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The Future of Remote Work and Diversity in the Asset Management Industry

Sustainable Finance November 01, 2021
Sustainable Finance November 01, 2021
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The words “unprecedented” and “inflection point” have been used frequently to describe the many structural changes that have taken place over the last 19 months, but at this year’s Milken Institute Global Conference, panelists wanted to understand why.

The panel, Asset Management: Repositioning for the Future, saw Caroline Hyde, anchor of Bloomberg Markets, host a lively hour-long discussion about what makes the current environment so unprecedented from a market and ESG perspective, and featured Kristi Mitchem, CEO of BMO Global Asset Management, Gary Chropuvka, President of WorldQuant, Carter Lyons, Chief Business Officer at Two Sigma, Joanna Welsh, Chief Risk Officer of Portfolio Construction and Risk Group at the Citadel Group Companies, and Neal Wilson, Co-CEO and Co-Chief Investment Officer of EJF Capital LLC.

When asked if the current environment is without precedent, Lyons replied that it is the summation of things that makes this market different. “Have we had inflation before? Yes. Have we had social unrest? Yes. Have we had supply shocks? Yes. Have we had them all at the same time, with a pandemic? No.”

Making Hybrid Work

This confluence of issues is forcing asset managers to rethink everything from the way they invest to how they run their businesses. It’s the latter, though, that saw the panel drill down on how the industry will cope with a more hybrid work environment. Mitchem said that while remote work was challenging at first, everyone adapted quickly and it worked well. “We were very effective when we had 100% of the people out of the office,” she said. “Our challenge is going to be around, how do we use technology and [explore] different ways of to make hybrid as effective as the all-in-the-office or all-out models?” she noted. “It’s going to be an experimentation process.”

One issue Welsh has been struggling with has been around hiring in a remote work environment, which could change as people feel more comfortable going outside. Moving to video interviews from in-person candidate interviews has made the hiring process feel more transactional, she said. “It didn’t cost people much to go to these interviews,” she noted. “Sometimes it kind of felt like being on a date where you didn’t care whether it worked out or not. You were just a face on a screen.”

Going forward, companies will need to continue paying careful attention to work culture, which can be a struggle in a fully remote environment and could be challenging to develop in a hybrid one. Chropuvka said that the key is talking to people about what they want. “We try to create an environment where we’re really listening to our people, as opposed to forcing them, and saying ‘you’re coming in three days a week, no matter what,’” he explained. The company regularly surveys its employees and asks them about their work-life balance. “It’s been useful for all our people to feel engaged.”

Embrace diversity

Perhaps an even more pressing issue that many firms are now addressing is diversity and inclusion within the asset management industry. According to an Investment Company Institute and Independent Directors Council survey, about 84% of executives at the senior leadership level are white and nearly 75% are male. “We really need to ask ourselves some very tough questions about the representation of women and people of color,” said Mitchem.

Understanding the problem is one step, added Wilson, but more asset management companies must actually do something about it. For instance, at least one woman sits on each of his many product boards, and they’re tracking – and reporting – the number of women and people of color they have on staff. While they’re doing this for themselves, they’re also doing it for their clients, who are increasingly interested in these kinds of ESG metrics. “We have clients demanding it,” he said. “You also need the investor base to demand it, you need your workers to demand it and that’s how change happens. You have to consciously take steps.”

At BMO, diversity is looked at holistically, said Mitchem – meaning she and her colleagues look at what’s happening inside her organization as well as what’s happening globally. “It’s not just how do we get people to work inside our organization, it’s about how do we support women and people of color as entrepreneurs, and how do we ensure that they have access to the capital they need to actually grow?”

Ultimately, people are looking for companies to say what they stand for and actively change, which is something the asset management industry hasn’t done well to date, panelists said, and if firms don’t move faster, then someone else will come in and take their place. “We have to consider what our social license to operate looks like in the future,” said Mitchem. “We have to consider who might come into our business and actually actively disrupt it. If you look at it statistically, we’re all wrong on diversity, and we’re not making change quickly enough to really secure the future of our industry.”

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Kristi Mitchem Chief Executive Officer, BMO Global Asset Management


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