Dasarte Yarnway and Emlen Miles-Mattingly are two financial advisors who want to help diversify wealth by fixing the financial-advisor industry’s diversity problem. The barrier to entry for financial advisors can be high: New financial advisors must follow compliance, and if they want to manage assets, they must have a custodian—which is a bank that safeguards customers’ securities. According to Miles-Mattingly, startup costs can range from $10,000 to $15,000, depending on how many states you want to register in. Unsurprisingly, the industry is overwhelmingly made up of older white males.
“Often, Emlen and I are the only men of color in the room at conferences,” Yarnway says.
According to data from the Certified Financial Planner Board of Standards, 47% of financial advisors are over the age of 50, 83% are white, and 75% are male. However, the demographics of wealth, and thus the customers they serve, are changing. According to a 2020 McKinsey study, women control over a third of household assets, and this share is expected to grow. While data from the Federal Reserve show that white families hold the majority of the wealth in the United States, wealth for Black and Hispanic families is growing at a faster rate.
Miles-Mattingly points out that financial advisors tend to target families who already have wealth, rather than thinking about how to help families grow their wealth.
“In the financial-advisor world, the best way to get paid is to manage assets,” he says, “but underrepresented people often don’t have assets.”
At his own firm, Gen Next Wealth, Miles-Mattingly offers monthly financial planning for families who may not fit the typical profile financial advisors target. “We want to get people to a place where they have assets,” he says.
Marginalized groups often have trouble finding financial advisors who take them seriously or understand their specific goals. Yarnway talks about how these clients may have different goals, such as financial planning for supporting relatives living abroad, or for surrogacy or adoption. He mentions meeting a woman of color who had wealth but struggled to get good advice.
Yet financial advisors with marginalized identities, who might be able to innately understand these needs, are underrepresented, partially because the barrier to entry is so high. Last week, Miles-Mattingly and Yarnway launched Onyx, a platform geared toward helping marginalized financial advisors build their careers. The platform charges $549 per month for a subscription service that allows financial planners to access technology and business services, such as data storage, archival and customer-relationship management tools, and compliance help.
Miles-Mattingly and Yarnway estimate that Onyx will save new financial advisors about $10,000 a year in costs. They also aim to create a network, and provide mentorship and support. Going forward they hope to see 100 members by the end of the year, and have plans to increase the services they offer on the platform. “We want to make sure that we can create a gateway for anyone new who wants to come in,” Miles-Mattingly says.