The relationship between a client and a financial advisor must be based on trust. Clients need to feel that their advisor intimately understands their perspective, goals, challenges, and overall financial situation. And starting with some shared cultural experiences can help build that trust.
Black, Indigenous, and people of color, or BIPOC, may find it easier to speak openly with a financial advisor who shares some heritage because they may have faced the same unconscious or conscious bias in the financial sector. That could include getting blocked from accessing traditional debt options for small business owners, a lack of financial education, or financial responsibilities to families located in other parts of the world. Luckily, it can be somewhat easier today than in decades past to find a BIPOC financial advisor, but the gap is far from closed.
- Locating a financial advisor or planner of your own ethnicity is easier these days.
- Though the majority of Certified Financial Planners (CFPs) are White, virtually all ethnic groups are represented in the profession.
- Organizations exist that represent CFPs of different ethnic groups.
Though 83% of (or nearly 77,000) Certified Financial Planners identify as White in the latest reckoning of professionals from the Certified Professional Planners Board of Standards, about 4%, or some 3,700, are of Asian or Pacific Islander heritage; 2.7%, or 2,525, are of Hispanic or Latino descent; more than 1,656, close to 2%, are Black; and 0.2%, or 201, are American Indian or Alaskan Native.
By comparison, the U.S. population is about 76% White, 18.5% Hispanic or Latino, 13% Black, and 6% Asian, according to U.S. Census Bureau data.
What Credentials Should a Financial Planner Have?
There are three designations a qualified financial planner might have, but the first one—Certified Financial Planner (CFP)—is the most important. A CFP is a formal recognition of expertise in the areas of financial planning, taxes, insurance, estate planning, and retirement (such as with 401(k)s). Owned and awarded by the Certified Financial Planner Board of Standards, Inc., the designation is awarded to individuals who successfully complete the CFP Board’s initial exams and then continue ongoing annual education programs to sustain their skills and certification.
A better-prepared financial advisor has a chartered financial analyst (CFA) designation. A CFA is a globally recognized professional designation given by the CFA Institute (formerly the Association for Investment Management and Research) that measures and certifies the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas such as accounting, economics, ethics, money management, and security analysis.
If you have a situation that deals particularly with taxes and accounting, you may want an advisor who is also a certified public accountant (CPA). A CPA is a designation provided to licensed accounting professionals. The CPA license is provided by the board of accountancy for each state. The American Institute of Certified Public Accountants (AICPA) provides resources on obtaining the license. The CPA designation helps enforce professional standards in the accounting industry. Other countries have certifications equivalent to the CPA designation, notably the chartered accountant (CA) designation.
Tips for Narrowing Down Your Search
As with any financial advisor search, start by checking credentials. The National Association of Personal Financial Advisors (NAPFA) offers a checklist on how to evaluate any financial advisor:
- Talk with your loved ones about what you want to accomplish by working with an advisor.
- Create a list of advisors compiled through word-of-mouth advice, professional organizations, or lists.
- Do homework on your candidates and come up with a top three by reviewing websites, and check for any disciplinary actions. Shortcuts for that include the Financial Industry Regulatory Authority (FINRA) BrokerCheck tool and the CFP site, both of which help evaluate brokers.
- Devise a list of questions to ask the candidates, starting with asking them their approach.
- Meet them face to face, if possible, or by videoconferencing.
- Make sure that you feel confident about their experience and credentials and comfortable talking with them.
To find a Black financial advisor, you may want to check out the Association of African American Financial Advisors’ Find a Financial Advisor tool. You’ll need to enter your contact info, including a ZIP code, email, and phone number. Plus, you should think about what you need an advisor’s help with comprehensive financial planning, insurance, estate planning, taxes, etc. If no Black advisors are physically in your area, there is a virtual advisement option.
Or the XY Planning Network’s Find an Advisor feature can help you search for a financial advisor by specialty, as well as by ethnicity, language, and gender/identity.
You may also want to reach out to professional organizations such as the Native American Financial Services Association (NAFSA), the Association of Latino Professionals for America (ALPFA), or the Association of Asian American Investment Managers (AAAIM).
What Percentage of Financial Advisors Are Black?
Nearly 2% of Certified Financial Planners are Black, according to the Certified Professional Planners Board of Standards, making it the smallest percentage of non-White advisors available.
What Is a Certified Public Accountant (CPA)?
A CPA is a designation provided to licensed accounting professionals. The CPA license is provided by the board of accountancy for each state. The American Institute of Certified Public Accountants (AICPA) provides resources for obtaining the license. The CPA designation helps enforce professional standards in the accounting industry. Other countries have certifications equivalent to the CPA designation, notably the chartered accountant (CA) designation.
How Do I Find Free Financial Advice?
In many major cities, you can now get free one-on-one professional financial coaching through organizations such as the NYC Financial Empowerment Centers. Their counselors are not necessarily CFPs, but they can help with budgeting, debt management, dealing with creditors, access to emergency resources, banking assistance, and navigating the IRS.
The Bottom Line
Having a financial advisor or planner who shares your culture may add a level of comfort to working out your present and future finances. However, it is important to do your due diligence first and evaluate their credentials and experience before beginning your working relationship.