When it comes to hiring asset managers, a commitment to diversity can be a competitive advantage, according to new research from Greenwich Associates.
The U.S.-based consulting firm reported that a study of institutional investors and consultants found that, all else being equal, asset management firms that have made commitments to diversity and inclusion (D&I) are more likely to be selected for investment mandates or recommended by consultants.
Specifically, firms with the highest scores for diversity were three times as likely to make consultants’ short lists, Greenwich said.
“When investors begin their manager search, performance and experience tend to top the list of important qualities. As the selection process whittles down to the final few, and differences among remaining managers begin to blur, investors broaden their selection criteria to factors that demonstrate cultural compatibility,” the study noted.
“With the 10 largest investment consultants accounting for almost US$20 trillion in institutional assets under advisement, it’s clear that a commitment to D&I can deliver immediate, tangible economic benefits for asset managers,” said Susan Gould, relationship manager for Coalition Greenwich, in a release.
The research also found a positive correlation between asset managers’ commitment to diversity and their performance in terms of service quality and other operational metrics.
“In some industries, the economic payoffs of diversity and inclusion can take time to emerge — that’s not the case in asset management,” Gould said. “In this industry, managers that demonstrate a true commitment to D&I have created a powerful competitive weapon.”