Business News

Diversity is imperative for financial services industry, business leaders say

By Laura Lang Haverty | October 11, 2016

Diversity is imperative for financial services industry, business leaders sayStrategic discussion at the Securities Industry and Financial Markets Association (SIFMA) Capital Markets 2016 annual meeting on Sept. 26-27 in Washington, DC made a clear case for diversity and inclusion (D&I) as a business imperative.

The meeting brings together leaders in the financial services industry from across the country. This was the first time that panelists at the event addressed D&I – culminating several years of hard work and focus by the SIFMA Diversity Committee, say event organizers.

Erika Irish Brown – global head of D&I at Bloomberg L.P. – chaired the panel. Fannie Mae had a strong presence in leading the conversation as its Chairman of the Board, Egbert L. J. Perry, a seasoned thought leader, cited Fannie Mae’s two-plus decades of commitment to D&I.

During the 55-minute session, about 250 attendees heard from Perry; Pete Rodriguez, managing director and chief administrative officer for Asset Servicing, BNY Mellon; Chris Lewis, principal, general counsel at Edward Jones; Suni Harford, managing director, regional head of markets for North America, Citigroup; and Congresswoman Terri A. Sewell (D-AL).

Executive Sponsorship

Panelists agreed that D&I initiatives need to be prioritized at the executive level. “The message has to be delivered from the top, and it has to cascade down to the troops,” said Fannie Mae’s Egbert Perry. Diversity “has been in Fannie Mae’s DNA for the better part of two decades.”

Minorities make up 53 percent of Fannie Mae’s 7,000-person workforce, he said. Forty-six percent of Fannie Mae’s workforce is female.

“We are not just checking a box. We understand the importance of diversity and inclusion,” he said. “We see it as a very clear business advantage.”

Driving Change

The panelists touched on the rapidly changing demographic landscape and the business case for actively responding to this opportunity.

“The success of our nation’s financial sector hinges on its most important asset – our people,” Sewell, a member of the House Financial Services Committee, told the audience. She noted that diversity encompasses not only ethnic and gender diversity but diverse “experience and voices.”

Sewell pointed to 2011 Forbes research calling diversity “critical to driving the creation and execution of new products, services, and business processes.”

“If you keep hiring the same people, you’re going to get the same views,” noted Lewis. “You won’t see innovation, you won’t see change.”

Proving the Case

Building the business case for diversity requires good data, said Harford, who added that internal data helped her document “potential problems in the system” in retaining female executives.

“Knowing why women leave the firm through documented and tracked exit interviews can combat the presumption that they all leave to stay home,” she said. “The reaction is different if you have data that shows they left to go to a competitor.”

“You can also use data to track the velocity of promotion for women versus men, as well as the rate at which high potential female talent leaves versus their high potential male counterparts” she added. “Having that data sets the stage for implementing change.”

Broadening the Conversation

While diversity is making inroads into the financial services industry, panelists said, there’s still room to improve. “You won’t achieve pipeline diversity unless you are intentional about it,” said Lewis. “While D&I is becoming the norm for large companies, there are medium and small companies too, where we may not see progress at the same pace.”

The panel pointed to incentivizing D&I. “We have to have goals without setting quotas, and measure people on achieving those goals,” suggested Lewis.

“Legislation and policy should incentivize the world you’d like to see,” said Sewell.

Panelists noted that when D&I initiatives are present, the supply chain responds in a positive way. “It’s not just about your immediate workforce,” Sewell said. “It’s about who you hire to supply your product.”

The D&I panel received high praise from attendees – including members of SIFMA’s board of directors, SIFMA’s leadership team, and Fannie Mae. Tujuanna Williams, chief diversity officer of Fannie Mae, who attended the session, says having the company’s Chairman of the Board address the D&I leaders from the Capital Markets “exhibits Fannie Mae’s commitment comes from the top of the organization.”

Audience member Emily Pitts, principal of diversity and inclusion for Edward Jones, called the SIFMA panel “an important milestone.”

“Diversity should be part of the conversation, and not just an afterthought,” she said. “It was great to see the diversity conversation broaden this year at SIFMA.”

Laura Lang Haverty is editor in chief at Fannie Mae.