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Don’t Overlook the Importance of Advisor-Client Compatibility

It’s no secret that the financial advisory profession is far from diverse. As of 2020, a full 82% of advisors are White and just 16% are women, according to the Financial Planning Association (FPA). Even worse, less than 4% of the industry are Black or Latino. As the country continues to grapple with the #MeToo movement and last summer’s racial justice protests, these numbers aren’t just disappointing, they are appalling.

To its credit, FPA has pledged to address this problem and has taken recent steps to make financial advisory a more representative industry, launching a Diversity & Inclusion initiative aimed at creating a “truly inclusive environment where people of diverse backgrounds are welcomed, supported and encouraged.” The effort includes education programs, discussion sessions, special events, D&I support for members and more. It’s a good first step, but it won’t solve the industry’s diversity problem overnight. Progress is being made, but we aren’t there yet. Advisors are going to be White, male and middle class for the foreseeable future.

That is the challenge. The opportunity is in expanding the concept of advisor-client fit to reframe the discussion around financial personality rather than solely on demographics.

How to find a financial advisor with whom you are compatible

The truth is your advisor doesn’t necessarily have to look like you as long as they think like you. Forget the demographics, it already is possible to find a financial professional who fits your unique style and goals, even if you both don’t share the same background.

Diversity is about more than just color or gender. It is multifaceted. True diversity should be evaluated based not just on superficial and visible factors but also on an individual’s experiences that impact how differently or similarly they see the world. Diversity in age, in socioeconomic status, in educational background and more can all play a major role in how we relate to one another and make decisions.

For example, two middle aged white men might have different filters to the world around them based on their backgrounds that can between them bring very diverse perspectives to their work. Similarly, two people from different demographics can have extremely similar views. There is no one definition of diverse.

Does your financial advisor match your financial personality?

That’s why compatibility can be such a powerful force in the advisor-client relationship. Your financial personality as an investor comes down to several set factors – purpose, security, relationships and viewpoints. 

Do you look for deeper meaning and purpose in your investments? Are you focused on providing peace of mind? Or do you think of investing as a way to form meaningful relationships or to tap into intellectual satisfaction? 

We all have different answers to those questions, based on a wide variety of factors, and they guide how we think about our portfolios. The same applies to professional investors. Some are more purpose-driven, some are more risk averse and some are focused on providing clients with portfolios that build stronger connections between people, their advisors, and their wealth.

The bad news is the financial advisory industry still has a long way to go on demographic parity. But, by looking at diversity from all of its different angles, clients can still find the right advisor to work with even if they don’t look just like them by matching their financial personalities. That way, they’ll know that they are compatible in the ways that matter most to their portfolio, and their long-term relationship.



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