In the tech business, the focus is usually on disrupting the status quo to create products or services people eventually can’t imagine doing without. The financial industry, not so much.
While heritage banks and traditional wealth managers continue to rely on spreadsheets and crunching numbers to assess risk, startups such as Addepar and ZestFinance are aiming to do what their established counterparts are unwilling or unable to try.
Addepar (named one of Fast Company’s Most Innovative Companies this year) is like wealth management 3.0. The company has created a financial dashboard for the advisers, working with the 1% to mitigate risk from investment portfolios. ZestFinance, founded by former Google CIO Douglas Merrill, aims to cut risk from lending by analyzing big data.
But the two companies are working on another "outdated" practice that runs deep in both the tech and financial worlds: diversity.
Research suggests that women make better investors than men and are better portfolio managers. Yet they remain underrepresented. Only 23% of certified financial planners are women, a figure that has been unchanged for a decade, according to CFP, the industry’s professional organization.
While the spotlight shines on such Silicon Valley stars as Apple and Intel
for their efforts to bridge the gap that already exists within their ranks, these startups are attempting to push the needle right from their inception.
Barbara Holzapfel, Addepar's CMO, tells Fast Company that overall, 20% of its employees are female. The management team is made up of 30% women, including the CFO, CMO, and the VP of people. With more than three-quarters of its staff under age 35 (and understanding how views of diversity are changing), Holzapfel says the company is actively working toward inclusion of all ages, genders, skills, and backgrounds.
In addition to making sure there are women in leadership roles, Holzapfel says one particularly effective strategy is to actively recruit them from seemingly disparate industries. "In many cases, as long as a candidate shares your vision and core values, you can likely teach them job-specific skills and processes," she asserts. For entry-level positions, Addepar looks to organizations such as the Anita Borg Institute for Women and Technology, and events like that organization's Grace Hopper Celebration of Women in Computing. Holzapfel says rather than focusing on top schools, Addepar prioritizes attending job fairs at a variety of schools, including all-women colleges.
More importantly, Holzapfel says there is an emphasis within the company to keep having conversations about gender diversity. "We’ve adopted a practice of regular all-hands meetings where we boldly encourage open conversations about the topic, during which men and women can share articles, posts, and personal experiences," she says.
That means that every Monday there is an "ask me anything" session led by Addepar’s CEO Eric Poirier. "It’s a completely open forum where everyone is encouraged to ask questions," Holzapfel says. Poirier’s willingness to have these chats, as well as to invite staff to a recent unconscious-bias training session, is what Holzapfel says made the difference in getting everyone engaged. "It’s really impactful and encouraging for employees to see the CEO kicking off conversations about diversity," she says.
Not only is Poirier the most senior male in the company, he’s also a brand-new parent with a better understanding of and appreciation for having a balanced life. Holzapfel believes that has an impact on everyone at the company, regardless of their gender. "We want employees to feel like their time is their own," she says. In addition to over three months of 100% paid maternity leave, new parents (both men and women) can get up to six weeks of 100% paid leave to bond with their new child. "We offer flexible work hours and unlimited vacation so parents—men and women—feel empowered to take the time they need to spend with their families," she adds.
At ZestFinance, CEO Douglas Merrill takes the company’s role as a job creator seriously and has baked diversity into its corporate culture. Starting from the ground up requires making the decision that diversity is core to winning, he tells Fast Company. "It will never happen if it’s viewed as a side effort heralded by HR people and a few people on the legal team who think it’s important," he maintains.
Currently, more than 40% of its workforce are women and 50% of its C-suite are women. That happened thanks to a careful hiring process that Merrill says surfaces a variety of diverse candidates.
It starts with hiring for "horsepower," that is, the potential to do a multitude of roles at the company. This is better than hiring for specific skills, Merrill says, because it enables the company to consider a much broader spectrum of job candidates.
There is also no hiring manager at ZestFinance. It’s all done by committee. A designated team also assesses candidates based on culture fit. "This way, many people with diverse perspectives are involved in hiring decisions, and all employees rally around a new Zestian to make them feel comfortable and enable them to succeed," he says.
Job candidates do "homework" preparing a presentation for a hypothetical situation in advance of their interview. "We do this to get to know how they think and give them a chance to showcase their horsepower," Merrill says. But it also shows the company wants them to bring their intellect to the table.
Merrill says he encourages employees to hire people who don’t think like them, who might actually annoy them. "We intentionally and actively work to hire people who are different from each other to create broad thinking and make sure we generate the best ideas," he says.
Once employed, Merrill insists that regardless of whether the employee is female or a minority, everyone just wants to work someplace where they can contribute ideas, feel comfortable doing so, and are valued for their unique, distinct viewpoints and contributions. "If you believe diverse perspectives are the key to winning, then you need to actually hear them," he says, "which means you also need a corporate culture that encourages everyone to speak up."
Merrill explains: "Diversity implies different use of language and different assumptions, which means there will be misunderstandings and conflict." That’s not always easy, he says, but it is something that the culture enables, making people feel safe when it does arise.
Holzapfel believes such a a culture change toward greater diversity and inclusion will take time and active management, but she believes the companies that make this a priority will reap disproportionate benefits. "Diversity is one of the single greatest enablers for establishing a strong workplace culture that attracts and retains top talent," she argues, "which in turn leads to more-innovative solutions and results."