Despite efforts by investment managers and other financial services firms to improve diversity, the industry still is not where it needs to be.
Executives no longer need to explain the thesis behind creating diverse teams — particularly in terms of bringing cognitive diversity to investment — but statistics show more work needs to be done, panelists said on a roundtable discussion among senior women in the finance industry, organized by Pensions & Investments.
Research by the CFA Institute, which has dedicated resources to the topic of gender diversity, shows that female representation among positions at the core of the investment management industry — CEO, CIO, portfolio managers and research analysts — hovers at 15% and below. "And so we still have a long way to go on that," said Margaret Franklin, Toronto-based president and CEO of the institute.
The CFA Institute is now expanding its diversity work to examine race and other forms of inclusion. It found that when employers start to remove different identifiers from statistics, such as gender, there is even greater disparity in terms of the representation of Black professionals in the investment management industry.
While the COVID-19 era showed the benefits of diversity, with Ms. Franklin noting that "the firms that were really on diversity and inclusion seemed to fare better," the disproportionate effects on women and ethnic minorities were also laid bare.
"There's a recognition of, we need to understand ... the lived experience of different people in our workforce," said Marisa Hall, co-head of the Thinking Ahead Institute at Willis Towers Watson PLC in London. The need to understand connections between different communities and the pandemic has been made "much more personal than ever before. Now you're working with colleagues where you actually get a look through into their life. And we found that, yes, not only have women fared worse as a result of the pandemic, but we also see that ... with ethnic minorities, people who are taking care of kids, people who are socioeconomically disadvantaged," she said.
Though companies are really starting to look at what they need to do to increase diversity across gender, ethnicity, disability, LGBTQ and other considerations, there are disparities in terms of how much progress is being made on each issue, panelists said.
There is "some really good work happening out there, and I think it's really opportune for companies to reward themselves, pat themselves on the back a little bit, but not get too excited about it because I think we have such a long way to go," said Tia Counts, managing director and chief diversity officer at MSCI Inc. in London.
J.P. Morgan Chase & Co., for example, is considering "all the levers we can pull to ... increase diversity as well as inclusion" on hiring, said Lily Burkhart, New York-based global head of diversity and inclusion and executive talent management for asset and wealth management. "We make sure we have a diverse slate. We also make sure that we have diverse interview panels" for selecting new hires, and programs are in place for promoting talent to support diverse individuals "so that they're on equal footing as everyone else, so that they have sponsorship to help them with development," she said.
Panelists highlighted a number of U.K. initiatives, including 10,000 Black Interns, an initiative to get young Black talent into different industries through internships; #TalkAboutBlack, a Diversity Project campaign that in part looks at issues with the progression of Black talent in money management; and Investment20/20, a careers service to inform young people about the investment management industry and help them to break into participating companies.
Ms. Counts finds it encouraging that attention is being paid to the fact there is a dearth of Black talent in finance. "And then beyond just noticing the problem, actually rolling up their sleeves and putting some potential solutions on the table for the industry to pick up and run with."
The CFA Institute's Ms. Franklin added that "root-cause discussions are quite interesting," highlighting New York state as an example of where prospective employers cannot ask interviewees what they earned in previous jobs.
"That breaks a systemic barrier for ethnic minorities and for gender, that if you've always been at some sort of discount, you're not perpetually shackled by that discount and you start to get to equal pay for equal work," she said.
Panelists said key messages to money management executives striving to accomplish true diversity include ensuring there is accountability at all levels and working to attract talent at a young age.
Inclusion is a major consideration, too. "If I were to encourage people to really focus on one thing, it's ... to really go hard at inclusion," Ms. Franklin said. There are "simple things you can do when you start to really practice inclusion — it changes your mindset and you start to build in diversity almost naturally."
And leaders must also be "deliberate" and "intentional," deciding what they're going to do differently and then following through, MSCI's Ms. Counts said.
But anyone thinking they can change overnight needs to think again. "There's a tendency to really want to do something now. But some of these actions are about longer-term" structural changes, Ms. Counts added.