The successful investment firm of the future, practicing an inclusive culture that leverages diverse views effectively, will experience many benefits and be differentiated by its ability to attract and retain the best talent. Diversity drives inclusion, so understanding the need and actions to encourage different types of diversity in finance is critical.
Sound investing mandates diversification, yet it is remarkably absent from team construction across all spectrums of the profession. As the largest global association of investment professionals, CFA Institute is in a unique position to raise awareness and drive change.
In portfolio management, the concept of diversification is well understood. Yet much work remains to bring more diversity to the workforces of investment management firms, as underscored by US Bureau of Labor statistics:
- 84% White
- 5% Black/African American
- 9% Asian
- 8% Hispanic/Latinx*
Unlike other industry education methods, we often say that the CFA® Program doesn’t require special connections or to have attended “the right university” to start down the path. While that’s true, we also acknowledge a need to develop better inroads for awareness and accessibility to our program among potential Black and other under-represented candidates. In collaboration with leading asset management firms participating in our Experimental Partners Program, we are convening conversations on race, diversity, and inclusion in the industry with participants such as State Street, Schroders, Macquarie, Morningstar, Lazard, Invesco, BNY Mellon, AllianceBernstein, and more. Some early revelations on the topics of racial and ethnic diversity have included the following.
- Outreach to minorities at the beginning of the pipeline to support recruitment is critically important. To achieve this, many of the experimental partners’ outreach activities include partnering with historically Black colleges and universities. This includes recruitment, but also can involve firms simply offering themselves as a resource for classroom visits, case competitions, and mock interviews to help students gain exposure to the industry and better understand it.
- Encouraging advancement and retention of racial diversity in the industry is equally critical as recruitment. While we want to encourage a pipeline of diverse interest in investment management, we recognize that racial and ethnic minorities are disproportionately prone to leave the industry. Efforts cannot end with recruitment. Recent research indicates that in the United States, for example, Black professionals are the mostly likely group to encounter racial prejudice at work, experience certain micro-aggressions, and become frustrated. It is no surprise, then, that as the Center for Talent Innovation reports, one in three Black employees in corporate settings intend to leave.
*From “Labor Force Statistics from the Current Population Survey”, US Bureau of Labor Statistics, 2019.
The level of age diversity is highly dependent on an individual’s role within the industry. While investment banking, for example, sees average ages between 22 and 50*, depending on position, in roles more typical of CFA charterholders — portfolio managers, financial advisors, and C-suite — the average age tends to be higher. In fact, among CFA Institute members, the average age is 42.5.
CFA Institute, in conjunction with senior industry leaders and experts, is developing a set of guidelines for preparing a pipeline of diverse candidates. This will form part of our industry wide Inclusion Code, due to be published in early 2021.
To create inclusive spaces, CFA Institute values and supports firms in encouraging employees to express themselves openly in the workplace. Our Experimental Partners Program participants report extensive activity and communications on LGBTQ with their employees during Pride Month, including storytelling through videos and interviews. Work by employee resource groups and supportive messaging from leadership team members helped promote wider participation at their organizations. With the forum provided through the Experimental Partners Program, CFA Institute is encouraging firms and their employees to talk openly about their experiences and to share their stories in support of LGBTQ diversity.
