Have you ever noticed someone adjusting their behavior or speech depending on who they’re interacting with? A good example of this is when President Obama was filmed entering the locker room of the 2012 U.S. men’s Olympic basketball team. There is a clear difference in the way he greets NBA player Kevin Durant, who is Black, and how he greets the (white) coach.

The way Obama effectively “switched” or adjusted his greeting style is often referred to as “code-switching,” and it can occur consciously or unconsciously.

In general terms, code-switching happens when someone adjusts their speech, appearance, expression, and/or behavior to adapt to the environment around them. It can be adopted – consciously or unconsciously – by individuals of any race, gender, or socioeconomic status. According to a survey conducted by Pew Research Center, “four in 10 Black and Hispanic adults and a third of whites say they often or sometimes feel the need to change the way they talk around others of different races and ethnicities.”¹

Diversity is increasing in the financial services industry

If you’re wondering what code-switching could possibly have to do with your role as a financial professional, consider this: According to the CFP Board, of the 5,214 new CFP^® professionals certified last year, nearly 15% are racially or ethnically diverse, making the class of 2022 the most diverse class in the Board’s history. Furthermore, nearly 30% of new CFP^® professionals are women, and more than 50% are under age 35.²

With the financial services industry becoming more diverse and trending younger, it stands to reason that code-switching may become more prevalent among members of your team. But that’s just one aspect of increasing diversity that leaders need to be aware of. As your team grows – and likely grows more diverse – how can you promote inclusive practices? More pointedly, why should you?

The benefits of team diversity

Being part of a team – particularly a diverse team – allows us to leverage each member’s unique talents and perspectives. That’s why being able to create a safe environment where everyone is encouraged to explore their individuality within the team is priceless. Furthermore, creating an environment that supports diversity of thought not only helps attract and retain a diverse group of employees, but it can also have a positive impact on the bottom line.

When employees work at firms where they feel like they can be their authentic selves, they are more engaged, which can help the organization be more successful. And this isn’t just a theory – research shows that inclusive workplace cultures lead to increased profitability.

For example, a 2019 McKinsey & Co. study revealed that companies that ranked in the top quartile for racial and ethnic inclusion were 36% more profitable compared to those in the fourth quartile.³ What’s more, industry leaders recognize the power of promoting diversity and inclusion: According to a PwC Global survey, 85% of financial services CEOs said it helps advance business performance.⁴

Creating an inclusive environment

So, what steps can leaders of financial teams take to help members feel empowered to be their authentic selves? Here are a few ideas:

1. Establish a value proposition. While inclusion is something that is arguably best achieved through actions, it can be helpful to put your firm’s commitment to the practice into words. Creating a firm-wide value proposition gives team members a tangible point of reference to help guide their behaviors and interactions.
2. Focus on culture (and cultural differences). Building culture doesn’t come from a firm’s employee handbook. Rather, it is planted and nurtured, and it blossoms when employees feel a sense of belonging. And because people are the life blood of an organization, creating this sort of dynamic environment where people feel they can be who they are tends to create synergies and lead to higher performance. But how, exactly, do you go about building your firm’s culture? One way is by giving team members the opportunity to raise awareness of their own backgrounds and cultures, and by encouraging them to provide input on recruiting efforts and firmwide policies.

3. Lead by example. Firm leaders play a pivotal role in creating an environment of trust where employees feel they can bring their uniqueness to the table. When employees witness for themselves the acceptance and celebration of diversity by leadership, they are more apt to comfortably share ideas, take more risks to further the efforts of the firm, and embrace who there are.

4. Be committed. Creating and maintaining an environment that encourages team members to be their authentic selves requires a deliberate approach. A good place to start is to understand where the team stands today, determine where it is the team wants to go, and then develop a plan to get there. That means not only proactively soliciting feedback, but acting on it, and then committing to the direction the entire team has helped set for the long term.

Taking these steps admittedly requires leaders to be vulnerable and practice humility. But if we can build teams that encourage members to bring their differences to the table, the resulting diversity of thought can be a powerful differentiator. Ultimately, embracing diversity and promoting inclusion allows each member of the team to flourish, while also helping the entire firm thrive.

¹ “Younger, college-educated black Americans are most likely to feel need to ‘code-switch’.” Pew Research Center, September 2019.
² “CFP Board Exceeds 95,000 CFP^® Professionals, Increases Gender and Racial Diversity of Financial Planning Profession.” CFP Board, January 2023.
³ “Diversity wins: How inclusion matters.” McKinsey & Company, May 2020.
⁴ PwC Global Diversity, Equity & Inclusion Survey, 2023.