The financial services industry has a major problem with diversity. Despite decades of campaigning and many programs aimed at making financial services companies more diverse, most boardrooms remain predominantly White and male.
- Diversity in the financial services industry is of vital importance, and there are organizations that are promoting it. Here's a look at how change is being brought about by industry programs that are designed to encourage members of minority groups and women to make careers in financial services.
- Companies in the financial services industry—and in particular, the boards of these companies—are predominantly White and male despite evidence that diverse workforces can improve profitability.
- There are many organizations devoted to encouraging and improving diversity in the financial services industry, and many of these can offer advice to women and people of color seeking to enter the industry.
- Major banks and brokerages also offer numerous programs to support women, ethnic, and other minorities in their efforts to launch a career 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. As recently as 2019, a mere 2.7% of venture capital–backed startups were founded by women.
Ethnic minorities are also hugely underrepresented. Fewer than 3.5% of the financial advisors in the United States, for example, are Latinx or Black. Further research undertaken by Investopedia on data from the largest financial institutions indicates that corporate leadership is almost completely White and male, and that diversity metrics do not correlate with compensation.
These statistics are mirrored by those published by the federal government. A report published in 2020 by the U.S. House Committee on Financial Services, for instance, found that the percentage of employees of color at major U.S. banks is representative of that of the general population. However, an overwhelming majority of employed racial 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 that there are real benefits to bringing diversity into financial firms. Companies that have diverse workforces are more agile and more profitable, as well as more likely to improve their market share.
The suggested cost of workplace discrimination that could be reached, according to research reported by Accenture.
Organizations Promoting Diversity in Finance
There are now many organizations focused on increasing diversity in the financial services industry. These organizations typically offer training and mentoring for young adults who are 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 is an organization that 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. These programs are also designed to ensure that women already in the industry have access to the education necessary to advance into leadership roles.
- Wall Street Bound is a growing initiative designed to identify and mentor talent within minority communities. Troy Prince, the CEO of the company, together with Maverick Trading, has developed a program to bring young members of underrepresented minority groups into the financial services industry through structured training programs.
- Greenwood Project, based in Chicago, is a more regional program. This initiative, which represents several firms, aims to introduce promising students of color to industry leaders so that each can recognize the potential of the other.
- Women of Wall Street, an outgrowth of Greenwood Project, now offers a summer internship program that is open to students from across the country.
- Fintech in Action, a new program that PEAK6 has recently launched, aims to encourage women and students of color to become active in the fintech industry.
In addition to these national organizations, many cities have programs in place to support women and people of color who are breaking into the world of finance, and many universities convene meetings at which students interested in working in the 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 foci.
Here is a selection of the best of these programs:
Bank of America: Global Banking & Markets Sophomore Summer Analyst Program
This 10-week internship is designed to help college students who have finished their sophomore year gain insight into the work of an analyst at Bank of America, but its particular focus is on encouraging students of color 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. It begins with a welcome dinner with senior Blackstone leadership, followed by a resume workshop, a lunch where attendees can network, and a Blackstone analysts panel, and concludes with one-on-one mentoring sessions for attendees with Blackstone professionals.
- Type: Diversity (women only)
- Eligibility: Female sophomore students
- Location: New York City
- More information (scroll down to find it): Blackstone Future Women Leaders Program
JPMorgan Chase: Proud to Be – MBA
JPMorgan Chase offers pathways to encourage women and minorities to join its company. This particular program is designed for 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 at an early stage can learn the skills necessary to pursue their career into 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, African American, and 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, and investment banking. Students who are selected are paid for the time they spend in the program.
- Eligibility: Black, Hispanic, Native American, and LGBTQ-identifying freshmen from an accredited four-year institution
- More information: Morgan Stanley Freshman Enhancement Program
This is merely a selection of the programs and support available to individuals from underrepresented groups who want to enter the financial services industry. In recent years, there has been a huge increase in the numbers of these programs, perhaps because the industry has finally caught up with what the research has been saying for years: that encouraging diversity is not only good for students, employees, and society, but it is also great for business.