Equality in Equities

A few years ago—not long after the arduous process of studying for and obtaining my licenses to act as a financial adviser had ended—I encountered something my training hadn’t prepared me for. I had just taken a leap from a steady consulting career with a reliable paycheck to a path with greater long-term potential, and eventual work-life balance, too—if I could slog through the initial years of long hours and slim wages. It was a risk. My wife and I discussed it for weeks, going back and forth on the pros and cons. The biggest question was whether I had what it takes to “make it.” When you’re starting out in financial advising, as with any entrepreneurial role, your first few years on the job are all about building a pipeline of clients as quickly as possible, establishing and maintaining relationships with them. It’s very much a sink or swim situation.

Luckily for me, having seen the number of advisers who “flushed out” after only a year or two in the business, my firm had put programs in place to help new hires. One program consisted of asking more established advisors to separate a small portion of their lower-revenue clients from their book and “gift” them to a new adviser. This helped both the older adviser, who was often grateful to have more time to focus on the top end of his book, and the younger adviser, who would be able to devote a higher level of attention and service to these clients. As an additional incentive, the firm guaranteed a payout to the gifting adviser based on certain criteria. It usually resulted in one of those rare outcomes in today’s world: a win-win situation. 

I was fortunate enough to have just such a lifeline offered to me. At the time, I shared an office with a very generous man whom I hold in high regard to this day. As I was nearing the end of my tenure with him, he offered to give me a small portion of his book of business, provided it made financial sense. We sat down to run the numbers.

At this point I learned that my firm had revised the program. Another factor had been added to the “gifting” practice: If an adviser gave a portion of his book to someone with a minority status—female, LGBTQ, or non-white—the company would give that adviser a bonus payout. With this preference on the tables, my mentor and I found that, in gifting to me—a white, heterosexual male—he would barely break even on the missed revenue. He couldn’t pass up the bonus. There wasn’t anything I could do, and I couldn’t blame him for going along. To his credit, he looked long and hard for any exceptions we could use to my benefit, but the firm wouldn’t budge. In the end, I didn’t get the book. It was disappointing. Shortly thereafter, I opened my own office, and have been building my practice ever since.

It was just a small episode, memorable to nobody but me. Nothing unique, certainly. State Street Global Advisors (of Fearless Girl fame) was recently in the headlines for hiring practices that allegedly discriminate against white males. And as R. R. Reno pointed out in the February issue of First Things, when financial firm Blackstone acquired a majority stake in shapewear company Spanx, they announced a commitment to forming an all-female board—men need not apply. 

Reading about these cases of favoritism will likely leave a bad taste in your mouth for an afternoon. When you experience it yourself, though, it stays with you.I remember the look on my mentor’s face when he had to decide what to do. I remember my own powerlessness, too. This is not the way “social justice” is supposed to work.

So how do we foster true diversity? Diversity can be a very good thing—in fact, one could say it was started by God himself as far back as the first biblical couple, when Adam and Eve, a man and a woman, formed the first family unit. But is it right, or even profitable, to cripple people’s livelihood by basing their paycheck on race, sex, or sexual orientation? 

While I certainly don’t have all the answers (anyone who claims to is probably selling something), this is a question that will only become more relevant as the elite continue their never-ending march toward ironic uniformity of thought, from the bedroom to the boardroom. 

John Norberg is a financial adviser in Frederick, Maryland.

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Photo by Metropolitan Transit Authority via Creative Commons. Image cropped.

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