Wilshire Consulting initiative pushes for diversified asset management industry

12 February 2018 Consultancy.uk 5 min. read
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Wilshire Consulting has launched a multi-step initiative to promote diverse managers to the consulting firm’s institutional clients. The US consultancy is pushing to increase investment in female and minority-owned asset management firms.

Over the course of 2017, the tense political atmosphere of the United States has led a number of businesses to take measures to support diversity. In November, it emerged that the US arm of Accenture was being sued for racial discrimination for the second time in as many years, following allegations from former employee Mohammed Ali. The fired consultant claimed that his manager, who he knew was a practicing Muslim, had said he agreed with “with all of Trump’s views,” at a time when then-candidate Donald Trump was calling for a Muslim immigration ban, while setting Ali sales targets $20 million higher than his colleagues. While Accenture denied Ali’s claims, the firm did launch a campaign for respect and diversity aimed at its workforce.

Elsewhere, following far-right violence in Charlottesville, which left a woman dead and many more injured, Arizona-based consultancy Spectrum Experience stated that it would refuse work from clients who were unwilling to embrace the principles of racial equality, or denounce “white supremacy”, while the White House committees of the Strategic and Policy Forum and the Manufacturing Jobs Initiative both had to be dissolved, as corporate leaders continued to resign en masse following President Trump’s perceived inaction on the matter.

Wilshire Consulting initiative steps up diversity push in asset management industry

As 2018 commenced, tensions regarding the racial politics of the incumbent US administration led to a government shutdown – albeit briefly – in January, suggesting that while the US economy looks set to continue to prosper, a failure to address ethnic and gender disparity could lead to social rifts which compromise this in the future. The latest effort by the business community to do so comes from Wilshere Consulting.

Wilshere Consulting was established in 1981, and provides customised consultancy and investment solutions, including outsourced-CIO (OCIO) services. As the institutional investment advisory unit of Wilshire Associates, Wilshire Consulting advises on nearly $1 trillion of retirement plans, endowment, foundation, and insurance assets.

The consulting firm has announced that from now on, the firm will make a point of including firms owned by women and or ethnic minorities in manager searches. The initiative will require consultants to recommend at least one such firm in every search they conduct for public securities mandates, while in addition, manager search materials published by Wilshire will include statistics for how diverse a given asset management firm’s ownership is.

Both measures will be tied to senior compensation in order to further incentivise inclusion efforts, with the quantity and quality of senior consultants’ interactions with diverse asset managers impacting how much they earn in bonuses. Wilshire Consulting has also promised to work to broaden its outreach to such asset managers, while developing a series of educational seminars to empower them within the market in 2018. In addition to changes in compensation and manager searches, Wilshire has also renamed its “Emerging Manager Asset Class Committee” as the “Diverse Owned Manager Asset Class Committee”, a move aimed at emphasising its focus on finding “talented, diverse-owned firms.”

With a growing body of research suggesting that diversity in the workplace, boardroom, and in the world of investments bolsters an organisation’s chances of success, global businesses are making an increasing collective effort to reach out beyond their traditional comfort zones. Indeed, in a statement regarding the new initiative, Wilshire Consulting said it had adopted the scheme in response to an “increasing desire” among clients to invest with more diverse asset managers.

Lack of representation

As of May 2017, women and minorities controlled a disproportionately small 1.1% of total assets under management, according to research by investment advisory firm Bella Research Group and Harvard Business School professor Josh Lerner. The study also revealed that the percentage of female and minority-owned funds did not range a great deal higher, languishing between 3 and 9% across mutual funds, hedge funds, private equity funds, and real estate funds.

Andrew Junkin, the President of Wilshere Consulting, spoke of the need for action on the matter, stating, “Women and minorities remain underrepresented in our industry, and ensuring that clients are aware of the many talented firms led by these managers is a priority for Wilshire Consulting. We are confident that this initiative will enable us to work more successfully with diverse-owned firms.”

Robert Raben, Director of the Diverse Asset Managers Initiative, meanwhile described Wilshire as having taken “meaningful steps towards diversity and inclusion” within asset management. In a statement, Raben, who is also President and Founder of the diversity and inclusion lobbying Raben Group, commended what he called the “genuine leadership” shown by Wilshere’s actions.