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FINRA examining itself and seeking industry collaboration on racial equity

From left to bottom, Association of African American Financial Advisors Chair Lazetta Braxton, FINRA CEO Robert Cook and National Association of Securities Professionals board member Nadine Mentor participate in a panel at Quad-A's virtual 2020 Vision conference.
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FINRA is working on racial equity from multiple angles and CEO Robert Cook is examining his own actions, he says.

“It all starts with individual accountability,” Cook said in a panel at the Association of African American Financial Advisors’ virtual Vision conference. “It all depends on how individuals change their own personal behavior. And as I was reflecting on that, I decided I really ought to ask myself, what steps will I personally take and how will I change my behavior?”

His comments come amid renewed focus on the severe lack of diversity in wealth management. Fewer than 4% of CFPs are Black or Latino even though the two minorities comprise more than 30% of the U.S. population.

Cook’s self-described “modest steps” have included studying the history of racism in the U.S., engaging proactively in “meaningful and necessary conversations about racism and racial injustice” and insisting on more job candidates who are Black, Latino or other minorities. He first made the promises in a LinkedIn post in June entitled “Making it Personal.”

After FINRA’s Board of Governors meeting that month in the wake of the murder of George Floyd and subsequent nationwide protests, Cook set up a task force assessing the self-regulator’s own organization, identifying areas of industry collaboration and promoting inclusivity.

Lazetta Braxton, chair of the Quad-A professional association for Black financial professionals, and fellow panelist Nadine Mentor, a board member of National Association of Securities Professionals, praised FINRA’s approach.

“We appreciate this conversation and this discussion to know that, as the head of FINRA, this is something that's important to you, because it's important to us,” Mentor said. She added that “my heart is very warm” hearing Cook’s words since “it needs to start from the top.”

Mentor asked Cook what FINRA’s role is in combating racism and how firms and regulators can get involved. FINRA aims to ensure that the “momentum that we've seen today translates into meaningful action,” Cook said.

In addition to diversity and inclusion efforts that have been in place for a decade at FINRA, the regulator’s task force is seeking to partner with historically Black colleges and universities to boost interest in the SIE exam. It will also launch a retrospective rule review “to see if there are any unintended barriers to greater diversity that we might be creating,” Cook says.

FINRA’s advisory committees will explore how the regulator can work with its members to grow the number of Black, Latino and other minority professionals. And its investor education foundation is trying to build up its financial literacy programs in underserved communities.

“A lot of really good ideas have come up and we wanted to develop a process to make sure that we’re systematically following up on them,” Cook said. “We know how to get a big, heavy lift done when it comes to a big technology project or a big rulemaking or a big organizational change. Let's apply those same skills to this initiative.”

Mentor and Braxton pledged that their organizations stand ready to work with FINRA on the efforts.

“You can guarantee that we will continue this conversation,” Braxton said. “We have to do this together. It's going to take a lot of hands, a lot of effort, a lot of energy and a lot of compassion as well.”

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