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Avoiding Blind Spots in Your D&I Initiatives

The Data Possible Podcast

Episode 11: Avoiding Blind Spots in Your D&I Initiatives

Guest: Bob Skea, Chief Executive Officer, Discovery Data

Summary: Discovery Data recently released a new Diversity & Inclusion (D&I) dataset and 2021 Closing the Diversity Gap research report which captures the current state of diversity and inclusion initiatives within the financial services industry and what can be done to improve them. In this episode of The Data Possible Podcast, Bob Skea, CEO of Discovery Data, joins the show to talk about the firm’s new research study, the data behind it, and why it is so important that we all focus on diversity like a blind spot. You will learn:

  • The types of D&I insights available in Discovery Data’s new dataset
  • What readers can expect to learn from the accompanying research report
  • Strategies firms can use to diversify their advisor teams
  • How D&I initiatives have evolved in the industry over time and why they are so important today
  • How Discovery Data hopes to have an impact with its D&I work

Resources: Closing the Diversity Gap Research Report Summary | Diversity & Inclusion Data | Discovery Data

The Data Possible Podcast is produced by our partner, Advisorpedia.

Podcast Transcription:

Doug: Hello, and welcome to The Data Possible Podcast presented by Discovery Data. This is your host, Doug Heikkinen. Today, our guest is Bob Skea. Bob is the CEO of Discovery Data and sits on the board of directors at various New Jersey organizations. He’s been an advocate for implementing diversity and inclusion initiatives in his professional career, as well as through his efforts with the All Stars Project of New Jersey at Rutgers University. Welcome to the podcast, Bob.

Bob: Thanks, Doug. Appreciate it. Thanks for having me on.

Doug: You recently announced a new dataset called Diversity & Inclusion. D&I is a hot topic these days. What does this data provide and how can the financial service industry benefit from this type of insight?

Bob: Yes, thanks. So our Diversity & Inclusion data, which we came out with a couple of weeks ago, is, I think a really timely and important dataset for the industry. My colleague, Saleem Khan, our Chief Data and Analytics Officer, worked really hard to put this together. And what provides in short is diversity metrics on financial advisors, brokers and insurance agents, which is our primary foundational data, that will allow our clients to really perform actionable intelligence primarily around recruiting and those they want to work with. It has various facets to it. So to give you a little bit of another click deeper on this, it provides diversity data amongst across seven different races, 180 different ethnicities, 170 languages, and other types of information relative to assimilation levels, etc. So what it’s going to allow our clients to do is incorporate into, primarily their recruiting processes, such that they can recruit candidates that better reflect the clients and communities they are trying to serve. And that’s a huge issue for the financial services industry right now. So we’re excited about it. It’s off to a great start. Saleem has been very busy since we launched two weeks ago talking to clients and prospects and others and a lot of excitement around it. We believe it’s the first algorithmically derived dataset of its kind. That is to say, there are other datasets out there that provide various forms of information but we believe it’s the financial services industry’s first aggregated and kind of model-enabled diversity enabler. So in that regard, we’re really excited about it.

Doug: Those are impressive numbers. But Discovery Data always has impressive numbers. So in addition to the dataset, you recently published a research report called Closing the Diversity Gap. Tell us about that report and what readers would expect to learn.

Bob: Yeah, so again, though, it was also Saleem who authored this with the help of others internally. It’s a pretty broad look at what we see as being or what the industry sees as being that this statistical analysis of how we are serving the community. We went out to hundreds of our clients and firms, advisory firms, and ask them a series of questions in the survey around their thoughts on the topic of diversity, what initiatives they had underway, what tools they use today, or maybe planning to use, where they are in the evolution of their D&I initiatives. We also got some key stats about the industry itself, in terms of demographics and the mismatch of coverage or the professional advisory populations that currently serve the communities. There’s clearly a gap there. That’s what we mean by closing the diversity gap. The industry, we believe, is a little bit out of sync, in terms of its coverage. And that’s really important. And the reason it’s important, and most firms agree, almost everybody has an initiative underway. But the reason that’s important is because, wealth and investment power, if you will, buying power, is growing very quickly, amongst underserved communities. And in order to serve those communities, we believe it’s important, I think the firm’s now believe it’s really important to reflect that community in a meaningful way. So if you are trying to develop a business and for example, Koreatown, Los Angeles, you might want to have Korean speaking agents or advisors. That’s not easy to do. And so trying to reflect the communities that you serve, so as to satisfy and frankly capitalize on the growing wealth amongst underserved communities, is a really important topic right now in the industry in particular. So that’s what the survey gets to is a lot of really interesting insights that we can dig into a little bit, but we’re excited about that. And I believe that it launches in this coming week.

