Breaking down the bamboo ceiling

We recently observed the month of May as Asian American and Pacific Islander Heritage Month. It’s a time to celebrate the many contributions the AAPI community has made to our nation’s history and culture. I am humbled to be the first Asian American president of the board of the Financial Planning Association.

The fact that a first-generation Korean American can rise to lead the nation’s largest membership organization for certified financial planner professionals is a testament to the profession’s intentional focus on diversity, equity and inclusion.

Many of those efforts have been focused on increasing the diversity of the financial planning profession in its entirety. All major financial planning organizations have made DEI a priority, recognizing that a diverse workforce is important to deliver the benefits of financial planning to more Americans and is correlated with financial outperformance.

The CFP Board of Standards provides a great service to the profession by publishing the demographics of CFP professionals each month. As of May 1, 24% of CFP professionals are female, while females make up 51% of Americans. Blacks and African Americans make up 1.9% of CFP professionals, while making up 14% of Americans.

Hispanics and Latinos represent 2.9% of CFP professionals, while making up 19% of Americans. Asians and Pacific Islanders comprise 4.1% of CFP professionals, while representing 6% of Americans. Clearly, the profession has much work to do if we desire a profession that reflects the demographics of our nation.

Although increasing overall representation is important, it’s equally important to ensure that planners from underrepresented communities are provided opportunities to advance after they enter the profession.

Data shows that underrepresented communities in financial services face significant barriers to advancing to senior leadership positions. According to McKinsey & Company, approximately 40% of entry-level positions in financial service firms are held by people of color, about the same percentage as in the American population. However, this share falls sharply during their careers. People of color only represent 10% of C-suite positions, a decline of 75%.

Within the AAPI community, this phenomenon is called the “bamboo ceiling.” It’s particularly prevalent in the financial services industry, where Asian Americans are often stereotyped as being good at math and are expected to excel in technical roles but are overlooked for leadership positions. While Asians represent 17% of entry-level positions in financial services, they represent only 6% of C-suite positions.

This lack of diversity and inclusion can have serious consequences, not just for Asian American individuals but also for the entire financial planning profession. It’s often said that you must “see it to believe it.”

To attract more underrepresented financial planners to the profession, next-generation planners need to see women and people of color in leadership positions. When there’s representation at the highest levels to see, it’s easier to believe.

Addressing this issue in financial planning requires taking specific actions. And we all can do our part.

» Companies must recognize the importance of DEI and commit to making real changes. That means creating a culture of inclusion, where diverse perspectives are valued and promoted and everyone has an equal opportunity to advance.

» Actively seek out and recruit diverse candidates. That could involve partnering with organizations that focus on supporting underrepresented groups and expanding outreach efforts to reach a wider pool of candidates.

» Provide training and support for employees from underrepresented groups regarding technical skills and leadership development. That could involve mentoring and coaching programs and opportunities to attend industry conferences and other networking events.

» Create an inclusive and supportive work environment for all employees, regardless of their background or identity. That could involve offering flexible work arrangements to accommodate cultural or religious practices and creating affinity groups or employee resource groups for underrepresented employees.

The invisible barriers underrepresented groups face are a significant challenge for the financial planning profession. Still, it’s a challenge that can be overcome with the right strategies and commitment to DEI.

opportunities, and creating an inclusive work environment, companies can help break down these barriers and create a more equitable profession that lifts the financial health of all Americans.

James Lee, CFP, CRPC, AIF, is the 2023 president of the Financial Planning Association and president of Lee Investment Management in Saratoga Springs, N.Y. He may be contacted at [email protected].