Despite financial firms making widespread racial equity statements last year, very few of the largest asset managers have committed to greater representation of women and minorities.
Just five out of 28 of the biggest names in asset management have pledged to boost the diversity of their workforces, only three firms vowed to alter their procurement practices to work with more businesses owned by women and minorities, and a single company promised more representation on its board,
BlackRock, Fidelity Investments, Prudential Financial, State Street, Wellington Management and 23 other asset managers supplied the first ever publicly available figures about employee demographics across so many of the largest firms. Committee Chair Maxine Waters, a Democrat from California, and Subcommittee Chair Joyce Beatty, a Democrat from Ohio,
After a 2019
“While this report and hearing will not transform the industry overnight, we seek to bend the arc of progress and expand employment and business opportunities for both men and women and minorities by opening eyes and drawing attention to the glaring inequities in this corner of our society,” Beatty said at a Dec. 9
The ranking Republican member on the subcommittee, Rep. Ann Wagner of Missouri, echoed Beatty’s comments while citing a separate
“Despite strides in diversity and inclusion across the banking sector, women and minorities within America's asset management sector are still underrepresented,” Wagner said. “Progress is being made, however, and today's witnesses will provide us with their strategies that have proven successful and also the challenges their firms face in hiring and retaining a diverse workforce.”
The findings
Committee staff asked the asset managers for their staff demographics between 2016 and 2020, along with their statements and pledges about racial equity last year. The participating firms included Ameriprise, Blackstone, BNY Mellon, Capital Group, Charles Schwab, Dimensional Fund Advisors, Franklin Templeton, Goldman Sachs, Invesco, J.P. Morgan Chase, Morgan Stanley, Vanguard and Wells Fargo. The asset managers provided data about the number of women and people of color in their ranks.
- Board and executive roles: People of color have 17% of executive level management roles at the asset managers and 18% of the seats on the firms’ boards. Women comprise 28% of the executives and the boards. At the CEO level, only one firm out of 28 has a person of color in the top job and three firms have women leading them. At the senior executive level, 83% of the company officials are white, 10% are Asian American or Pacific Islander, 3% are Black or African American, 3% are Hispanic or Latino, 1% are two or more races and 0.1% are American Indian or Alaska Native.
- Top five companies in executive diversity: The firms with the highest share of women in executive positions are: Wellington Management (40%), T. Rowe Price (38%), Vanguard (34.8%), Northern Trust (34.7%) and Prudential (34%). The firms with the largest number of executives who are minorities are: Capital Group (31%), BlackRock (29%), Goldman Sachs (24%), MassMutual (22.4%), New York Life (22.1%) and Nuveen (22.1%). BlackRock, Fidelity, Prudential, State Street and Wellington publicly committed to boosting the representation of minorities and women among their employees.
- Top five companies in board diversity: The firms with the largest percentage of women on their boards are: MassMutual (46%), Principal Financial (42%), J.P. Morgan (40%), Goldman Sachs (36.4%), State Street (36.4%) and T. Rowe Price (36.4%). The firms with the largest representation of minorities on their boards are: Prudential (39%), Northern Trust (39%), BNY Mellon (36%), MassMutual (27%) and T. Rowe Price (27%). Across all 28 firms, 84% of board members are white, 10% are Black or African American, 4% are Hispanic or Latino and 4% are Asian American or Pacific Islander. State Street alone has committed to adding more Black and Hispanic directors.
- Procurement: Out of all the firms, only BlackRock, State Street and Fidelity promised to alter their vendor and other contracting relationships, according to the report. In terms of subcontracted asset management services allocated by the firms, they spent only 0.6% with women-owned firms and 0.5% with minority-run fund companies. In underwriting, just 0.3% of the contracts went to women-run firms and 9% went to minority-owned companies. Out of a half dozen other kinds of contracts, women-owned firms received their highest share of non-professional services, at 12%, while the minority-run firms took in the largest percentage of the assignments in human resources, at 17%.
Among other proposals, the Democratic majority on the Financial Services Committee is backing legislation that would require financial firms to disclose diversity practices to their regulators, bills mandating audits of pay equity with respect to gender and race, and a measure from Rep. Beatty that would create a guideline similar to the National Football League’s “Rooney Rule” obligating teams to consider minority candidates for senior positions.
The National Association of Securities Professionals, a trade organization of 500 minority asset management professionals, supports efforts to compile and track the data, as well as Beatty’s Diverse Investment Advisors Act, CEO Ron Parker said in his remarks at the hearing. He suggested calling it the “Beatty Rule” in finance.
“It is our hope that through legislation, rulemaking, as well as data collection and analysis, that we frame and execute creative ways to address this issue,” Parker said. “We must move from promises to practice to process.”