Doug: I got a copy of the report and it’s no surprise that the financial service industry does not reflect the general demographic trends in the U.S. Hispanics and African Americans being the most underrepresented groups. What are some of the ways firms can diversify their advisor teams?

Bob: So to your point, the Hispanic, and African American populations are underserved by 11 and 10%, respectively, whereas the Caucasian population is overserved by 20%. But more African Americans opened up investment accounts during the pandemic than in any previous year. And so the interest amongst investing for African Americans in particular and other populations, Hispanic incomes are growing at a faster rate than any demographic, including Caucasian. So the need for this is important from a business perspective. How can they go about it? Well, first it takes a commitment. If you saw the report, you saw that most firms are focused on this in some way, shape, or form. The question is, what level of conviction do you have around it? How long have you been at it? Do you have someone dedicated to it? So there’s a lot in the report about what the industry is doing as a whole. But one of the findings in the report says the longer you stay with it, the better results, you’re going again, now that sounds like no surprise, right. But I think that the aha moment there is that unless you stay with it, it will fizzle out, right? You have to maintain a level of conviction over time to do this. So that’s the first thing is the belief and this as a both a social imperative but also a business imperative. Most firms, many firms now believe this is very good business overall. The second thing is using proper tools, whether that’s earnings tools or types of software. Many firms are using third party consultants. But data is on the rise. Data is the oil and the engine of this type of initiative. We think we can be helpful. And so it’s a combination of factors. It’s commitment, it’s awareness, it’s ongoing passion, and then using the right tools, inclusive of data, to make sure you can get to the outcomes you want to.

Doug: You’ve been in the financial services arena for over 30 years, both large and small firms. You’re not alone. How has the concept of diversity and inclusion evolved over those years in your experience, and why is it so important today? You started to touch on that earlier.

Bob: Yeah. I was really fortunate. I worked for one of the JPMorgan Chase predecessor banks, Chase Manhattan Bank, back in the day, in the 90s. I was very fortunate to be on something called the Diversity Council, in the mid 90s, I think was 96/97. I ran our Latin American effort for the business I was in, I spoke Spanish a lot better than I do now. But consequently, I was I was on a Diversity Council and, to my knowledge, or at least my awareness at the time, Chase was out in front of this, relative to other banks and other firms, frankly, in having a Diversity Council on awareness. And I learned a lot on that Council, I’m a city kid, I’m from Jersey City, which is one of the most diverse, large cities in America. It is literally equal parts, 25% of you will, Asian, Hispanic, African American, and Caucasian, almost 25% each. And so I grew up around diversity but when I got to the street, when I got to financial services, it was a little different. And so this Diversity Council was something I got a lot of interest in. And I learned on that something from an executive that I’m still in touch with. He actually sent me a note the other day, I won’t use his name. But he taught me that diversity was something that needed to be focused on like a blind spot and I asked him what he meant by that. He said when you’re driving your car, and on your back right wheel, well, it might be a car, but you can’t see it and you have to lean forward in your seat almost over the steering wheel to look out your sideview mirror to see whether there’s somebody there or not. I said, yeah, I know what that is. He said, that’s diversity. He said, unless you’re leaning forward to look, you’re not going to see it, that you’re not going to see that you’re lacking in it. And so why is that? He said, well, it has to do with comfort zones, it really has to do with, how we are the human condition is. We just tend to stay with folks who are like us. And so overcoming that, if you will, that comfort zone requires an overt action to break that inertia. And I’ve never forgotten that, the blind spot aspect of diversity. And these days it’s become a social imperative. I work on the board of a couple of charitable organizations, one in particular, here in New Jersey, the All Stars Project of New Jersey, it’s a national organization, I sit on the New Jersey board. And it really works with the high school level, kids, if you will, from underserved and frankly, poor communities. And invariably, they’re their kids of color, to try to introduce them to how to network, how to how to make eye contact, how to get them internships, etc. But it’s really all about confidence. And so the reality is, to me, this is a grassroots type of effort. And over the years, we’ve had an issue in the financial services industry with respect to making sure we are seeing those blind spots and overcoming them. But as someone who has hired after 35 years, you hire a lot of people, either directly or indirectly, someone who has hired hundreds of people, it’s also not easy even when you’re aware of it. Finding qualified candidates of diverse backgrounds is hard to do. We know it makes good business sense, but sometimes it’s hard to do. And that’s where the tools come into play. So I would say that the industry has evolved. I was involved very early on. I think there’s always been an awareness. But I think there’s a heightened sense of social awareness now. It’s a social imperative, but it’s also a business imperative. It makes really good business sense. And those two are intertwined. Ultimately, it’s about networks, whether it’s social networks, or business networks, those things have increasingly become intertwined. And it’s important for us as an industry to focus on. I heard the podcast you did with Kate Healy, on The Data Possible Podcast, which I thought was great. Kate talked about more of a grassroots, financial literacy aspect of this. And I think that’s critically important. It’s really important. Because ultimately, there will be a trust factor here. Undoubtedly, for certain types of backgrounds, demographic, underserved populations, they won’t necessarily have the trust factor of working with a financial adviser or wealth manager, as their wealth grows. One of the stats in the report, it says that only 18% of Asian Americans, which is a very wealthy population, only 18% of Asian Americans use financial advisors, versus the population overall, which is 26, or 27%. Right. And that’s cultural, that’s a trust factor. And so the industry needs to understand that in order to service that community, they probably have to build that trust. And I think the best way to do that, is by working by employing folks who speak the same language as your prospective clients. And make sure you can build that trust. So overall, the industry has come a long way, and still has a way to go. But the good news is, I would say, the awareness now is more keen than it’s ever been in terms of what needs to be done. And I think the tools and the data available now are going to make that easier going forward. And we’re just really happy to be doing our part to be part of that solution. Because we at Discovery Data believe this is important from a number of different angles. And we’re happy to be part of the solution.

