There are plenty of reasons that socioeconomic diversity can contribute to a more creative and vibrant workplace. In fact, almost every single bank claims that such diversity helps the growth of their firm. In fact, it has become a buzzword for so many employers.
But how much diversity is really present within the industry? Simple test: for all of you who work/have an internship in finance, find out how many people in your office come from a family who makes below $48K. All my friends who tried this found at most one person with this economic background. Well, I guess in a society where being a rich dumb kid gives you a higher chance of graduating from college than a poor smart kid, it’s not surprising the upper-middle class and upper class kids are the ones heading towards finance. With networking being such a crucial part of finance, it is inevitable that kids from better-off families who interact with other better-off families inevitably have a higher possibility of landing a connection that will help them in their financial career.
Buffet got exposure to the world of finance because his father was a stock broker. Some kid in a lower income area probably gets exposure to the drug trade in the neighborhood he is in. Who is more likely to work in finance, and who is more likely to deal drugs? That’s the inevitable tragedy of income inequality hindering social mobility (I’ll refrain from debating this issue now, but I might just right up an analysis of this issue if enough people want me to…)
Children born into better-off families receive better education, have better connections, and have little to no pressure to helping put food on the table. No wonder they don’t have time to look up how to make discounted cash flow models on the internet. Here’s my problem with this phenomena from a human resources standpoint: we have a large pool of applicants with a lot of potential, but not the right education. Why is no one reaching out to them?
Granted, some areas of finance such as trading is more accessible to those without prestigious connections, but other areas such as investment banking and wealth management have a surprisingly low level of socioeconomic diversity. I feel as though this pool of talent has to be tapped into, and someone really should see the potential of many kids who don’t have the luxury to explore the financial services industry. In addition, the morals and ways of thinking of the entire industry may change if we substitute some arrogant upper-middle/upper class kids for their humbler counterparts who simply didn’t have a shot at a job because of personal constraints.
I’ve talked to enough recruiters that I understand three important criteria for hiring that doesn’t rely on having an expensive degree and well-off family:
1) Be smart
2) Learn fast
3) Be a team player
These are criteria that almost every single recruiter desires, but in fact may be extremely pronounced in certain kids who didn’t have the luxury to explore this industry. The problem with the industry is that the elite university douchebags to honest, humble workers is much too high. (not to generalize and say everyone who graduates with an econ degree from an elite university is a douchebag, but there certainly is enough out there to change the collective conscience in the financial sector)
Government regulation is debatable in terms of “making finance better”, but tapping into an undervalued labor pool full of potential is certainly something more human resource departments should be looking to do.