African Americans and the Financial Services Industry

Article excerpt

Introduction and Background

Before 1970, there were relatively few African Americans employed in professional positions in the financial services industry. Commercial banks, brokerage houses and investment banking firms recruited African Americans for the first time. Most of these institutions were unaware that their decisions would have a lasting effect on an industry traditionally the exclusive enclave of Ivy League educated White men. Twenty years later, while some African Americans are routinely courted by the nation's most prestigious financial institutions, they remain under-represented in the industry. What caused the change in attitude toward African Americans is not as important as the experience African Americans have acquired in the industry.

The number of African Americans in the financial services industry has always been relatively small compared to the number of African-American people who held undergraduate and graduate degrees that were generally accepted as appropriate training for a career in the industry--accounting, business, economics, and finance. Most of the opportunities made available in the industry were for positions with commercial banks; the African-American investment banker was a novelty at best. And rarely if ever were those African Americans selected for professional or career management positions in commercial banking placed in corporate finance or other high profile divisions of the institutions that recruited them.

Today, African Americans represent approximately five percent of the 1.6 million people in the financial services industry and 8.6 percent of the 766,000 financial managers. The reasons for the number of African-Americans in the industry have less to do with the available pool of qualified African Americans than with the dynamic changes in the financial services industry that resulted in a very competitive environment. There is more competition for business, more competition for new markets. As a result, there is more competition for the best talent. Every aspect of the financial services industry has changed since the early influx of African Americans.

Further, the political landscape has changed dramatically since then. Indeed, the aggressive leadership of Black elected officials and demographic changes have contributed to the "coloring" of the financial services industry. Even legislation at the national level has sensitized many in the industry about the need to continue to diversify all financial services, notably the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA). This article examines the trends in traditional and non-traditional professions of the financial services industry, conventional and non-conventional roads to employment in the industry, and future opportunities within the financial services industry for African Americans.

Recent Trends in Employment of African-Americans

No matter what the level of progress for African Americans in the financial services industry, a major concern among African Americans in the financial services industry still focuses on the relatively few number of Blacks in the industry. Their concern is not without merit.

For example, during the last ten years, the number of African Americans in the commercial banking industry and the securities industry has grown slightly. In 1983, there were 177,000, Black employees in the commercial banking industry, 45,000 males and 132,000 females. A total of 28,000 African Americans were employed in the securities industry, or less than 20 percent of the total number of Blacks in the commercial banking industry. Black males held fewer than half the positions of Whites in the securities industry.

Total Black employment in the commercial banking industry represented 9.7 per cent of the total, in 1983. In the securities industry, fewer Blacks were employed. In 1983, African Americans represented 5.9 per cent of the total number employed in the securities industry. …