Latest crop of diversity programs hope to create wider, more welcoming points of entry

Goals include dismantling barriers and creating new ways to reach and invite women and minorities.

A coalition of private equity firms is applying a metrics-driven perspective to one of the PE industry’s most intractable problems: attracting and keeping more women.

“We’re not saying you have to transform your whole team, but this is a very doable strategy to be intentional, in acknowledging that there hasn’t been a space for women,” said Amanda Kim, a vice president at Avante Capital, a woman-owned private credit and structured equity fund. Avante is among several firms that joined with MidOcean Partners when it launched the Women’s Awareness Initiative this month.

It’s one of several new efforts to catalyze diversity in the investing and retirement planning sphere. Advocates in the life insurance industry are proposing to ease one barrier to those pursuing careers as agents, partly in hopes of attracting more minorities. And the comprehensive program launched in February by the CFA Institute is gaining momentum, with 45 firms on board, up from 16 when the program was announced.

A coalition of insurance groups is pushing for less structured licensing exam requirements in the 23 states that currently mandate certain types of preparation. The rationale for the change, according to advocacy groups Finseca, the National Association of Insurance and Financial Advisors and others, is that allowing aspiring agents to choose their own modes of preparing allows for a wider variety of accessible, lower-cost courses and resources. While this change affects all candidates working toward licensure, it is being cast by the industry as especially relevant to ethnic minorities.

The industry has analyzed the relationship between test prep and test pass rates, and has concluded that requiring certain prep regimens doesn’t ensure success. The industry is seeking more ways to draw in minority agents.

Seven states track the race of people who take the licensure test. In each of those states, white test takers recently passed at much higher rates than did ethnic minorities. One of the widest gaps was evidenced by the 75% pass rate for white test takers in Virginia, compared to a 37% pass rate for Hispanic test takers in that state.

“We think these solutions will lead to a diverse representation,” said Melissa Bova, Finseca’s vice president for state affairs.

Women’s initiatives are well-established in many industries, which offers efforts like those launched by WAI and the CFA Institute plenty of guidance.

Candice Richards, managing director and ESG compliance officer for MidOcean, said that she hopes to streamline paths into and through the private equity industry so that young women don’t have to trudge up the learning curve she endured. Richards “fell into the industry,” she said, and then realized that happy accidents are unlikely to drive systemic change.

“In our research, we found that one reason women are not attracted to the industry is there’s a lack of exposure and a lack of access,” she said. The WAI initiative, she said, “is about creating promotion paths for women within the industry.”

The most successful women’s initiatives are grounded in the operational realities of how each industry works, said Melissa McClenaghan Martin, who runs consulting firm M3 Strategic Alliances, and who specializes in designing women’s advancement and business development initiatives for professional services firms.

Asset management shops that have few employees might consider starting with programs that address functional friction points, such as the head-on conflict between travel and working on deals. “It’s about understanding what makes sense, but also knowing that you have to have basics like maternity policies,” said Martin, noting that very small operations often lack human resources staff who typically formulate and manage benefits and policy structures. “The challenge is to reconcile the needs of women with the daily responsibilities of the job, and that varies by investment sector.”

Richards said that the WAI program intends to build a structured, purposeful approach that can set an industry standard. To that end, the new initiative has already been endorsed by another industry group, the Institutional Limited Partners Association, which has added WAI to its Diversity, Equity and Inclusion Roadmap. “With something that’s standard and uniform, we can lay out the steps, and we can change the conversation,” she said.

Meanwhile, the CFA Institute’s DEI code and corresponding program has more than doubled the number of subscribed firms, with more in the pipeline, said Sarah Maynard, global head of external DEI. So far, firms that have signed on represent more than $5.1 trillion in AUM and $6.5 trillion in assets under advisement, and span startups to blue chips.

The institute’s approach centers on accountability, with firms promising to complete internal audits and reviews to identify diversity barriers in their cultures, practices and policies, with commensurate vows to tackle the problems they find. Firms will also deliver a suite of diversity metrics annually to the institute, which will compile them into an annual benchmarking report. Firms that say they are on board, but don’t take the pledged steps, will not be allowed to resubscribe, Maynard said.

The one-two punch of measurement and models is intended to quickly identify and build on nascent best practices, she said. “The numbers are important as both a symptom of existing culture and as a direction of travel for future growth and development.”

“Governance really matters. You cannot implement unless you put the infrastructure in place. Over time,” Maynard added, “this will build, as it has with our other codes and standards.”