Despite the entire world being on lockdown, social, cultural and political controversies were not just focused on the spread of coronavirus.
The tragic death of George Floyd in the US marked the start of one of the most influential civil rights campaigns since the 1960s.
Many industries have continued to build on the foundations laid by the Black Lives Matter (BLM) movement.
The financial services sector is no exception and has seen the introduction of initiatives like 100 Black Interns and Classroom to Boardroom over the last few weeks to increase black representation in the space.
International Adviser spoke with several firms involved with these initiatives to discuss what the industry has to do to improve diversity.
Greatest barrier
Financial services does not typically show the image of a diverse industry, but it is trying to change that.
So, what has been the greatest barrier for diversity in the sector?
Vicki Foster, St James’s Place’s head of inclusion and diversity, said: “Preconceptions and assumptions around culture and what it’s like to work in the industry. Roles have changed greatly over the years and many firms have embraced more flexible ways of working which is attracting more diverse employees.
“A lack of strong role models in senior roles from diverse backgrounds has historically held firms back, but we are seeing that begin to change.”
Deb Clarke, global head of investment research at Mercer, said: The financial services industry is not well understood in terms of what we do and the overall purpose of our industry. This means it has not always attracted a diverse group of people.
“There has been a tendency for firms to recruit from the same universities, recruit those with similar backgrounds and typically from mathematical focused degrees.
“There have also been questions about the ability of the financial services industry to offer roles with purpose which many graduates are seeking. This has led to a lack of diverse candidates entering the industry, with many choosing to go to other industries such as technology firms.”
Still blockages
Firms have been campaigning to bring more of a diverse culture to their organisation over the last few years.
But unfortunately, not much change has happened, so why is this the case? Are there still obstacles?
Lindsay Hudson, Emea diversity and inclusion manager at Invesco, said: “The lack of data is a huge blockage. Many financial services firms do not properly capture and report ethnicity data so progress is very hard to measure.
“Perception is probably another barrier but that’s why sharing learnings and having public discussions also help. There are so many ways to address this but breaking the taboo of feeling comfortable discussing important diversity and ethnicity issues has be the starting place.”
Mercer’s Clarke said: “We need to be more active in the community to ensure people have a better understanding of the important work we do around ensuring people have a better and dignified retirement.
“There are great new initiatives such as the apprentice scheme in the UK, which offers school leavers an alternative route to work than through university.”
More than just words
The financial services industry, like many sectors in the world, reacted strongly to the BLM campaign.
But, sadly this is not a new phenomenon. Many industries like to look to be doing the right thing.
How can companies in the financial services industry prove that this is more than just words, and will take action for change?
SJP’s Foster added: “Firms need to listen to their employees and colleagues first and foremost. Developing a better understanding of what’s stopping black talent enter the industry is key, and the best way to do this is to talk to the black employees that are already here.
“Speaking to young black talent is also important. The view inside a firm is often very different from the external perception, particularly for those in the early career space.
“Alongside offering internships and work experience to young black talent, we need to mentor and sponsor our existing black talent to support fair career advancement and strengthen the talent pipeline.
“At the heart of this issue is inclusion. A focus on building an inclusive environment where people can thrive by being themselves rather than feeling they have to fit in is crucial.”
Quotas
Before the black representation campaign, there was a fight to get more women in the financial services sector.
Most firms took to quotas to make the industry more inclusive to women. However, this approach does have its critics.
Terry Mellish, head of international public policy and diversity and inclusion at Natixis Investment Managers, said: “Quotas can be very helpful in reaching objectives and goals and committing to ensure targets are met.
“As an asset manager, we are always mindful that our asset owner clients can and do vote against all-male boards, or against company directors where there is not strong evidence of gender ratios improvement.
“Asset managers are also escalating their engagement by focusing on female representation in businesses, boards, and in leadership roles generally, for example.”
Mitesh Sheth, chief executive at Redington, added: “I can see that quotas may be necessary for some firms and situations. We have not used quotas for gender and are not likely to for race either.
“When speaking to black students they wanted to know we are not just looking to tick a race box in hiring them. They want to know that we are hiring them because they bring something valuable to our organisations and our industry.”
Key for diversity
There are many different approaches that firms can take to improve black representation in the industry.
The sector will be the first to admit it has not always got diversity right. But now is the time for change, so what can firms do differently?
Invesco’s Hudson said: “We believe by partnering together within the industry and using programmes such as Investment 2020 to attract greater diversity into the business, we can collectively not only increase awareness but gather and share resources to improve current practices and tackle some of the conscious and unconscious biases that may exist, but no one can do this alone.
“There is strength in numbers, clearly you need both, but I would say partnerships over individual firms and keeping the momentum going will be key.”
Redington’s Sheth added: “If we are going to change the image of the industry, if we are going to reach out to schools, if we are going to level the playing field through CV and application support, then we need to work together as an industry.
“There’s no point increasing the pipeline of black talent if they can’t get into our firms, or can’t thrive once they do get in. Individual firms have to review their recruitment process, train their hiring managers and make their culture more inclusive.”
Catherine Hong, managing director and chair of Morgan Stanley Investment Management’s Emea diversity and inclusion committee, said that there are number of elements to achieve “sustainable improvement in black heritage representation in an organisation”.
This is:
- To implement a strategy that aims to materially boost diverse recruitment at all levels;
- Increase retention and engagement through dialogue with employees;
- Focus on talent development and promotion;
- Establish agreed metrics to measure progress of both representation and culture; and,
- Make all leaders accountable, while ensuring employees support everyday racial inclusion.
“Those are building blocks for action, and for a more diversified workforce,” she added.
