This article was first published in the Research Portal for Morningstar Office clients.
In the past few months, we’ve seen that the ability to talk about race is not just a “nice to have” business skill, but a “need to have” skill. Though the public reckoning with racism in business has mostly focused on large corporations, smaller financial firms and financial advisors are not exempt.
Clients are asking how they can support racial justice in their portfolios and questioning their advisors’ responses (or lack thereof) to the recent public discourse around systemic racism. Employees--especially younger ones--expect their firms to take a public stance on racial equity; top talent will leave a firm where they don’t feel supported, or when they interpret their company’s lack of an acknowledgement of the Black Lives Matter movement as an indicator that their company’s management doesn’t care about racial equity.
Over time, I have had a lot of conversations with advisors and other financial professionals on the topic of race, and, not surprisingly, these discussions have been happening more often lately. Since George Floyd’s death, many of these conversations have been with people new to talking about race and racism, especially in a professional context.
The universe of financial advisors is overwhelmingly white (and male, but that’s for another column) and it’s an unfortunate truth that many white people struggle to discuss and be open to issues around race. But in my conversations with advisors, I’ve noticed several traits that seem a bit more particular to the world of financial advisors.
What I’ve found in my conversations is that many advisors and financial services executives do care, but they just don’t know how to talk about it, or it makes them uncomfortable. But staying silent on an issue you’re uncomfortable with discussing is a choice, and not a smart one.
With that, here is what I’ve learned from those conversations about advisors’ challenge around discussing race, and some thoughts on how to overcome and work with the discomfort around these conversations.
- Advisors are accustomed to being the smartest person in the room, or at least thinking they are. Advisors spend each day thinking about and helping their clients with their investments and finances, and they have been hired for their knowledge in that area. On the topic of finances, they often are indeed the smartest person in the room and are accustomed to having more answers than questions in their advisor-client relationships.
Additionally, personal finances and investment markets are often influenced by forces outside of the field of finance (for example, the coronavirus and geopolitics). As a result, a good advisor makes it their business to stay well-informed on a number of tangential issues.
Finally, investment advice is a well-paid and highly regarded profession. Society confers merit and deference to people who work in lucrative, white-collar professions.
If a white advisor hasn’t spent time learning about racial inequity (and most have not), it may feel like a topic they’d rather skip instead of admitting they are not knowledgeable.
I see this dynamic at play during financial conferences with competing breakout sessions. When there’s a breakout session on racial equity or diversity, and a breakout session on another topic, the racial equity session will have a much lower percentage of white people than the other session. When given a choice, many white financial professionals opt out of conversations about race.
- Investment advisors are practiced at thinking in a framework of data and numbers, approaching problems in a methodical way, where they can feel like there are right and wrong answers. Talking about race isn’t so clear-cut. People are much more nuanced then numbers. Discussions around race can be emotional, and there are no universal solutions. Conversations aren’t easy; they require deep listening and hard work to understand experiences vastly different from one’s own lived experience. Without practice, these conversations can feel intimidating.
- Advisors don’t want to “get political.” Most advisors don’t want to alienate clients by sharing policy or candidate endorsements that their clients may not agree with, which can be a wise business decision. Talking about race is often put under the same umbrella of “don’t get political.”
But--and this is crucial for white advisors to understand--talking about race and advocating for equal opportunities for people of color both in and out of the workplace is not political; it’s an affirmation of equity and basic human rights.
And it so happens that being able to have these conversations, and later develop a diverse network, is good for business.
- Many advisors, especially white advisors, have an overwhelming fear of saying the wrong thing when talking about race. This particular thought is so frequent, and silences so many potential conversations, that it merits its own section, which follows.
All these factors can lead some advisors to be unaccustomed to being in a situation when it comes to race, where not only do they not have the answers, they may also be part of the problem.
How to Overcome Challenges Around Discussing Race
To move past the fear of saying the wrong thing, so that you can talk about and act for racial equity, you have to get used to being uncomfortable. In fact, if you are not accustomed to sitting with discomfort, this may be in and of itself, a reflection of your privileged place in society. Your discomfort is small compared to that of Black, Indigenous, and other people of color, or BIPOC, speaking up, or just showing up to work in an overwhelmingly white workplace. (It’s a small positive step to just take your discomfort and use it to build empathy for BIPOC who continually live with that discomfort around race as a prerequisite of working in our industry.)
- Start by listening, with an intent to understand, not an intent to respond. Listen to BIPOC employees, colleagues, friends, and clients. If you work in a large organization, listen especially to your colleagues who have the least amount of power--this is often younger women of color. While you are listening, believe what they tell you about how they have experienced the world, even if the experiences they share with you are hard for you to imagine.
An important note about listening: when I say “listen,” I mean be open to hearing these stories if and when your BIPOC colleagues and friends share them. Don’t ask your BIPOC contacts to educate you on this topic, unless that is their job (like a DEI consultant) and you are compensating them for their time. If you don’t have the ability to hear those types of stories directly, you can read The Memo and So You Want to Talk About Race.
- Acknowledge to yourself, and better yet, with colleagues, that racial justice is a topic you are learning about and working on doing better. Invite both self-reflection and outside feedback. Be open to hearing--and expect to hear--uncomfortable truths or things you haven’t thought about.
- When you get feedback (which you will eventually get if you keep speaking up!), pause, breathe, remind yourself not to get defensive, and thank your colleague for offering the information. Take the feedback not as a personal criticism, but as an opportunity to develop a better communications skill set. Some good phrases to practice are:
- “Thank you for telling me this.”
- “I hadn’t thought about that before. Thanks for taking the time to tell me this.”
- “This is a good thing for me to think about. I appreciate you sharing that with me, and I will do some reflection/look to learn more.”
- Know that you will eventually say the wrong thing. Even though your intent was good, the impact of your words or actions may hurt someone. When this happens, apologize for your impact. An apology is not about you or your feelings. An apology is about acknowledging harm done and taking steps to repair that damage. Being willing to apologize when your impact does not match your intent is one of the most valuable tools you have.
Now is the time to learn how to talk about race, listen to perspectives that may be new to you, and opt in to conversations that broaden your worldview. If those conversations make you uncomfortable, lean in to that discomfort and find a willingness to learn and grow--for yourself, your business, and your community.
Sonya Dreizler is a speaker, author and consultant focused on fostering candid conversations about gender and race in financial services. She is also a subject matter expert in ESG and responsible investing, and a former chief executive officer for an independent broker-dealer/registered investment advisor. The author is a freelance contributor to Morningstar. The views expressed in this article do not necessarily reflect the views of Morningstar.