Doug: Bob, do you think that financial services has been a very welcoming place for diverse individuals to join?

Bob: I don’t. That’s the short answer. I don’t and it’s a matter of degree, right, I believe in this from me, I believe in this from the kind of farm system perspective that we need to introduce the industry to folks right out of school or right out of college, if you will, and it kind of demystify the language of financial services. I have kids in their 20s and I talked them about some of the terminology we use, it’s really not that complicated, but I think we get the reputation as being hard to understand, and it’s not. So I think we need to demystify the language we use and the concepts and be a little more welcoming. And so, I think it’s a vicious cycle, if you will, to the extent that certain populations are overrepresented and others are underrepresented, again, unless you make an overt action to change that. It’s not going to change on its own. And we’ve got to do our part to embrace diversity and embrace these communities to make sure we can truly represent the community as a whole.

Doug: Yeah, the report’s fantastic. So how does Discovery Data hope to have an impact on the industry with D&I initiatives?

Bob: Yeah, well, in working with our clients, this is very real, we think we can help our clients to achieve their goals, their hiring goals, and better reflect these communities. It’s very large, brokerage firm that is a client of ours, remain nameless, has been a recruiting client of ours for many years. Having specific conversations down to the level of, we need to hire more Hispanic and Spanish speaking advisors in the Greater Portland region. I mean, that’s how specific it gets. We need to hire more Asian speaking professionals or more Japanese speaking professionals in San Francisco. And so these are very specific needs that that our clients have. We believe that our data, the way it’s derived, using both the incoming data from various sources as well as the machine learning we have, can help them get to better outcomes faster, right, and be more straight through in terms of who they should focus on. So we hope to help our clients first and foremost, I think the broader good then will be where we, as an industry better reflect the communities that we serve and start to close this this gap that we see in the report that we’re coming out with.

Doug: Where can listeners go to learn more, and maybe even download the report?

Bob: Yeah, We’ll also be distributing this through social media networks, certainly LinkedIn and Twitter etc. But we’d love to talk to whomever about how we can help them achieve better outcomes for their for their hiring practices.

Doug: Bob, thank you. It’s been quite a pleasure talking to you.

Bob: Pleasure’s mine. Thanks so much, Doug. Appreciate it.