Improving diversity in the asset management industry will require better data from investment managers and consultants and client demand, panelists said Thursday at the SEC's asset management advisory committee meeting.
Several panelists cited studies noting that women and minority managers represent roughly 1% of the asset management industry, and Dalia Blass, director of the SEC's investment management division, said at the meeting that "the numbers have not changed in a decade."
Juan Martinez, vice president, CFO and treasurer of the $2.3 billion Knight Foundation, said his organization in 2010 made a point to improve its percentage, and now works with roughly 35% women and minority asset managers. "One thing we ask for is greater participation within asset management firms, and at the asset level," he said. Mr. Martinez said that data on diversity to drive improvement in the industry "is incredibly hard to come by." That fact was echoed by other panelists who cited a lack of response to surveys by asset management firms and consultants.
The panel was asked by SEC Chairman Jay Clayton to help inform the agency on how it can promote diversity and inclusion in the broader asset management industry, including getting more diverse candidates in the door and giving them access to opportunities to advance and succeed.
Robert L Greene, president and CEO of the National Association of Investment Companies, an industry association for diverse-owned private equity firms and hedge funds, said the SEC could issue industry guidance and investigate findings from a 2017 GAO study that minority and women-owned asset management firms disproportionately manage only 1% of the $70 trillion managed by asset management firms in the U.S. The SEC could also require investment managers and consultants to report data, because "if they don't ask for it, it won't happen," Mr. Greene said.
Panel moderator Gilbert Garcia, founder of fixed-income manager Garcia Hamilton and Associates, with $15. 8 billion under management, suggested creating a "Rotten Tomatoes" rating system for consultants, or the Garcia Rule, a diverse version of the NFL's Rooney Rule that requires at least one woman and one underrepresented minority to be considered for open positions. Illinois State Treasurer Michael Frerichs has adopted the Garcia Rule for asset management hires.
"We need to seize this moment," Mr. Garcia said.
