After $34 Mln Settlement with Edward Jones, Wayne Bland Reckons with Future of Diversity in Wealth Management
Wayne Bland closed one chapter of his story when a federal court approved a $34 million settlement of a class action bias claim against Edward Jones & Co. this summer. But the challenges for Bland and other minority financial advisors are not over, the former broker said.
Bland, who litigated that bias case over three years, said he’s still working with a number of Black financial advisors across the country to give them support and encouragement as they navigate what he describes as still unfair hurdles for diverse candidates. Bland is hopeful, however, that some of the programmatic changes that Jones has made during and following the lawsuit to its account inheritance programs and training may be the changes that make the firm and the industry more inclusive.
“It’s moving slowly but it is moving in the right direction,” Bland said in an interview from his home in Charlotte, North Carolina.
At Jones, Bland was initially assigned to Steele Creek, North Carolina, a neighborhood near the South Carolina border with fewer affluent and more Black residents. He was placed there because of the firm’s “racial steering” practices of assigning minority brokers to minority neighborhoods, according to his lawsuit’s allegations.
He persuaded Jones managers to reassign him after five months to Lake Wiley in nearby South Carolina, with a majority white population. But door knocking in that neighborhood prompted harassment and unease for Bland, who is 6’4”.
Residents called police on him and threatened him, despite his prominently displayed Jones badge. When he raised concerns about the confrontations with managers, they were unresponsive, Bland and his lawyer Suzanne Bish of Chicago’s Stowell & Friedman said.
Bland left Jones in 2016 and moved to Southeast Investments, where he remained until 2017, according to BrokerCheck records. It was in March 2018, when Bland filed his first lawsuit that remains pending against Jones and alleges its trainee program violated the Fair Labor Standards Act. Two months later, he filed his discrimination suit.
Jones agreed to release former advisors who left before 2021 from any training costs obligations, and reduce training costs going forward, terms worth $21 million and $3.1 million respectively, according to the plaintiff’s lawyers. The training costs were an issue that disproportionately affected Black and African American brokers because of the challenge in building a book.
“African American advisors were struggling just to make it. The white male advisors, with little or no experience, would come in and basically were just given the keys to the kingdom,” Bland recalled.
Policy changes at Edward Jones followed Bland’s litigation. The St. Louis-based firm earlier this year altered the way it trains advisors with more support and changes aimed at helping improve the odds of success for its diverse trainees, even though it meant a potential slowdown in hiring as it focused on quality over quantity. It pledged to form an advisory council comprising a “diverse cross-section” of brokers at the firm who will consult with senior executives on initiatives to increase diversity and representation of African American advisors.
Even before the settlement, the company started modifying policies in ways that Bland hopes will help Black men and women who want to be advisors there.
Weeks after Bland and the other plaintiffs filed the discrimination lawsuit, Jones implemented a program to pay additional compensation to financial advisors who elect to transition existing client relationships to people of color and women financial advisors.
Bland wholeheartedly endorsed that change as a way of undoing decades of race-based inequities in transfers of client assets.
“One of the things that really inspired me to pursue this lawsuit is when I looked at the inequities when it came to transfer of assets,” Bland said. “You’re talking about hundreds and hundreds of millions of dollars that were given to advisors who were mainly not women and not people of color.”
An Edward Jones spokesperson declined to provide the amount of the extra compensation available for such transfer, or any numbers to show how many assets have been transferred to Black, Hispanic or Latino, or women advisors as a result of the 2018-initiated program.
But Bland has pinned hopes for progress based on the management personnel changes at the company since he filed his lawsuit. In January 2019, Penny Pennington took over as the firm’s first female chief executive officer, replacing Jim Weddle who had led the firm for 13 years before retiring. The company’s commitment to diversity got an additional boost under one of the few female executives to lead a major brokerage firm, Bland said.
“Maybe it was just a matter of timing, but I think it was a great change,” Bland said.
After taking the helm, Pennington in June 2020 unveiled “a five-point commitment focused on equitable hiring, training, promotional practices and policies to better support financial advisors of color at the firm,” the company said. In June 2021, Edward Jones announced a 2025 target of 15% representation of “people of color” among its brokers, up from 8% currently, and 30% representation of women, up from 21% currently.
Among its home office leaders, Edward Jones is targeting 20% representation of “people of color,” up from 9%, and 40% women, up from 30% by 2025.
“The scary part—and I’ll just be perfectly open—about putting those numbers out there, is what if we don’t quite make them,” Pennington told an online audience at the time.
Bland’s case is one example of diversity lawsuits that have frequently targeted major brokerage firms in the past decade. In one historic settlement in 2013, now-retired Merrill Lynch broker George McReynolds won a $160 million claim against Merrill that emphasized many of the same concerns about training and asset allocation that arose in the Bland suit and also required programmatic changes, including revisions to the way accounts were distributed when a broker left the firm.
In another, Wells Fargo Advisors in 2017 agreed to pay $35.5 million to settle a proposed class action lawsuit alleging discrimination against African American financial advisors. (The class action plaintiffs in both the Merrill and Wells lawsuits were also represented by the same law firm, Stowell & Friedman in Chicago.)
The pressure, and accelerating public pressure in recent years on companies to focus on boosting diversity, has prompted more transparency.
At Merrill Lynch Wealth Management, which began disclosing diversity metrics for its broker roster last year, 21% of its roughly 17,500 brokers and bank branch-based advisors were women and almost 14% were Black or Latino.
UBS Wealth Management USA also last year issued 2025 diversity targets in the Americas business, which also includes around 6,500 advisors in Latin America and Canada, and said it is looking for 25% female representation and 19% representation of “racial/ethnic minorities” among advisors. That is up from 15.3% of women advisors currently and 10.4% racial/ethnic minorities, according to the 2020 report.
Bland’s legal fights with Edward Jones are not over, however. Bland is among the named plaintiffs in a pending proposed class action against Jones, which seeks damages for the company’s alleged failure to pay overtime compensation to trainee brokers. The settlement in the race discrimination case has not dimmed Bland and the other plaintiffs’ pursuit of those pending claims, Bish, who represents them, said.
Edward Jones has denied the overtime-pay allegations and, in its earnings report filed with the SEC for the second quarter, again pledged–as it had in the prior quarter–to “vigorously defend” itself.
Bland characterizes his own future in the wealth management industry as unlikely, despite the progress he hopes Jones and other firms will achieve in terms of racial diversity and inclusion.
When he has pursued advisor jobs, some prospective employers initially showed enthusiasm for his candidacy, but later cancelled meetings after, Bland presumed, they learned about his role in the Jones lawsuits, he said. His attempt to establish his own registered investment advisory firm had led financial product wholesalers, whom he also understands were clued into his litigation, declining to work with him, Bland said.
Many stakeholders in the financial advisory industry are unwilling to cede assets and revenues to make it more diverse and inclusive, Bland recognizes.
“Sometimes it takes leadership to step up and make the change,” Bland said. “The other people, hopefully, come along later.”