The financial services industry has a major problem with diversity. Despite decades of campaigning and the many programs aimed at making financial services companies more diverse, most boardrooms remain overwhelmingly White and male.
Diversity in the financial services industry is of vital importance. After all, diversity in priorities and viewpoints can be beneficial to a company's well-being. Here's a look at programs that encourage women and members of racial and ethnic minority groups to make careers in financial services.
- Despite evidence that diverse workforces can improve profitability, boards of directors, executives, and workers in the financial services industry remain predominantly White and male.
- Numerous organizations encourage and improve diversity in the financial services industry, many of which offer advice to women and people of color seeking to enter the industry.
- Banks and brokerages offer numerous programs to help women, racial, ethnic, and other minorities launch careers in finance.
The Importance of Diversity
Recent research on the level of diversity in the financial services industry makes for sobering reading. Women still hold very few roles in finance, especially leadership roles.
The percentage of capital invested in venture-backed startups founded solely by women.
Racial and ethnic minorities are also hugely underrepresented. For example, fewer than 3.5% of the financial advisors in the United States are Latinx/Hispanic or Black. Investopedia's research on data from the largest financial institutions found that corporate leadership is almost completely White and male and that diversity metrics do not correlate with compensation.
These statistics mirror those published by the federal government. For instance, a 2020 U.S. House Committee on Financial Services report found that the percentage of employees of color at major U.S. banks is representative of the general population. However, an overwhelming majority of employed racial and ethnic minorities are in relatively low-level positions, and very few hold senior management positions.
This ongoing lack of diversity is hurting the sector, and not just in terms of public perception. Research has repeatedly shown there are real benefits to bringing diversity into financial firms. Companies with diverse workforces are more agile, more profitable, and more likely to improve their market share.
The estimated annual cost of replacing the more than two million American workers who leave their jobs each year due to discrimination and unfairness, according to research reported by the Center for American Progress.
Organizations Promoting Diversity in Finance
Many organizations are now focused on increasing diversity in the financial services industry. These organizations typically offer training and mentoring for young adults looking to enter the industry, and they organize educational events across the U.S.
Here is a selection of the most prominent of these organizations:
- 100 Women in Finance focuses on sharing the knowledge and skills of women who have been successful in the industry. The organization is built around a network of mentors and puts interested young women in touch with funding sources. The program also ensures that women already in the industry have the education necessary to advance into leadership roles.
- Wall Street Bound is a growing initiative designed to identify and mentor talent within underrepresented communities. Founder and CEO Troy Prince and Maverick Trading have teamed up to launch the Diverse Trader Training Program. The program aims to recruit, train, and mentor diverse talent to trade and manage live capital.
- Greenwood Project creates career pathways in the financial services industry for Black and Latinx/Hispanic students. The organization has partnered with over 50 companies to enhance their diversity, equity, and inclusion (DE&I) efforts in recruitment, retention, and advancement.
- Fintech in Action, launched by PEAK6, seeks to increase the pipeline of Black professionals for careers in finance and fintech through the equitable hiring, promotion, and retention of talent.
In addition to these national organizations, many cities have programs to support women and people of color breaking into finance. Additionally, many universities hold meetings where students interested in the financial services industry can speak with corporate leaders.
Industry Diversity Programs
Alongside the support offered by charities and NGOs, most major banks and brokers now offer programs that aim to encourage women and members of minority groups to launch careers in financial services. There are many such programs, each with differing entry requirements and focuses.
Here is a selection of the best of these programs:
Bank of America: Global Banking & Markets Sophomore Summer Analyst Program
This internship helps college students in their sophomore year gain insight into the work of an analyst at Bank of America. Its particular focus is on encouraging students from underrepresented groups to train as analysts.
- Type: Early exploratory
- Eligibility: Sophomore students
- More information: Bank of America Global Banking & Markets Sophomore Summer Analyst Program
Blackstone: Future Women Leaders Program
Blackstone has long been keen to encourage more women to join the financial services industry, and this program is one of the ways they do that. The program is a two-day educational event that allows Blackstone to build a network of candidates for its internship and full-time programs.
- Type: Diversity (women only)
- Eligibility: Undergraduate women
- More information (scroll down to find it): Blackstone Future Leaders Program
JPMorgan Chase: Proud to Be - MBA
JPMorgan Chase offers pathways to encourage women and minorities to join its company. This particular program enables LGBT graduate students to meet with existing LGBT-identifying members of the JPMorgan Chase team. The program is designed to build into an internship program so that students who join early can learn the skills necessary to pursue careers in higher management.
- Type: Diversity (LGBT only)
- Eligibility: Graduate students who self-identify as LGBT
- More information: JPMorgan Proud to Be - MBA
Morgan Stanley: Freshman Enhancement Program
Morgan Stanley's program gives LGBTQ+, Native American, Black, and Latinx/Hispanic students a chance to experience the industry firsthand.
One of this program's major advantages is the range of experiences it makes available. Participating divisions include wealth management, global capital markets, investment banking, and sales, trading, and research. Students who are selected are paid for the time they spend in the program.
- Type: Diversity (Black, Latinx/Hispanic, Native American, and LGBTQ+)
- Eligibility: Black, Latinx/Hispanic, Native American, and LGBTQ+ first-year students
- More information: Morgan Stanley Freshman Enhancement Program
What Does DEI Mean?
DEI (or DE&I) stands for diversity, equity, and inclusion. The term describes programs and policies that encourage participation and representation from diverse groups. The goal of DEI is to hire a diverse workforce and have systems in place that give all workers a voice and include them in business happenings.
Concerning DEI, diversity refers to the many ways people differ, such as race, ethnicity, nationality, age, gender identity, physical ability, mental ability, socioeconomic status, experience, and education (among others). Equity means fair access, opportunity, and advancement for everyone to create a level playing field. Finally, inclusion is the extent to which employees and other team members feel a sense of belonging and value within an organization.
How Does Diversity Help Companies?
A diverse workforce offers a variety of perspectives, which is essential when planning and executing a business strategy in a regional or global market. Studies show that diversity drives employee productivity, fosters innovation and creativity, leads to faster problem solving and better decision making, improves employee retention, and increases profits.
How Many Women Are Fortune 500 CEOs?
The number of women running businesses on the Fortune 500 list hit an all-time high of 41 in 2021 (the most recent list); two Black women were among the group. The 67-year-old Fortune 500 list is a closely watched metric among those tracking gender and racial diversity in the country's largest companies. While 41 is a record, it means that just over 8% of Fortune 500 companies have women at the helm—so there is room for improvement.
The Bottom Line
The programs included here are just a small selection of those available to individuals from underrepresented groups who want to enter the financial services industry. In recent years, there has been a substantial increase in the numbers of these programs, perhaps because the industry has finally caught up with what the research has been saying for years: Encouraging diversity is not only good for students, employees, and society, but it is also great for business.