Diversity central to US Bank’s ambitious growth plans
Recruiting a more diverse roster of investment professionals is key to US Bank’s mission of attracting assets from a broader client base
Scott Ford, recently promoted to US Bank’s president of wealth management and today overseeing $439bn in client assets and 3200 professionals, is passionate about diversity and inclusion (D&I) – but not for its own sake.
Recruiting a more diverse roster of investment professionals is the key to his mission of attracting assets from a broader base to meet an ambitious goal of doubling assets and numbers of wealth management clients to 1m, over the next three to five years.
US Bank, the fifth largest banking institution in the country, already serves 13m households. But through its growing wealth management capabilities and client segmentation approach, with Ascent Private Capital Management catering to ultra-wealthy families and family offices launched in 2011, the bank can aspire to serve many more, believes Mr Ford.
He was previously at the helm of the firm’s affluent business, having joined US Bank in 2021 from JP Morgan Chase, where he served as a wealth management director for the New York region. Mr Ford has experienced firsthand how challenging it can be for “diverse” people to advance their career in a predominantly white, male industry.
More than just a moral issue, attracting and retaining people from all walks of life is a “talent strategy”. If this is not followed, it would amount to a “missed commercial opportunity”, he says.
“People of colour and women are underrepresented in this industry, and I think we could do a much better job of trying to attract these people into the wealth management space, making sure they have the support to be successful,” he says. Firms that do not evolve alongside the changing fabric of US society risk getting left behind by the next generation of clients, he adds.
Although women represent more than 50 per cent of the US population, they account for only a third of licensed financial advisers. With the amount of wealth women control, it is a “cultural imperative” to hire women, he believes.
African-Americans make up 15 per cent of the overall US population, but are represented by less than 7 per cent of financial advisers. Similar stats apply to Hispanics, now 20 per cent of the population and forecast to grow.
Mentorship is crucial to promote equity, he says, recalling his “lonely endeavours” at the start of his 20-year career. “There's a lot we can do in terms of support networks and development to help diverse people get a leg up,” suggests Mr Ford.
Firms also need to find the right balance between fixed salary and bonus components to attract diverse talent. Women may be the principal breadwinners in their family and reluctant to work according to “a heavy, variable compensation scheme”.
Improving the industry’s tattered image is vital to attract new recruits. “Wealth management isn’t necessarily top of mind for generations coming out of universities. If anything, a lot of what they are seeing are negative headlines,” he says.
Talented people come from all walks of life and kinds of backgrounds, and not from the same school in the same neighbourhood. “It's about looking for talent in all places” and then making them feel welcome, which is the “real magic” of any D&I strategy. “You can hire a bunch of people, but if they don't feel included, ultimately, they won't stay. I do believe diversity begets diversity.”
Investing in people
It is also important to “home grow” wealth advisers, instead of relying on hires from competitors. Firms must be willing to make investments in people and build out that “next generation of great talent” in a people-intensive business.
“Money is highly emotional, so you need people with empathy skills and emotional intelligence, helping clients think through their decisions,” arming them with information to help the best possible outcome, says Mr Ford.
These soft skills can also be taught, he maintains, and meaningful progress achieved within the context of a goal-based planning approach, rather than product-pushing.
To best engage clients, including women and ethnic minorities, it is crucial to ask directly what they want and need, to make sure offerings and service delivery are appropriate. The way private banks really distinguish themselves from the competition is how they deliver their service and engage with customers, he says.
According to the bank’s recent research, women, especially older ones, are less confident in their knowledge of financial matters and planning, with industry jargon also causing anxiety. “We've got a lot of work to do there,” admits Mr Ford, stressing the importance of engaging with women “in a meaningful way, that resonates with them”, through creating better training. “Generally, men have not done a good job of engaging with women and listening to women.”
The bank’s study also shows black people are somewhat distrustful of financial institutions, given historic patterns of racism and institutional discrimination policies, like “redlining” relating to mortgage lending. “Representation is a big deal for black communities and having someone that understands them, their culture, their journey and where they come from is vital,” he says.
Diversified approach
US bank has been “very deliberate and intentional about attracting the diverse workforce of the future”. In the bank’s private wealth and affluent businesses, catering to high net worth and affluent clients respectively, around half of adviser hires have been diverse candidates over the last two years, with particular emphasis on women. “We've got a little bit more work to do in the ultra-high net worth segment, but I'm proud of the results we've got up to this point.”
Younger generations are also key to any private bank’s survival and understanding their needs is a high priority. “All private banks are trying to build a relationship with younger generations early in their financial lifecycle, otherwise they risk missing the boat,” says Mr Ford.
Robust digital tools are a “must have”, but advisers need to be always available too. Product innovation is also crucial, with a great deal of interest today in cryptocurrency and artificial intelligence (AI).
Sustainable and impact investing is vital for younger cohorts. According to the bank’s recent study, 85 per cent of Gen Z active investors would accept a return below the average return of the S&P over the last 10 years, if it reflected their values and supported causes they care about.
The whole notion around ESG and even, to a certain extent, equity and inclusion, has become “highly politicised”. But the wealth and asset management sector can add value by “staying anchored in facts and taking emotions out of arguments, cutting through the noise”. It is straightforward to prove, for instance, that companies with greater female representation on their boards of directors tend to outperform their peers over time.
For some clients, though, especially boomers, sustainability is less top of mind than it once was. Today, most clients are concerned about inflation, market volatility and economic uncertainty, and some of “the most pointed questions” are around AI. “It is at times like these that advisers demonstrate their value and what they bring to the table,” he says.
While a narrow business model, highly concentrated in specific remunerative client types, such as serial entrepreneurs, may work well short-term, it is useless in the long term, he says, as Silicon Valley Bank’s collapse demonstrates.
His wider job gives Mr Ford the opportunity to look across the entire breadth of the wealth management organisation, making sure “teams work better and more collaboratively”, removing roadblocks and obstacles. “What is important is to get the client to the very best person or the very best team of individuals to serve their needs,” he says, explaining the bank has been getting “a lot better” at that.
“I very much believe in a very diversified approach. We should not put all eggs in one segment type of one client. Having a very broad set of capabilities to serve the needs of many clients gives you a much more balanced and stable business over time.”
