When Maria Nuñez went to the bank to apply for a home loan, she was nervous. Born in a tiny town in Puerto Rico, Maria had come to New York with her family as a teenager, eventually settling in New Jersey. Her parents had always been renters, but after a decade of steady work as a registered nurse, along with savings from her husband’s job as a welder, they had built up a nest egg and were ready to think about buying a house.
After a meeting with a financial planner that she was referred to by her workplace, Maria had assembled all the paperwork she knew she would need, but walking into the bank to meet with the loan officer was intimidating.
“I was worried because no one there seemed like they were like me,” remembers Maria. “They were all men and women in suits who seemed like they would be more at home on Wall Street than in my neighborhood.”
For many years, the financial services industry has recruited from top schools, believing that great talent would bring great returns. By hiring the cream of the Ivy League crop, big banks were positioning themselves to compete in the global marketplace. But in many cases, this focus on a specific demographic for hiring had left them with a diversity challenge.
In 2010, as part of the Dodd Frank act, the financial sector was required to identify and report on gender and ethnic diversity. In 2017 the Government Accountability Office (GAO) released a report showing the progress between 2007 and 2015, and the results were not encouraging. In 2007, 19% of the first and mid-level managers in the financial services industry were minorities. By 2015, that number rose slightly, to 22%. Far less than the population as a whole.
Encouraging diversity is generally considered beneficial, but Maria’s story shows why it’s critical. Every individual who participates in the economy needs the ability to access services and resources from the financial services industry. Yet the makeup of the profession is highly skewed, with limited representation from minorities, particularly those from lower income backgrounds.
From simple banking relationships to complex issues including retirement planning, investments and loans, the financial services industry provides a variety of products that can improve the financial wellbeing of every individual, regardless of their current financial state. The customer base of the industry crosses all genders, races and socio-economic backgrounds. But those customers struggle to find service providers who share their background and can relate to their experiences and financial needs.
In 2016, KPMG released a report detailing their socio-economic makeup, becoming the first business in the UK to publish this data. This data collection was part of an effort to rethink their recruiting process and ensure that their firm was leveraging the power of diversity to reduce potential bias, increase innovation and move the needle on their global competitiveness.
In both financial services and in management consulting, there is a new recognition that diversity is not only positive for advancing innovation, but has a direct impact on the ability to connect with customers and to create products that meet the needs of people across the entire economic spectrum.
Everyone needs to access the #financialservices industry, yet the profession has limited representation from minorities and people from lower income backgrounds. Some in the industry are trying to change that #WorkLab https://hubs.ly/H0cJlJM0