Bank of America headquarters in Charlotte, North Carolina. (Photo: AP) Bank of America headquarters in Charlotte, North Carolina. (Photo: AP)

Three months after it announced a $1 billion, four-year commitment to help local communities address economic and racial inequality, Bank of America has announced additional steps to increase diversity among the asset managers on its investment platform.

Its chief investment office, which had been evaluating asset managers’ diversity and inclusion policies and practices at the organization and investment team levels through its due diligence team, is now expanding that analysis into its overall assessments of asset managers’ investments. The results of that analysis will factor into the team’s level of conviction for a particular manager’s investment strategies. 

The office will also collaborate with asset managers and industry groups who are focused on developing investment solutions that direct capital to diverse managers and provide capital to diverse-owned businesses and populations as part of their underlying investment mandates.

“We recognized the need to embed a diversity and inclusion assessment into the core of our due diligence process,” said Anna Snider, head of due diligence for rand Bank of America Private Bank, in a statement. “We believe that this, along with other environmental, social and governance (ESG) considerations, can and should inform investment conviction and play an increasingly important role in our selection of managers and strategies going forward.”

Assets management and the broader financial industry are among the least diversified industries in the U.S.

According to a 2019 Knight Foundation study of asset managers, just 1.3% were minority- or women-owned. Almost 99% of asset management firms were owned by white men. The study also found no statistical difference in the performance of the two groups.

BlackRock, the world’s largest asset manager, has vowed to increase representation of Black people in its overall workforce and among managerial staff, but the targets are in single digits. BlackRock CEO Larry Fink announced in June that the firm has plans to double the share of senior leaders who are Black from the current 3% level by 2024. The firm has also targeted a 30% increase in Black employees, who make up about 5% of its workforce currently.

Even the Securities and Exchange Commission is getting involved in the issue of diversity among asset managers. The agency convened a special meeting of its Asset Management Advisory Committee on the topic in mid-July, and its chairman, Jay Clayton, asked how firms could increase diversity and provide opportunities for advancement when more diverse employees join firms. He also asked how firms and the SEC could help expand investment services to a more diverse base of investors. 

To date, the committee hasn’t released any proposals or recommendations on these topics and is scheduled to hold another meeting on Sept. 16, where diversity in the asset management industry will be discussed among other topics.

“The investment industry is on a D&I journey,” wrote Tracey Flaherty, global head of diversity and inclusion and public affairs for Natixis Investment Managers in a March 2020 report. 

“It is probably fair to say D&I [diversity & inclusion] is where ESG was a few years ago … entering the consciousness of investment firms, but not yet embedded in the DNA of all of them.”

— Check out What the Top BDs of 2020 Are Doing to Improve Diversity on ThinkAdvisor.