CFA's Rebecca Fender

The CFA Institute will work with 30 asset owners and managers as “experimental partners”, implementing diversity and inclusion action plans in their businesses.

Over a two-year period, the partners will liaise with the CFA Institute in implementing diversity and inclusion action plans, with the aim of the process to be a guiding light for other investment firms to follow.

It marks the second phase of a project by the CFA Institute responding to demand for greater diversity and inclusion in the investment management industry.

In September last year the CFA released a guide, Driving Change: Diversity and Inclusion in Investment Management, which included 20 action plans for investors to use in a bid to increase diversity and inclusion.

The guide was developed following a series of workshops – with 344 participants from 99 companies representing $38 trillion in assets – where they discussed what they are currently doing when it comes to D&I, what has been effective and ideas for improvement.

Rebecca Fender, head of the Future of Finance initiative at the CFA Institute, said what the workshops revealed is that there is no best practice in the industry when it comes to diversity and inclusion.

“We were well positioned to use our convening powers to bring people together and uncover best practices. What we found is they don’t really exist yet,” she said.

“This is a generally competitive industry and this is a topic where people want to work together.”

Experimental partners, which include VFMC in Australia, will choose up to three of the 20 action points to implement over two years. There will be quarterly check-in calls with the CFA Institute to learn about what is working in their own firms, and also with the other partners.

Professional Planner’s sister publication, Top1000funds, covered the topic here.

“We don’t want this to be a compliance exercise but we want our partners to choose what works for them and figure out who’s responsible, what metrics they will look at, and what their action will be.”

‘Universal diversifiers’

Speaking at the CFA Societies’ International Women’s Day lunch on Friday, Fender recalled that the preparation work for the study that led to the guide revealed an industry-wide deficit in best practice knowledge.

“Perhaps naively, we gathered the groups together and asked them what were the best practices. What we found is they don’t exactly exist yet,” she said. “Nobody’s figured this out. It was humbling.

One thing the focus group did realise was that “everybody” was looking at gender diversity. They took this as a lead to ask how companies were defining diversity itself.

“The one thing we found out is that women are the universal diversifier,” Fender said.

The group then asked contributors what their motivation was for pursuing diversity and inclusion.

“A couple of years ago it was all about compliance, but it’s now much more around improving investor and business outcomes.”

Industry action

Fender said a number of forces in the industry were driving the demand for more diversity. These include the move away from the star portfolio manager to team-based decisions, and the acknowledgement and willingness to change inherent biases.

“It has been a topic of interest for many asset managers coming to the CFA Institute to ask how to get more diversity. They want to hire the best and brightest without constraint,” she said. “It is also driven by asset owners which have diversity and inclusion as a priority and see it as a way to bring values to investing.”

Of the current CFA charterholders only 19 per cent were women. However, Fender, who is a CFA, said about 40 per cent of the candidates currently sitting the CFA are women. In China that figure is closer to 50 per cent.

“This is a view into the trend and the supply side of labour in the industry,” she said.

At the International Women’s Day lunch, Fender noted that Australia was currently behind the pack in terms of gender diversity.

“If we look at the top ten countries around the world for CFA members the gender gaps are narrowing in 7 out of 10 countries,” she said. “But the three where it’s not are Australia, the US and Singapore.

“There’s still work to be done,” Fender said.

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