Practical analysis for investment professionals
14 July 2020

Race and Inclusion Now: Action Points for Investment Management

Have you ever dreamed of becoming a professional athlete? Perhaps you fantasized about playing in the National Basketball Association (NBA) alongside legends like Michael Jordan?

Chances are, if you have, you also know the odds of making it to the NBA are slim. Very slim.

In fact, the probability of a college player going pro is just 1.2%.

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If you think those odds are long, consider this sobering perspective from John W. Rogers, Jr., chair, co-CEO, and CIO of Ariel Investments and former captain of the Princeton men’s basketball team, on the chances of an African-American making it in the investment management industry today:

“If you are an African-American in the public schools in Chicago, the probability of you becoming a partner in a hedge fund, venture capital firm, or long-only firm, all put together, the odds of you becoming a professional athlete are much higher than you becoming a partner in those industries.”

As Rogers explained during the recent “Race and Inclusion Now: An Investment Industry Call to Action” webinar hosted by CFA Institute, such opportunity deficits give the lie to the conventional wisdom we accept at face value:

“People say, ‘You should work on your studies,’” he said. “Maybe you should be working on your jump shot because you really have a much better chance of becoming an NBA pro than a partner in any of these exclusive industries here in the US.”

Rogers should know. When he got started in the industry in 1980, he was the first African-American professional hired by William Blair & Company. He went on to found Ariel in 1983, now the largest African-American–owned mutual fund company in the United States, with more than $10 billion in assets under management (AUM). But much to his despair, very little has changed in the interim when it comes to diversity in the US financial sector.

“If you look today, there are still very few African-American financial advisers throughout the Chicagoland area, still very few in investment banking, very few in investment management, almost zero in hedge funds and private equity,” Rogers said. “Many of the private equity firms in Chicago haven’t hired their first African-American professional, let alone partner or managing director.”

In finance, firms owned by white men manage 98.7% of the $69 trillion managed by the US asset management industry. Similarly, 88% of senior fund managers are white and even analysts and associate managers, more junior positions, are more than 70% white

Structural Racism

One of the issues at the heart of the problem is the nature of relationships and networks — both of which are essential in the investment management industry. But the truth is people with privilege, who tend to be white, enjoy access to both, while those from under-represented groups — people of color — often do not, and this puts them at a distinct disadvantage.

“To become a partner often in investment banking, or in money management, or as a financial adviser, you have to be able to generate revenue. That’s critical,” Rogers explained. “You have to be able to have access to customers, people who are CEOs, CFOs, people who have wealth, and can assign contracts and opportunities to investment professionals”

But if you come from a community that has endured a history of segregation and discrimination, you have much less access to the necessary networks.

“Typically” Rogers said, “African-Americans don’t grow up with CEOs in the neighborhood, or living next door. They are not involved in the same schools, same high schools, the same universities. They are not involved in the same country clubs. They are not fully encased in our capitalist democracy. It’s very, very difficult to move ahead if you don’t really have the opportunity and the relationships that can help you enhance your business opportunities and that is something that is a real problem in our society and it’s a question that is not being addressed enough.”

Action Point: Create robust programs to mentor and sponsor African-American employees to build vertical and horizontal networks and business opportunities.

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Cultural Hurdles Abound

People of color also face social impediments to which many of their white peers may be oblivious.

Stephanie Creary, assistant professor of management at the Wharton School of the University of Pennsylvania, said firm or organizational culture is about the values and norms that guide what we do and how we behave. And there is a specific set of cultural norms, particularly around self-presentation, that can hinder the success and advancement of Black employees.

“By self-presentation I mean not only the way that you speak, but also what you wear, how you style your hair, the leisure activities you engage in outside of the workplace,” she said. “In the US, we talk about these as white, Euro-centric norms, and while there are many African-Americans who have spent their entire lives, their schooling, going to and attending institutions where these norms are socialized from a very young age, there are other African-Americans and Black employees who are having to learn these norms and engage along the way.”

For example:

“In the [investment] industry, there is a norm around being assertive, being aggressive, getting the deal. But one of the longstanding stereotypes of Black men is that they can come across as threatening or aggressive. And so what we see in research, and in practice, is that Black men are dampening down their personalities, if you will, trying to be quiet, to come across as more non-threatening, which is actually counter to the self-presentation that is often valued when making a deal.”

