Progress on gender diversity has slowed. But the world’s biggest private banks and wealth managers are keeping the pressure on.

In 2021, several large US fund selectors signed up to a new pledge, an asset management version of the NFL’s Rooney Rule through which these giant professional investors would commit to ensuring underrepresented fund managers were considered for every recommendation list.

JP Morgan Private Bank was among the first to sign up and Aubre Clemens, its global head of sustainable research, warned us last year that progress would be slow.

She wasn’t wrong.

‘It’s disappointing to see the numbers haven’t budged, but I’m not surprised,’ she said, commenting on figures from this year’s Alpha Female Report. ’It’s early innings; this is not going to be an overnight change. Today, as an industry, we’ve acknowledged the weakness, that we haven’t invested the way that we should have. Now we’re in the process of figuring out what we do to make change.’

Click here to view the full Alpha Female group data on female manager percentages, tenure, turnover and mixed teams.

The pledge on diversity, equity and inclusion that these heavyweight firms have committed to was drawn up by York Lo, head of alternative products and LLCs at John Hancock Investment Management.

Firms that sign up also get access to Citywire’s Fund Manager Database, which allows them to identify female portfolio managers. Fund analysts at JP Morgan are already using this data in their searches.

Clemens highlighted the vital role of data in driving initiatives around diversity.

‘There’s a lot of work that has been done on the data side to build an awareness of where the industry is today,’ she said. ‘That gives us the baseline – if you don’t have that baseline it’s very difficult to measure progress. It takes time, not just in focusing in on diverse managers but we also need to see more work being done in building diversity in the investment teams, in the research teams.’

Anna Snider is head of due diligence in the CIO office at Bank of America Merrill Lynch, another signatory to the pledge. ‘I think the industry is making an effort on diversity, but is it also focusing its effort on inclusion and establishing a culture that changes this equation,’ she said.

‘For example, are we willing yet to put our trust in naming a new female PM, or associate or co-PM, the same way we’ve taken that risk with men of the same experience and qualifications?’

Snider (pictured) also picked up the idea of data as a foundation but added: ‘We can’t just collect data. As with all performance evaluation, we need to hold the manager to the committed trend line.’

Aaron Hanson, head of global manager research at RBC Wealth Management – another signatory to the DEI pledge – called for patience.

‘Even as some asset managers are making a real effort, it will take some time before we see real progress,’ he said. ‘I’m not sure team diversity has been a concern for most investors, until perhaps recently. Until it becomes a more important issue for investors and clients, it may take longer to make meaningful change.

‘Even with managers who are committed to diversity, I think it could end up being a longer process than perhaps many would have hoped.’

One of the reasons these global banks are turning up the pressure on asset managers is they are themselves feeling pressure from their own clients, as JPM’s Clemens explained. ‘The other piece here is: what are clients asking for? Similar to our own journey, they are starting to ask questions around diversity and they want to be comfortable with what’s in their portfolios.’

For Hanson, there are steps the industry could make to accelerate change.

‘I know there are some non-profit organisations out there focused on highlighting careers in finance, and RBC partners with several of them,’ he says. ‘But it would be great to get more talented women and BIPOC individuals more involved and interested in investing and asset management at an earlier age – during college, or high school, or even earlier.’

He also thinks manager research teams can maintain the pressure by making sure diversity is a key part of their due diligence, both for firms and investment teams.

‘Continuing to ask the questions around diversity practices can keep asset managers accountable to their stated diversity plans and goals. As we are going through our due diligence efforts quarter-over-quarter and year-over-year, we need to continue asking managers about their approach and implementation of diversity practices. Are managers doing what they say they are going to do? If they aren’t showing any signs of improving diversity, what are the reasons for that?’

How long will it be before we see the numbers move? ‘It’s going to be a five-plus-year change,’ said Clemens. ‘That’s why we’ve been broadening our definition to include what does the investment team look like? What does the research analyst team look like?’

‘Changes in tenured investment teams will take time. However, as we see new investment firms or newly launched funds come into the market, the expectation should be that diversity of thought and management is clearly built into the culture and structure of the firm or strategy,’ she says.

RBC’s Hanson (pictured) said the climb to the top can be slow. ‘For many asset management firms, I would guess that there may currently be more opportunity to hire for diversity at the early-career job levels,’ he says. ‘If that is accurate, it will likely take years for those individuals to reach senior levels within the organization, for example, a senior investment professional or portfolio manager. I don’t know when we’ll start to see numbers change significantly, but I do think it will take time.’

BoAML’s Snider reinforced this point. ‘It takes a long time to make it to the level of a PM and that requires the right incentives and work environment for women to stay long enough to gain the necessary experience. So while it’s not going to change overnight, gatekeepers need to hold managers to their commitments around retention and mobility.’

The pandemic may also have held up progress. ‘There is a lot of data coming out now about women who have left the workforce in the US economy,’ Snider said.

Clemens has noticed strong female candidates dropping out of the system over the past two years, but she sees reasons to be positive. ‘What I’m excited about is the amount of interest from our clients, who have been increasingly asking about this,’ she said. ‘Now it’s every client.’

‘We’re being more proactive, the data piece is coming along, and, along with our peers, we’re standardizing the kind of questions we ask. It’s just the way we do business these days.’