The next frontier for greater inclusion in financial services

Sponsors for Educational Opportunity (SEO), a New York non-profit organisation, has been offering training and mentoring to junior investment banking analysts from under-represented groups since 2009.

Its aim, along with its sister organisation in London, is to enable them to secure posts in private equity firms and other alternative investment companies, such as venture capital firms and hedge funds.

“We reverse-engineered it. We looked at the knowledge and skills gaps [in the sector] and built the programme to address them,” says Julian Johnson, executive vice-president at SEO, which developed the programme with private equity groups KKR and TPG.

However, acquiring technical skills is only one of the hurdles that minority groups may face when entering the financial sector.

“One of the biggest challenges people from under-represented backgrounds have is fitting in. They don’t feel part of the club, whether that is the boys’ club, the white club or the wealthy club,” says Lauren Rivera, a professor at the Kellogg School of Management, who studies class, gender and racial bias in hiring and promotion decisions at investment banks and consulting and law firms.

Fitting in matters because informal networks help people gain access to useful information and resources. “It presents a barrier not only to their work but also to being promoted,” says Prof Rivera.

Researching her book Pedigree: How Elite Students Get Elite Jobs, she noted that, beyond core skills, hirers looked for what they might describe as “polish” — or “pedigree” — revealed in tiny social cues and cultural patterns.

The financial services sector tends to be dominated by white men, often from privileged backgrounds. In 2014, a report by Mercer found that while 17 per cent of Chicago’s population was African-American and 21 per cent was Latino, the figures for their employment in the financial services sector were 12 per cent and 10 per cent respectively.

Pamela Sandy, president of the US’s Financial Planning Association, a trade body, says her industry has been slower than others to increase workforce diversity because of “a culture that’s having a hard time changing”. She also cites vested interests: “When you have successful white males who have easily stepped into this profession and made a very good living because there was little competition, they’re protecting their territory.”

Many financial services companies are working to counter this. Barclays, for example, measures diversity and inclusion in its balanced scorecard, its business performance management tool.

Make sure people change offices so they can make connections with different people

One way institutions can support diverse groups is with workplace networks that connect employees of similar backgrounds, interests and experiences. JPMorgan Chase’s Adelante business resource group promotes professional development and leadership opportunities for Latino employees and provides networking across the US.

Support groups exist outside the workplace, too. In the US, the Urban Financial Services Coalition backs career development for financial services professionals from minority groups by offering education and networking opportunities, as well as scholarships.

Companies should also mix up the workforce, however. “Proximity is important,” says Prof Rivera. “It [involves] making sure people aren’t isolated physically and that they change offices regularly so they can make connections with people they wouldn’t normally interact with.”

This should be the goal in mentoring too, she says. While mentors from similar backgrounds to their mentees provide insights into navigating an organisation, “often they don’t have connections with people in positions of power”.

Prof Rivera advises companies to take a dual approach. “Individuals get a mentor who can give them social support but also one from a majority group, so they can get access to people who control the power in the organisation.”

BNY Mellon enables access to senior executives through its Signature Leadership Forum, comprising networking events that allow promising employees from a range of backgrounds to highlight their skills. “It gives them opportunities to form peer networks across the company and to get exposure to senior leaders,” says Jyoti Chopra, global head of diversity and inclusion.

Assembling teams of people from different backgrounds to work on particular projects also helps, as the bank found with its People Report. A series of stories told by staff, designed to showcase the bank’s talent strategy, it involved about 150 people from around the company, says Ms Chopra.

Even more powerful unifiers are projects undertaken outside the office, such as volunteering programmes, says Ms Sandy. “If there is a common goal that is not just driven by work, it allows those walls to break down.”

When it comes to staff from disadvantaged backgrounds, she adds, banks can help employees to feel more engaged by involving them in efforts to increase financial inclusion. “Young people from these backgrounds enter the profession with a passion to make a difference,” she says.