Black women often face a similar dilemma. “There’s a stereotype that Black African-American women can come across as overly aggressive or overly assertive,” Creary said. “So we see that same struggle around how do you navigate that style of presentation that is valued in the industry, but if you present yourself that way as a Black man or woman it can be a mark against you.”

Black employees often find themselves adjusting their behavior, or engaging in “code-switching,” changing how they present and express themselves for the benefit of others in hopes of receiving fair treatment.

Action Point: Normalize a diverse workplace, call out expectations for minorities to conform to majority ideals.

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“Race is a taboo topic.”

In the wake of the killing of George Floyd, many companies have decried racism and pledged to fight for racial equality in the workplace. But words must be backed with action.

Machel Allen, CFA, president and CIO of Metis Global Partners, said that at all levels — within organizations, across the industry, and as individuals — we need to be able to talk about race in order to address any structural biases and that we need to “Call things by their name.”

In the investment management industry, as with most other industries, race is a subject that is usually avoided. The first step in finding solutions or actions at any level, Allen said, is talking about race in the workplace. 

Creary recently developed a RACE framework to initiate workplace conversations on race.

“Race is a taboo topic in the US. Race is a taboo topic around the world,” she said. “And so, I named this framework RACE because I wanted people to encourage people to say the word ‘race’ without a lot of the baggage that often comes along with this topic.”

“We are taught to be colorblind,” she continued. “The reality is that it’s unclear, depending on the context we step into, whether we can actually name race, and so my research and work is suggesting just call it what it is, and say race.”

This is the framework:

R — Reduce anxiety by talking about race anyway.

A — Accept that anything related to race is either going to be visible or invisible.  

(Creary explained that as a Black woman teaching at an elite business school, her race is very visible. But for someone who is white, race may seem invisible. “There is a continuum around the visibility of how we experience our own race,” she said, “and how do we find a place between hypervisible and invisible, where we can normalize race as a dimension of diversity that is worth talking about.”)

C — Call on internal or external allies for help.

E — Expect that you will need to provide some “answers,” practical tools, skill-based frameworks, etc. 

Action Point: Facilitate employee discussions about race and racism led by the majority group.

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Senior Role Models

If firms want to attract more employees of color, it’s important to have a “Pied Piper” for talent in the senior ranks of the organization, Rogers said.

“All companies that care about these issues have to have senior African-Americans in the leadership ranks, on the management committee, people who are directly reporting to the CEO. That is just critical, because if you have someone at the top of the organization, it signals to everyone else that this is a progressive and inclusive environment, a progressive and inclusive culture,” he urged. “And if you have someone who is senior there, they become a Pied Piper for talent.”

Rogers added, “You’ve got to have someone senior in the organization, that can bring people along, keep them there, recruit talent, and there is no substitute for it. Everyone wants to talk about their mentorship programs, summer internship programs. Those things are important, but you won’t move the needle unless you have leadership.”

Action Point: Appoint senior leaders who can also be role models for minorities.

Intentional Recruiting

Allen noted that firms frequently lament that they simply cannot find diverse talent — an excuse the speakers agreed signaled that firms and hiring managers were simply not trying hard enough.

“The talent is there,” Rogers said. “Just people have to be intentional about searching and looking. They’ve got to have great internship programs, have to have great mentorship programs. But there is no substitute for having a senior African-American in those leadership ranks.”

“Sometimes you have to be a little non-traditional,” he continued. “Sometimes you have to be a little creative in what you do. But as you know, in the C-suite, you’ve got general counsels, you’ve got CFOs, you have people who bring all types of diverse talents that you can bring into your organization and then they can be the Pied Piper for the talent.”

Action Point: Ensure diversity in early career recruiting by being intentional about outreach. For example, recruit at historically Black colleges and universities, or HBCUs.

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Demand Diversity

When it comes to change, demand matters.

“When you have one of your biggest customers demanding that your team is diverse, all of a sudden, people find diverse talent. It just happens,” Rogers said. “You need demand if you want to see people succeed within these organizations.”

Clearly, money talks. As Allen noted, clients and asset allocators “are the group that have the most power to move the dial. The most powerful voice in the room.”

Action Point: Ask that diversity be added to your manager selection process.

Three Paths to Greater Diversity

Rogers offered three pieces of advice for increasing the ranks of people of color:

1. Study the anchor institutions that have done this well and been able to open their doors.

He noted there are some great role models of allocators that have succeeded at this — Exelon Corporation and the University of Chicago — but that typically, most US endowments “have never had a Jackie Robinson moment out of the hundreds and hundreds of firms they have hired.”

