Best Programs Improving Diversity and Inclusion in Financial Services

The financial services industry has long faced challenges in fostering diverse workplaces. Despite decades of campaigning and numerous initiatives targeting greater inclusivity, the composition of most executive boardrooms in this industry still predominantly features White males.

The importance of diversity in financial services cannot be overstated. After all, diversity in priorities and viewpoints can be beneficial to a company's well-being. Recent research also underscores the significant role of workforce diversity in enhancing business performance. Companies that integrate diverse perspectives in decision-making at all organizational levels see marked improvements in efficiency and results; inclusive teams are more effective, making superior decisions 87% of the time and achieving 60% better outcomes.

Here's a look at programs that encourage women and members of racial and ethnic minority groups to make careers in financial services.

The Importance of Diversity

Recent research on the level of diversity in the financial services industry makes for sobering reading. Women, for example, still hold very few roles in finance, especially leadership roles. And only 2% of capital is 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. Despite Latinos comprising about 15% of the U.S. population, they are underrepresented in the U.S. securities industry workforce, making up only 4.7%. 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 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.

Another U.S. House Committee report revealed that among large financial institutions, insurance companies had a lower representation of employees of color (30.5%) compared to banks (42%) and investment firms (40.6%). It also noted that less than 1% of employees in these sectors were American Indians or Alaska Natives. In 2021, the vast majority (88.9%) of CEOs in the largest insurance firms were White men, highlighting significant diversity gaps at the executive level.

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. Multicultural organizations, or companies with diverse workforces, are more agile, more profitable, and more likely to improve their market share.

Organizations Promoting Diversity in Finance

Many organizations are now actively working to enhance diversity in the financial services industry. These groups primarily focus on providing training and mentorship to young adults aspiring to join the industry, and they organize educational events nationwide to further this goal.

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 various cities, local programs are established to aid women and people of color in entering the finance sector. Additionally, universities frequently host events where students interested in financial services can engage directly with industry leaders.

Industry Diversity Programs

Alongside the support offered by charities and non-governmental organizations (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.

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.

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, sales & trading, and research. Students who are selected are paid for the time they spend in the program.

Boston Consulting Group: Growing Future Leaders ​​​​​​​Internship Program

The Growing Future Leaders (GFL) Internship Program by BCG is designed to nurture talent from underrepresented groups in consulting, focusing on Black/African American, Hispanic/Latino, and Indigenous/Native American/Alaska Native students.

This 10-week summer internship for sophomores offers hands-on experience in BCG’s U.S. or Canadian offices, mentoring, and professional development. Successful interns may receive a scholarship and an offer to return as a Summer Associate. The program seeks candidates with outstanding academics, leadership skills, and a passion for problem-solving.

Bank of America's Women's Executive Development Program

This program is a collaboration with Columbia Business School. It's a comprehensive 10-month program designed for high-potential female talent, featuring assessments, both in-person and virtual development sessions, executive sponsorship, and local market engagement opportunities.

This initiative is part of a broader commitment from Bank of America to support the career advancement of women through various programs, including mentoring, sponsorship, and leadership training, emphasizing equal pay and proactive talent visibility promotion.

The Bottom Line

The diverse array of programs highlighted in this article underscores the financial industry's evolving acknowledgment of the critical importance of diversity and inclusion. 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. The commitment from leading financial institutions to these efforts signifies a positive shift towards an inclusive, innovative, and robust financial services sector.