This article was penned by CAPIS
Today, one of the best investments a financial services firm makes is in its diversity and inclusion efforts. The financial industry has been making some progress on this front, but still has a long way to go.
The industry knows it needs to improve. Last year, the U.S. House Committee on Financial Services released its first report on Diversity and Inclusion, specifically looking at large banks — all 44 banks asked to participate acknowledged the need to do more.
Earlier in the year, CAPIS’ Coleen Donohue spoke with Liz Whitehead and Heather Cox, co-founders of business consultancy Diversity Masterminds™, about what small- and medium-sized businesses can do to compete with large firms that have more resources to devote to D&I.
They mentioned that for any business, investment in internal D&I efforts (like hiring practices), as well as external ones (like supplier diversity programs), leads to better performance of the business. We wanted to drill into that sentiment, especially since the bottom line will move even the most stubborn firm into action.
The research is clear — more diverse firms do better. According to McKinsey, those companies in the top quartile for ethnic and racial diversity were more likely to outperform their peers — the same goes for firms in the top quartile for gender diversity.
A Harvard Business Review study of venture capital firms found that if an investment was made by VC partners with similar or shared backgrounds, it lowered the investment’s success rate. Diversity of background leads to a diversity of thought, and in the world of investments, that is invaluable.
One approachable step a small company in financial services can make towards improving its D&I is increasing its supplier diversity. Take a small RIA for instance. Perhaps they have $100k in external legal spend. Why can’t $40k of that spend be directed to a minority-, woman-, or veteran-owned legal entity?
CAPIS is a WBENC-Certified Women’s Business Enterprise, which means we can meet some diversity supplier requirements — and we also engage with diverse suppliers. (Other certifications can come from the National Minority Supplier Development Council (NMSDC), the National LGBT Chamber of Commerce (NGLCC), the National Veteran Business Development Council (NVBDC), and the US Business Leadership Network (USBLN).)
Addressing this issue in financial services is paramount, not only for the success of your business and the happiness of your employees, but of the industry as a whole.
If you have questions or would like to learn about CAPIS and our status as a WBENC-Certified broker-dealer, please reach out to Coleen Donohue at [email protected] and follow us on Twitter (@capisinc) and LinkedIn for additional updates and insight from our team.