It’s rare for $1.1 trillion brokerage LPL Financial to cut ties with any of the financial advisers it works with. But after a TikTok video accusing one of its affiliates of saying she wouldn’t hire Black employees went viral, LPL did just that.
“After reviewing the facts, it was a violation of our policies,” LPL CEO Dan Arnold tells Fortune about the matter. “It’s infrequent” for LPL to terminate its adviser relationships for any reason, he said.
The financial adviser, Eileen L. Cure, runs the wealth management practice Cure & Associates, which—as of earlier this week—had been affiliated with LPL Financial. That means that she independently runs her own advisory business but is registered and holds assets with LPL, using the brokerage for back-end resources such as compliance services. Cure allegedly told her staff in a Skype message that she did not want to interview Black applicants, according to a TikTok video that has over 300,000 views, posted by user auntkaren0.
“I specifically said no Blacks,” the message shown in the video read. “I am not a prejudice [sic] person but our clients are 90% white and I need to cater to them. That interview was a complete waste of my time, please don’t second guess me or go against what I ask. Listen to me and give me what I ask for please.”
Cure did not respond to a request for comment but previously provided a statement to another publication, denying the claims against her and stating they have spawned threats against her. “This published photo and along with subsequent related false and defamatory materials and statements, which have incited false commentary and threats of violence and bodily harm toward me and my staff and acts which are being investigated as criminal in nature, are being publicized on a social media platform by a third party who is not related or in any way affiliated with me or my office,” she told financial adviser publication InvestmentNews. The allegations against Cure were first reported by the trade publication Financial Planning.
LPL moved swiftly following the publicized allegations: Arnold said the company began reviewing the incident at the end of last week; the company decided to terminate its relationship with Cure by the afternoon of Aug. 4—the first day of the company’s largest annual conference.
LPL has a formal process in place to address whether it should cut ties with the advisers it works with, Arnold said, noting that “a diverse group of people” gets together to discuss the facts and circumstances and “try to come to a really informed decision.” The company took a couple of days to gather facts around the specific incident, he said, and ultimately determined to cut ties with the adviser.
“We go back to our principles. We have policies that protect those principles, and we stand for the principle of equity—and that’s for everyone,” Arnold said.
Social media has brought to light overt discrimination that Black individuals in the financial industry face throughout their career to those who typically don’t have direct exposure to it, said Rachel Robasciotti, CEO of Adasina Social Capital, a social-justice-focused investment management company. “This is the experience of Black people in our industry. We know we’re not proportionately chosen for roles,” she said.
Technology and social media are simply making transparent what Black folks have known all along. https://t.co/CPI2Y1xUeF
— Rachel J. Robasciotti (@rrobasciotti) August 6, 2021
Several financial services companies have publicly terminated employees after their employees were accused of racism in videos posted online. Franklin Templeton fired one of its white employees after she allegedly called the police on a Black birdwatcher in Central Park last May. In September, Prudential fired an employee who allegedly told a Korean-American woman at a restaurant to “go back to Wuhan.”
Financial services companies—which have long-standing problems with racial and gender diversity—have upped their efforts to address racism and discrimination in the workplace in recent years. Some of this momentum has been driven by an increasingly diverse group of investors that have been entering the market. “The breadth of the segments of clients that our advisers serve is definitely evolving,” Arnold told Fortune.
Robasciotti said she has yet to see results from the financial industry’s focus on diversity, particularly over the last year. “I have not seen the representation in financial services change,” she said, adding that there are still many companies pushing back against measures like racial equity audits.
LPL Financial—like many broker-dealers—has seen an influx of new assets in the last year as more investors who tend to be younger and more racially diverse flock to the markets. The company had $1.1 trillion in brokerage and advisory assets at the end of June, up from $761.7 billion the year prior.
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