Articles | July 10, 2020

Disrupting the Status Quo and Promoting a Better Future

The authors are members of Segal Marco’s Diversity Investing Working Group - Rosa Limas, Donell Ward, Francois Otieno, and Joey Mallon

Disrupting the Status Quo

A recent article published in Fundfire presented important information regarding the investment consulting industry’s position with respect to diverse and minority-owned asset managers. The main takeaway: the investment consulting industry is not there yet. While we were pleased to be highlighted as the investment consulting firm with the highest client allocation to Black-owned firms among those that disclosed the figure, we are not content and have been taking a number of steps to continue to increase our leadership in this area that were not highlighted in the article. Segal Marco Advisors is not alone in improving our diverse manager engagements, but we are a leader in the field and would like to take this opportunity to provide additional perspective on our continued action aimed at disrupting the status quo and promoting a better future for underrepresented members of our investment community.

At Segal, we are committed to a diverse and inclusive workforce. To support this ongoing commitment, a Diversity & Inclusion (D&I) initiative was formally launched in 2018 to embrace the range of human differences and create an environment that elevates the importance of attracting, retaining, developing and advancing the careers of a diverse employee population. In this vein, we hold ourselves accountable to specific goals and objectives related to recruitment, hiring, promotions and staff development activities. Ongoing efforts related to the establishment of a One Company internship program across all service lines, implementation of a formal mentorship program, as well as the introduction of company-wide bias awareness training for all employees serve as foundational elements of achieving such goals.

We promote a grassroots effort within our four walls through an internal Business Resource Group (BRG) initiative. BRGs serve to unify and empower employees that share common characteristics or experiences and have common interests or goals that support business objectives while promoting diversity and inclusion. A stellar example of this effort is the Women’s Leadership Council, a 15-member body that seeks to support, inspire, and transform the involvement and development of women across Segal’s service lines.

Outside of our walls, we support the community and advocate for change. Historically, Segal has supported Jobs With Justice, a non-profit organization that fights for working people at the intersection of civil rights and corporate accountability. In response to the recent acts of violence, an additional matching program for employees’ contributions has been established to bolster our support. Aside from monetary action, all employees have been informed on how to get involved and be supported during these trying times.

While the initiatives above span the entire organization, from a manager research perspective, Segal Marco Advisors (SMA) has taken additional steps through a Diversity Investing Working Group (DIWG). The DIWG is a subunit within the Alpha Research team led by diverse individuals with expertise across all asset classes and client plan structures dedicated to the research, advocacy, and incorporation of small, emerging, women and minority-owned organizations. Since inception, DIWG has sought to infuse SMA’s existing research process with key considerations of diversity, leveraging the full scale of the firm’s platform from traditional advisory roles to discretionary engagements. DIWG has since performed a self-evaluation of procedures historically applied, analyzed results, and has implemented a targeted action plan. Our action plan is supported by our bottom-up efforts that consider the objectives, sensitivities and needs of each asset class, as well as ongoing client demand. We continue to seek best-in-class investment strategies while applying a consistent due diligence framework aimed at identifying and supporting differentiated talent. Our mission is to promote progress in a holistic manner, free of judgement, while bolstering core pillars of portfolios — such as potential alpha capture and diversification.

SMA has also created a structured small, emerging and diverse investment manager forum to more efficiently introduce and increase exposure of traditionally underrepresented managers to SMA Analysts. This forum was set to launch in 2020 but has since been delayed due to the health crisis. Plans are being finalized to offer the forum in a virtual setting.

With respect to established investment managers, SMA has engaged in dialogue both through the lens of Environmental, Social, and Governance (ESG) policies and practices, as well as on their Diversity and Inclusion (D&I) policies and programs. SMA’s ESG subunit recently engaged with investment management firms on the composition of leadership teams via a survey and found that the results skewed heavily white and male. Additionally, nearly half of survey respondents have no racial minorities on their firm’s board of directors, and slightly more than one-fourth of the respondents reported no women on the board. SMA’s DIWG has embedded diversity metrics as part of the formal due diligence process since the merger of Segal Rogerscasey and The Marco Consulting Group in 2017. These diversity metrics, which were further refined in 2018, are used to engage in honest dialogue with the investment manager community. An evaluation of D&I is a requirement of the due diligence and ongoing monitoring processes for all investment managers.

Furthermore, our D&I evaluation is not focused on a single number. We do not believe that 51% or greater ownership is the only way to achieve diversity in the industry and we do not believe that the only way for diverse individuals to receive our support is by taking on the risk of owning an investment management business. Our efforts also look beyond the ownership to ensure that true diversity is occurring at the firms we endorse and with which our clients partner.

In addition, SMA has historically been an active participant in industry conferences and panel discussions. Such engagements include: the Illinois State Treasurer Diversity Investing Forums, the Association of Asian American Investment Managers, Accelerate Investors, Seizing Every Opportunity (SEO) Alternative Investments, and the National Association of Securities Professionals (NASP), among others.

In summary, SMA remains committed to promoting diversity and a better future — within our own walls and in the investment communities we face. We believe accountability is and will continue to be key to obtaining results, and we are applying a transparent process to our initiatives to achieve our goals.

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Segal Marco Advisors provides consulting advice on asset allocation, investment strategy, manager searches, performance measurement and related issues. The information and opinions herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Segal Marco Advisors’ R2 Blog and the data and analysis herein is intended for general education only and not as investment advice. It is not intended for use as a basis for investment decisions, nor should it be construed as advice designed to meet the needs of any particular investor. Please contact Segal Marco Advisors or another qualified investment professional for advice regarding the evaluation of any specific information, opinion, advice, or other content. Of course, on all matters involving legal interpretations and regulatory issues, investors should consult legal counsel.

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