The financial services profession should be open to anyone with a passion for it and a determination to succeed. Yet, we know that diversity in the profession is still a work in progress.
It’s a fact too that traditional perceptions of finance careers, and even hiring practices, have tended to emphasize not only certain kinds of people, but also certain kinds of academic backgrounds — “the right schools,” to be blunt.
An analysis by Peak Frameworks, which provides educational support for aspiring finance professionals, and human resources analytics firm Terrain Analytics found that just 60 colleges — so-called “target schools” — produce the vast majority of graduates selected for Wall Street firms’ investment banking analyst programs.
Outside this list of 60 colleges are “non-target schools,” which typically do not receive any on-campus recruiting or specific attention from large institutional financial services firms.
This recruiting framework results in not only investment banking analyst positions but also most entry level front, middle and back-office positions at large institutional financial services firms being filled with recent graduates from these 60 colleges.
Avoiding 'group think'
For investment management professionals, diversity is a critical defense against “group think.” Many of the best investment opportunities have emerged when an investment professional went against prevailing opinion and looked at a situation in an atypical way — and saw potential that others had missed.
The more diverse an investing team is, the better equipped it is to apply different kinds of thinking and insight to the investment process — and achieve better outcomes.
Diversity in educational experiences should be part of the mix, for an individual’s academic background is as relevant as all the other attributes and characteristics that shape their worldview.
The advantages of diverse teams
We can do better. A significant body of academic research supports the notion that diverse teams — comprising individuals with varying educational backgrounds, among other diverse characteristics — tend to perform better than homogenous ones. Diversity can also make our profession look more like the people we want to serve — and make our guidance and support accessible to even more people.
Interestingly, although a degree from a premier college has typically conferred some advantages, that doesn’t seem to hold true everywhere in the business world — including its highest levels. One researcher who examined the educational backgrounds of Fortune 500 chief executives found that most did not attend an Ivy League school. In fact, some of the executives didn’t even go to college.
Target schools, of course, are excellent sources of outstanding finance professionals. But as we shed worn-out views of what a financial services professional “looks like,” we’ll find the future colleagues we need even more successfully if we include many more schools in our search.
Industry-wide initiatives — in particular, the CFA Institute’s Diversity, Equity and Inclusion Code project — are putting emphasis on outreach to colleges and universities not typically targeted by our profession. But advocating for educational diversity is a challenge that all of us who care about the many positive aspects of diversity should accept.
Broadening the pipeline, being a mentor
What can we do to build diversity of educational experience in our teams?
Broaden the pipeline. The old refrain, “We would love to hire more diverse candidates for Wall Street but there aren’t any,” doesn’t work anymore. We need to expand our industry’s recruiting programs to consider people at schools that previously didn’t get a look.
We should attend career days at non-target schools; promote our goals for educational diversity on social media, and, when posting job openings, set expectations with our human resources departments about securing more applicants from non-target schools.
Be a mentor. It’s one thing to recruit diverse individuals into our firms — just as critical is helping them stay and succeed. Being a mentor means more than an occasional cup of coffee with a young colleague. It means lighting a professional path and showing the way to follow it; monitoring your firm’s programs for professional development and advancement, and helping young colleagues take advantage of them. And it means being a champion for people who go the extra mile — especially people whose efforts might otherwise escape notice.
Take stock of your own team. Carefully assess whether your own team reflects your goals for diversity. Among all the characteristics of diversity that you seek, have you overlooked educational diversity?
Keep in mind this: There is only constant change — with new forces shaping markets and economies, and new cohorts of investors seeking support for their distinctive needs. We can’t simply run our firms and do business in the same ways we always have. We should value colleagues with their own ways of looking at the world, its needs and its opportunities — grounded in their diverse heritages, life experiences, beliefs, values and even the schools they attended.
As we invest in our businesses and our service, let’s be sure we’re investing in people like that too.
Saira Malik is the chief investment officer of Nuveen, based in San Francisco. Thomas Brigandi is managing director, investment research and relationship management, at RisCura Solutions (U.S.A.) LLC., based in New York. This content represents the views of the authors. It was submitted and edited under Pensions & Investments guidelines but is not a product of P&I’s editorial team.
