Best job candidates don't always check every box, asset managers say

If you were to guess the professional or educational background of an analyst or portfolio manager at an asset management firm, you might not imagine a rocket scientist or art historian — but some firms are going out of their way to recruit employees with unusual career backgrounds, arguing that having a professionally diverse team improves investment outcomes and prevents groupthink.

Hiring with diversity in mind has become a common practice both inside the asset management industry and beyond, as firms attempt to incorporate diversity, equity and inclusion principles into their staffing decisions.

But many of those policies have been based on racial or gender diversity — the industry is, after all, still largely white and male-dominated and reports suggest that more diverse investment teams routinely outperform less-diverse peers. One 2023 report from Willis Towers Watson found that investment teams in the top quartile of gender diversity (the highest proportion of a team reporting as non-male) outperformed the bottom quartile by 45 basis points annually.

Asset management executives say that other kinds of diversity — including educational and professional diversity — also are important factors that can improve an investment team's performance.

"All the data shows that diversity leads to better business outcomes. And diversity doesn't just mean gender or ethnicity — diversity of thought is a critical piece of this, and having folks from different career paths, different areas of study is how you get diversity of thought," said Rachel Trock, chief people officer at $66 billion Polen Capital.

Trock said that, among Polen's staff, there are investment professionals who came straight from the military, from neuroscience backgrounds and from agricultural science.

"We really think that as part of the investment process it's critical to have people from differing college majors or prior career paths because it helps to prevent groupthink," Trock said. "Our research teams are all extremely collaborative, and they're tasked with questioning and challenging one another, so these distinct backgrounds are really additive to that process."

For Ann Miletti, head of active equity and chief diversity officer at $485 billion manager Allspring Global Investments, her firm's performance will always come first, but it can be enhanced by assembling a diverse team: "It's good for performance, it's good for our business, and it's good for clients," she said.

"Everybody thinking the same way, in our business, is bad. It's a terrible thing," Miletti said. "Having a pool of people who aren't cut from the same cloth and have different backgrounds really does add so much value by ensuring you aren't going down one path without considering another."

Miletti, who was a school teacher before pivoting to the finance industry, acknowledged that it's often easier for firms to hire from tried-and-true educational and professional backgrounds than to take a chance on a career-changer or someone with a non-related degree. She said the default — and easiest — thing to do when filling a role is to find a candidate with experiences that exactly matches the job posting.

"There's a bias in some ways of hiring what you know — so, if I'm hiring a retail manager, someone that's covered retail before, that's been in the business for five years, that has their CFA … it (eliminates) a lot of hurdles that you have to go through in the beginning stages of bringing someone new onto your team," Miletti explained.

But as a career-changer herself, Miletti said opening doors for those with unusual career paths and helping them succeed is personally important.

"What I've realized is that it's very trainable," Miletti said of many jobs in the asset management industry. "You can train somebody to do a spreadsheet, to do a P&L statement, to look at balance sheets."

Miletti said that she's working with Allspring's hiring managers to rework job postings in a way that doesn't discourage people from nontraditional career paths from applying. One way she said the firm is doing that is by avoiding using certain words in job postings — including "aggressive," "ambitious," "outspoken" and "superior" — that can intimidate women and minorities from applying.

Trock said her firm has seen improvements in the diversity of its applicant pool after adding a disclaimer to every job posting encouraging applicants to apply "even if they do not necessarily check every box outlined in the job description, including education level."

"We have heard consistently from current employees and from applicants as they're going through the process that this disclaimer was the reason they chose to apply," Trock said.

She added that another step she takes to level the playing field after candidates are screened is not reviewing resumes before interviews, so she doesn't go into the conversation with any preconceived notions or biases.

"Going into these interviews without knowing where someone went to school, what they studied, where they live, where they currently work, has afforded me the opportunity to better understand the individual and their behaviors before I assess what's on your resume or their skill set," Trock said.

Even some asset management executives who aren't involved in day-to-day hiring decisions are also thinking about professional diversity at their firms.

Linda Gibson, chair and CEO of $96.7 billion PGIM Quantitative Solutions, was a securities lawyer and general counsel for a financial firm before becoming an executive herself. But Gibson attributes a portion of her success to the skills and experiences she gained while practicing law.

Gibson said she tries to "hire people that are not like-minded, that are smarter than you, that are interesting, and that bring different experiences and ideas to the table — I think then you're going to get the best team and the most likely team for success," she said.

George Patterson, PGIM Quantitative Solutions' chief investment officer, is one of Gibson's employees with an unusual career path: before working in asset management, Patterson got a Ph.D. in physics and subsequently worked at NASA's Jet Propulsion Laboratory.

Dan Chung, CEO and CIO of $22 billion asset management firm Fred Alger Management, also is a lawyer who clerked for a Supreme Court justice and worked at a prestigious law firm in New York before leaving to join Alger as a research associate. Chung said he prefers to hire candidates who come from diverse professional backgrounds and have subsequently sought out the asset management industry rather than followed the traditional path into finance.

"People who are successful either scholastically or in another field but who are willing to give that up to make a change and take a (pay cut) ... who is willing to give up the natural path to follow — that's a candidate who is risking a lot," Chung said. "They have a lot of skin in the game. I think that's always attractive to me."

Chung has hired nontraditional candidates like Ivy League art historians, mothers who have been out of the workforce, police officers, retail workers, Juilliard-educated musicians and scientists to fill investment positions.

"You end up with an eclectic crowd," Chung said. "You get a diversity of opinions and experiences that can, you know, wildly benefit your results sometimes. And most importantly, I think you get people who are, whether they know it or not, very used to being independent and therefore thinking independently."