plane, but it’s incredibly important to your future,” Baker said.

Find what Davis calls safe and sacred spaces to participate—whether that be Quad-A, PridePlanners or FPA Latino—and make them your own.

Don’t be afraid to make space if you can’t find it.

Davis said there are so many firm owners of diverse backgrounds because sometimes they can’t find their space in more established firms.

“People come in and they have high hopes,” Davis explained. “They’re welcomed at the beginning, but as soon as the microaggressions kick in, they try to talk about it,” but oftentimes they are not heard or helped.

Be yourself.

Davis said that she didn’t do the work she did in this arena for minority professionals to not show up in this profession as themselves.

“We shouldn’t have to not be ourselves to fit in,” Davis said. “We are equally as competent and sometimes even more so. Don’t think for one minute you’re not doing something significant.”

Ana TL Headshot_Cropped

Ana Trujillo Limón is senior editor of the Journal of Financial Planning and the editor of the FPA Practice Management Blog. Email her at alimon@onefpa.org, or connect with her on LinkedIn