2. Get rid of “supplier diversity,” which is focused primarily on the supply chain — lower margin spends such as construction, catering, and janitorial service — and focus more on “business diversity” across professional services that a firm engages with, including legal services, accounting services, and money management.

But don’t stop there. Not only do we need to get rid of the term “supplier diversity,” we also have to abolish the idea of “emerging managers,” Rogers said.

Rogers shared an anecdote to illustrate his point, from the time he chaired an investment committee at Rush Presbyterian Hospital in Chicago:

“Who here on the board would hire an emerging doctor to do their heart surgery?” he asked the group.

“Of course, no one would, they want to get the best people. We have to get that mentality out there. We are not emerging. We are talented, gifted money managers with outstanding long-term performance, and we have to tell those stories and get away from this terminology that I think is so damaging to us.”

Action Point: Recognize and celebrate Black talent in our industry.

3. Serve on the boards of local anchor institutions, such as hospitals, museums, universities, and foundations, and use your position of influence to demand change.

“Because you have financial expertise, because a lot of wealth gets created in our industry, we get asked to be on these boards,” Rogers said. “So if you want to have impact, you can get on those boards and insist that African-American investment management firms get hired and brown investment managers and advisers get hired, and as those firms get larger and larger, they become a pipeline for talent, and it becomes a virtuous circle.”

Action Point: Leverage your volunteer work to have an inclusive impact.

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A Difference Together

Rogers implored the industry to work together.

“We can all make a difference together if we ask these questions and we address these questions around race and economic opportunity,” he said. “Dr. [Martin Luther] King once said, ‘progressive white Americans deplore prejudice, but they accept and ignore economic injustice.’ We can no longer accept economic injustice, those of us who are leaders in this wonderful industry, that we have been able to be a part of.”

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Image credit: ©Getty Images / Sven Hagolani

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About the Author(s)
Lauren Foster

Lauren Foster was a content director on the professional learning team at CFA Institute and host of the Take 15 Podcast. She is the former managing editor of Enterprising Investor and co-lead of CFA Institute’s Women in Investment Management initiative. Lauren spent nearly a decade on staff at the Financial Times as a reporter and editor based in the New York bureau, followed by freelance writing for Barron’s and the FT. Lauren holds a BA in political science from the University of Cape Town, and an MS in journalism from Columbia University.

Sarah Maynard, ASIP

Sarah Maynard, ASIP, joined CFA Institute in 2019 in the newly created role of Global Head, External Inclusion & Diversity Strategies and Programs. She leads a global, industry-recognized, external I&D program portfolio for key stakeholders: candidates, members, societies, and institutions. An experienced investment professional, Maynard previously worked at Majedie Asset Management, an independent global investment firm based in the United Kingdom, where she was Client Communications Director and Head of Stewardship. In this role, she focused on ESG, especially governance, with a keen interest in how companies can achieve success through improving inclusion in stewardship. Prior to that, she was Director of Career Development at CFA Society UK, and a founder of their Women’s Network, which is now the Inclusion & Diversity Network. Maynard previously worked as an analyst and fund manager. She earned her MA degree in English Language and Literature at Trinity College, Oxford, holds the ASIP and is an Associate of the Chartered Institute of Personnel & Development.

11 thoughts on “Race and Inclusion Now: Action Points for Investment Management”

  1. Alienated and upset says:

    It is interesting that neither author has the CFA designation. Flipping through other articles on enterprise investor, the majority of authors are not CFA charterholders.

    CFA institute doesn’t support its own members.

    1. Paul McCaffrey says:

      Thanks for your comment. I’m Paul McCaffrey, the editor. Rest assured, we make every effort to feature content by CFA charterholders. That ~190 charterholders have contributed to Enterprising Investor over the years should demonstrate that. While we are open to any worthy contribution from whatever source, Enterprising Investor’s first priority has always been and will always be serving CFA Institute members.

      1. Alienated and upset says:

        Are you serious? 190 members have written articles?

        At the peak, CFA Institute had well over 100,000 members — so even if we accept your number, it’s barely a rounding error.

        Shame on you, and shame on everyone in Charlottesville HQ. Do members not think the flagship magazine is relevant? Or do members realize that Charlottesville is only there to collect dues and ignore members in every other way?

