St. Louis-based financial services firm Edward Jones has been ordered by a federal judge to pay a $34 million settlement for bias claims by Black financial advisors, Reuters first reported.
The firm is known for serving individual investors and boasts more than 19,000 financial advisors. This settlement comes after Stowell & Friedman filed a class-action lawsuit in 2018 on behalf of roughly 800 Black financial advisors. The official complaint was “race discrimination,” states a court filing that names Wayne Bland as the main plaintiff in the class action case. The Black financial advisors accused Edward Jones of assigning them to less lucrative work, denying them working with certain high-level client accounts, and depriving them of advancement opportunities.
In the case represented, Edward Jones, which Dowd Bennett denied wrongdoing, went as far as to try to get the case dismissed since it claimed that the named plaintiffs failed to provide more than speculative claims in the lawsuit. The firm also moved to get the case dismissed since it believed the suit should have happened in a federal court in St. Louis. U.S. District Judge Andrea Wood in Chicago rejected both of these arguments in November 2020 and decided to continue the lawsuit since one of the named plaintiffs resides there.
After a three-year battle, Judge Wood ruled that there was wrongdoing on Edward Jones’ behalf for denying work and opportunities to Black financial advisors based on their race. The judge officially signed off on the settlement earlier this month, ordering Edward Jones to pay all of the Black advisors that it employed between May 24, 2014, and December 20, 2020, up to $31,000 each, AdvisorHub reported. The firm also agreed to form an advisory council to address internal issues of diversity and equity, bring Black financial advisors together for focus groups and provide senior managers with data on hiring and keeping Black employees, Reuters reported.
“We reached this agreement because it is in the best interest of Edward Jones and allows our firm to move forward,” Edward Jones spokeswoman Regina DeLuca-Imral said in a statement, according to AdvisorHub. “We pledged to continue working toward meaningful increases in diversity among our financial advisors and senior leadership – helping all to succeed.”
Bland worked for Edward Jones as a South Carolina-based broker between 2014 and 2016. Like most other junior advisors who go to work for competing companies, he ultimately left the firm and had to pay back training costs to Edward Jones. According to AdvisorHub, Bland claimed that this disproportionately affected Black financial advisors who were failing more than others because of the lack of resources. As part of the settlement, Edward Jones will be updating its practices of recouping training costs.
The announcement of this settlement comes after Edward Jones was ranked the No. 5 Best Workplaces in Financial Service & Insurance and named to the FORTUNE 100 Best Companies to Work For for the 22nd consecutive year. On April 21, the firm joined organizations across the nation to participate in CEO Action for Diversity & Inclusion’s third annual Day of Understanding and Reflection, a day dedicated to hosting candid conversations about diversity, equity, and inclusion in the workplace.
“Edward Jones has one of the largest advisory workforces, so we are hopeful that this can make a positive impact for African American advisors,” Suzanne Bish, a partner at Stowell & Friedman, told AdvisorHub. “There is relatively new leadership that seems committed to improving diversity at the firm.”
This lawsuit against Edward Jones highlights a more significant issue for the company: retaining diverse employees. While the firm’s profit increased by 18 percent in 2020, Edward Jones lost 117 advisors in the last quarter of the year, Advisor Hub reported. The lawsuit also claims that only six percent of Edward Jones’ workforce is diverse (Black, Latino and Asian).
If you’d like to skim the official court files, the case is titled Bland v. Edward D. Jones & Co LP, U.S. District Court for the Northern District of Illinois, No. 1:18-cv-03673.
