As the country’s cultural and political shifts affect C-suite decision-making on impact investing and company diversity initiatives, leading executives said the specifics about rhetoric were less critical than results, during a discussion at this year’s WealthManagement.com Industry Awards Executive Forums.
During a Focused on the Future Think Tank held in midtown Manhattan prior to the Wealthies Awards ceremony, firm leaders discussed specific impact investing initiatives within their own companies, from encouraging charitable contributions and work in advisors’ local communities to mentorship programs for college students seeking pathways into the profession.
However, when aligning their work with clients’ needs and preferences, firm leaders had to weigh how to respond to those who take issue with an emphasis on impact, including the diversity, equity and inclusion programs and language that many companies rescinded in the wake of President Donald Trump’s election last fall and executive orders on the issue.
“I think everybody probably has their own personal experience, but I know talking to a financial planning firm where they had some very large clients that took issue with their stance on DEI, which is not an exception. That happens quite a bit,” said Suzanne Siracuse, CEO of Suzanne Siracuse Consulting Services, and think tank facilitator. “So having a position as leaders at the firms on how to respond to that is incredibly important.”
According to George Nichols, the president and CEO of The American College of Financial Services, companies would be better off if they focused less on rhetoric and examined what its decisions mean for their workforce and client base, arguing that firms inherently can’t create an inclusive environment if everyone has to be the same (whether in ethnicity, background or educational experience).
“I want to create a culture where the best people want to work in my organization,” Nichols said. “And when you do that, you’re going to create a diverse environment.”
According to Wescott Financial CEO Grant Rawdin, the fraught political environment even threatened controversy around things that the firm didn’t view through that lens, and that firms risked taking “a certain amount of fire” from clients on terms like social responsibility (even when avoiding hot-button religious or political topics and extending that responsibility to causes and concerns close to that client’s heart).
“The first thing is, where do you stand in the society today? What is it that you’re doing, and how do you want to frame it?” Rawdin said. “And then, you move into what we’re really talking about, which is doing good. So (it’s) defining what that means and defining whether it’s within your company.”
For Toussant Bailey, a managing partner of Uplifting Capital (and former WealthManagement.com “Ten to Watch” selection), firm leaders need to “go to first principles” and be able to frame what the company wants its actual outcomes to be when it prioritizes impact investing, diversity initiatives and other social concerns.
“Saying DEI was important for its own sake wasn’t enough; now, we have to say why it has business value,” Bailey said. “Now we have to say why that business value can sort of coexist with people who are taking issue with the labels that we’re putting on it.”
According to Cheryl Nash, president of APL at InvestCloud, firms submitting requests for proposals to the technology vendor were still asking pointed questions before partnering with them, including the diversity of the board and executive team, how they contribute charitably and how the company supports the different types of people and groups that make up its workforce.
“Most of the firms today are really interested in that from an RFP perspective,” Nash said. “They don’t want to do business with firms who don’t take care of their people, or think holistically around who’s in the organization and what their leadership makeup is.”
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