'Disappointingly slow' progress on investment industry diversity
Diversity progress is “disappointingly slow” in the investment industry, according to Willis Towers Watson, as it releases an action plan to accelerate the pace of change.
Its ‘Diversity in the Asset Management Industry’ report used a diversity score to establish a view on a firm’s gender and ethnic diversity as well as insights gained through its qualitative manager research process. Asset managers who failed to encourage greater diversity or did not respond to growing asset owner expectations could face a ratings downgrade.
The firm is encouraging asset managers, investment consultants and discretionary investment solution providers to consider eight factors:
- Greater transparency and disclosure: high-level statistics to understand how diversity is reflected across different functions;
- Increased sourcing of diverse talents: for example, through graduate and returner programmes;
- Measurement of diversity of asset managers that goes beyond just equity ownership;
- The removal of requirements that may unwittingly exclude diverse funds/firms;
- Progressive compensation structures and policies around flexible working arrangements;
- Shifting away from a star portfolio manager model to a team-based investment approach, with a strong focus on ensuring decision-making teams are diverse;
- Asset owners and investment consultants to establish targets to significantly increase the diversity in portfolios, with the associated improvement in expected performance; and
- A focus on internal policies, training and networks designed to increase diversity and address the challenges of racism, sexism and other unconscious biases.
Chris Redmond, head of manager research at Willis Towers Watson, said: "Addressing the systemic issue of poor diversity in the asset management industry requires a collective effort, and in many cases a fundamental change in mindset and culture.
“Although some of these efforts will take time to bear fruit, as an industry we need to be challenging ourselves to do more now. Improving diversity is key to building a stronger investment industry, and our initial findings show that it is positively linked to performance outcomes.”
Willis Towers Watson senior investment consultant, Angela Brown said: “We recognise that businesses are at different points in their diversity journey today, and these proposed actions are just the starting point upon which the industry can build.
“While we recognise the challenges that lie ahead, we strongly believe that by taking these steps, the investment industry can take a crucial leap forward in better reflecting our society and delivering better performance outcomes for savers.”
AUTHOR
Laura Dew
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