        1. Rob Martorana says:

          Alienated and upset:

          “190 members have written articles? … Shame on you, and shame on everyone in Charlottesville HQ.”

          I don’t understand your point. Are you assuming that the CFA Institute should aim to publish as many charterholders as possible? Why? People are free to blog anywhere they want, if that’s what they wish.



    2. Rob Martorana says:

      Alienated and upset:

      “The CFA Institute doesn’t support its own members.”

      I am a CFA charterholder and an active contributor on Enterprising Investor for many years under different editors. I have found them open to contributions and supportive of new ideas that I suggest.

      “…the majority of authors are not CFA charterholders.”

      Your comment assumes that the purpose of Enterprising Investor is to publish material WRITTEN by CFAs. But most financial news, research, and commentary is written by people who are not CFAs. Would you say that the Wall Street Journal is not helping its subscribers unless the material is written BY subscribers? That is a closed loop.

      The CFA Institute writes material that is FOR its charterholders, to help us make better decisions. So if the contributor is a finance professor or a specialist in their field, I want to hear from them.


  2. Paul OBrien says:

    Lot’s of good ideas here. But also a big gap.

    Yes, there is institutional racism in America and in the asset management industry.

    But there also is a more subtle problem: the tendency for existing elites to promote “their own” and protect their positions. Those elites will naturally favor “virtue signaling” over real actions that have tangible impacts on their wealth and position. Changing that requires real action that involves money and jobs.

    Sure, it’s past time to widen the hiring/interview process to HBCUs. But we must recognize that the system of higher education has fundamental barriers to diversity. Legacy admissions are a huge part of that problem. How about refusing to recruit at universities that allow legacy admissions? Or not serving on their investment committees?

    And don’t just set generic “diversity” goals. Be specific. Don’t do business with firms that don’t provide on-site child care to all employees. Don’t contract out things like janitorial services. Hire those people directly and give them good pay and benefits. Link senior management compensation to specific outcomes.

    Yes, it is important to work within the system. But lets not be afraid to call out systemic problems and insist that they change.

    1. John Shanks says:

      You making astonishing and alarmist claims without substantiation. Where is the racism in the asset management industry that you allude to? Where are the so-called barriers to higher education?
      Access to higher education and entry to the asset management industry require hard work, years of study and dedication, not something everyone is given to. It’s got nothing to do with race, but depends on personal commitment and attitude, which this article conveniently ignores in order to play its racist agenda.

  3. Another Upset Individual says:

    Certain XL CFA Societies (at least one comes to mind) have CEOs and leadership teams that are entirely composed of Individuals that are not CFA Charterhders. They have not even passed CFA Level I. I have heard this comment from a source.

    It would be good to set the example and show the value of the CFA certification from within.

    Talking about race, the same applies. What XL CFA Societies have CEOs and leadership teams that show ethnic diversity?

    One XL CFA Society comes to mind which is lead by a NON – CFA Charterholder CEO that does not show neither gender nor race diversity.

    1. Alienated and upset says:

      How many finance CEOs, of any race, are CFA charterholders?

      None of the money center banks. None of the Fed primary dealers. Not one CFA in the CEOs of Black rock, Fidelity, Schwab, and Vanguard.

      AIMR was practitioner oriented. CFA Institute spends its days virtue signaling and alienating its members, of all races.

      CFA Institute can’t even get a white male member into a CEO slot, never mind all this race baiting. Shame

  4. Robert J. Martorana says:


    Thank you for an excellent article on an important topic.

    I listened to part of the webinar, and I enjoyed being able to read the transcript, especially with the actionable takeaways.

    My favorite quotes:

    1) “Race is a taboo topic.” Stephanie Creary

    2) ” It’s very, very difficult to move ahead if you don’t really have the opportunity and the relationships that can help you enhance your business opportunities and that is something that is a real problem in our society and it’s a question that is not being addressed enough.” John W. Rogers, Jr.


  5. Theo Anderson says:

    “Who here on the board would hire an emerging doctor to do their heart surgery?”

    I love this line. Deep down, when it comes to really important things like heart surgery, everyone values skill over race. There’s nothing wrong with companies and people that value meritocracy over racial hierarchies.

    “you can get on those boards and insist that African-American investment management firms get hired”

    Hiring people based on race is *illegal* and therefore against the CFAI Code of Ethics.

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