When it comes to diversity and inclusion, strategies are better than intentions

As the investment management and financial advisory industry seeks to attract and retain a more diverse mix of talent, a consensus has emerged on the importance of early engagement, pipeline building, mentoring and development of contemporary employee benefits. There is evidence that discussions are richer, insights are deeper and decisions are stronger when we have diversity of thought. How does an industry full of organizations with established, often storied, cultural legacies and norms enable diversity and inclusion to drive these more informed insights and lead to better business outcomes? (More: How to recruit and retain a diverse workforce) Unlocking the benefits of diversity and inclusion starts with leaders adopting an inclusive mindset. Three examples of areas that offer opportunities to embed the benefits of diversity into company culture include: Procured services, corporate engagement and product development.

Three areas of opportunity

Procured services are elements that the firm directly controls, such as brokerage, legal and accounting firms. We can make conscious and deliberate choices about procuring services from those who exemplify and see the value of diversity and inclusion.

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In 2018, Northern Trust Asset Management acted to increase equity security trading commissions with minority brokers, setting and achieving targeted commission amounts in our largest fund range. We broadened the scope of our engagement with minority brokers toward utilization of sell-side research. A second area is corporate engagement that leverages quantitative and qualitative research to identify investments that can generate long-term value for our clients. Enhanced financial performance has been correlated with companies that embrace diversity and inclusion. Asset managers must create space in their research processes for engagement with corporations in which they invest on diversity and inclusion issues. At Northern Trust Asset Management, our proxy committee has developed a policy that recommends we vote in favor of shareholder proposals requiring women and minorities be included in any pool from which board nominees are chosen. Third is product development. In choosing new and innovative offerings to bring to market, product developers are considering how diversity and inclusion show up beyond discrete portfolio holdings. (More: New CFP Board ads feature lesbian couple) Many of Northern Trust Asset Management's investors told us they seek managers that exhibit investment excellence and a demonstrated commitment to diversity. Thus we created the Northern Engage360 Fund (NENGX), which is focused on both, regardless of the company's size or ownership status.

Concrete strategies

Intentions are good, but it's also critical to have concrete strategies. Let's ensure that new and existing employees experience a culture that is alive with activity inspired by the best practices and behaviors of diversity and inclusion.

This story is part of an ongoing initiative by InvestmentNews to cultivate a financial advice profession in which diverse perspectives are welcomed and respected, and industry best practices can be shared across organizations.

Sheri B. Hawkins is head of strategic product management at Northern Trust Asset Management.