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  • Getting the Good Leads can be Harder for Women FAs … Here’s Why

    September 4, 2018 by Garrett Keyes

    Discrimination against minority advisors — whether by race, gender or any other delineation — can take a variety of forms, many lawyers argue. But while certain discriminatory actions may be perfectly obvious, some are harder to identify than others, says at least one advocate of equal protections for all advisors.

    Plaintiff lawyer Lawrence Schaefer of Schaefer Halleen specializes in fighting against discrimination in the workplace. The Minnesota-based firm particularly focuses on issues of discrimination, retaliation, sexual harassment, employment contracts, and wrongful termination within the financial advice industry.

    In wealth management, Schaefer has fought discrimination against women FAs in many forms, including gender-biased client distribution practices, which he says are still far too prevalent today. He talks to FA-IQ about a particularly insidious form of discrimination: keeping the good leads from female advisors.

    Q: Discrimination can come in many forms – even in how new client leads are distributed to advisors. How prevalent are discriminatory practices in lead distribution?

    A: There has been class action litigation over this issue in the past 20 years, which is a pretty strong indication that the problem persists. The result of these class actions, however, is better state-of-the-art processes to monitor lead distribution and ensure it is done equitably. The availability of these tools gives us all hope for the future, but until these tools are ubiquitous, the problem will continue. What isn’t measured is, unfortunately, often ignored.

    Q: Why does this form of discrimination happen? How is it carried out?

    A: As long as there is discretion in lead distribution and its impact isn’t measured, there is a high potential for a gender-discriminatory impact. This happens for the same reasons discrimination often occurs: We are all more comfortable with – and more likely to reward and cultivate – people who are “like us.” Implicit bias, which operates in each of us, has to do with this phenomenon, and its prevalence can’t be disputed. The most effective cure is creating lead distribution mechanisms which take out discretion and are largely self-executing, monitoring impact, and making corrections when disparities emerge.

    Q: Does responsibility fall on firms or regulators to ensure women FAs are given the same number of new business leads as their male colleagues?

    A: It is each firm’s responsibility internally to be sure equal employment opportunity exists, and this extends not just to policies as written, but policies as enforced, an often-critical distinction. A state-of-the-art policy on discrimination or harassment isn’t worth the paper it is printed on if it isn’t enforced rigidly, without exception, and if individuals who report non-compliance fear retaliation.

    Be sure there is a complaint mechanism in place, a robust investigatory response, and the authority to take the necessary corrective action. The commitment to this process needs to be reflected by the very senior leadership in the organization.

    Regulators, from agency level to Congress to the courts, also have a critical role to play to be sure that when violations are substantiated, they are dealt with appropriately and with injunctive relief [changes in policy] when appropriate. The Equal Employment Opportunity Commission particularly must be willing to prosecute “pattern and practice” violations. [These prosecutions regularly] occurred under the prior administration but [they] are in the process of being reversed now.

    And effective lead distributions are concerned not just about objective numbers, but subjective quality as well.

    Q: Are there specific staffing needs to stop exclusionary client distribution practices?

    A: The necessary corrections more often can be accomplished by a change in policies and practices, and existing personnel committed to implementing these changes. The investigation and corrective action functions most often reside in the compliance and/or HR functions, and can be effectively performed by these functions when there is a real commitment to enforce equal employment opportunity. There may be a need to have a separate ‘ombudsperson’ – or similarly titled – office, reporting directly to senior executive leadership, to address particularly acute complaints.

    *This interview has been edited for brevity and clarity.

    Originally Posted at Financial Advisor IQ on September 4, 2018 by Garrett Keyes.

    Categories: Industry Articles
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