Truist Wealth Harnesses Diversity

Tom Burroughes

11 March 2022

Creating a more diverse wealth industry isn’t just the morally right step to take, it also builds more resilient performance over time for clients – a result that is all too obviously important right now.

And the work that firms can achieve by using their economic muscle to encourage more diverse hiring, promotions and engagement in the investment world is having tangible results. That’s the view of Sabrina Bowens-Richard, a vice president and senior investment solutions specialist for diverse asset managers at Truist Wealth, part of banking group Truist in the US.

“The face of the population is changing…if we look out over the coming decades, we see diverse communities showing considerable growth,” she told Family Wealth Report in a recent interview. “That growth isn’t being reflected in the financial system,” she said.

“The vast majority of assets today are being run by non-diverse firms,” she continued.

Truist has a dedicated program which identifies and examines diverse-owned firms and diverse-led investment strategies to add to its wealth platform. The firms meet its diversity criteria as well as those for investment performance and other more traditional metrics.

”We have more than a dozen firms that are diverse-owned, which we classify as women, racially/ethnically diverse, persons identifying as LGBTQ+, veterans and those with disabilities,” she said. “Being intentional about diversity will allow us to examine new firms and potentially include them on our platform.”

Diversity matters
Concerns about improving diversity in what has been a male-dominated wealth sector are not new, but with political and social controversies in the US and abroad the subject now has added urgency. The financial turmoil of 2008 was also, perhaps, made worse by uniform “groupthink” among policymakers, central banks and large financial institutions and could have been avoided by a more diverse set of opinions and perspectives.

This is a subject that Bowens-Richard is passionate about. She argues that there is a growing body of hard facts proving that diversity is good for the bottom line as well as for the wider civil society. She cited findings from a 2019 study from Harvard University’s Bella Research Group, showing that women and minority-owned hedge funds, mutual funds and private equity funds are disproportionately represented in top quartile performance figures. Building from its 2017 study, Examining the Returns, NAIC continued to find significant evidence that diverse-owned private equity firms consistently outperformed their peers from 1994 through 2018.

A 2020 report from McKinsey & Co, the consultants, links diversity on executive teams to their likelihood of having financial outperformance. In 2019, it found that companies in the top quartile of gender diversity were 25 per cent more likely to have above-average profitability – the greater the representation, the higher the likelihood of outperformance.

Asked to explain how Truist thinks about diversity, Bowens-Richard said the ownership of firms is one way to approach it; it also values diverse perspectives at the strategy leadership level.

“We believe bringing diversity of thought from the people making the investment decisions is valuable. When we look across products and solutions, taking into account ownership and strategy leadership, we have more than 80 differentiated investment strategies on our bank platform that are classified as diverse,” she said.

More to come
“While there is no target for how many diverse firms we will have on the platform, we will increase our offerings over time – we believe having a broad set of strategies enables us to serve so many different types of clients,” Bowens-Richard said.

Truist’s strategies owned and led by diverse firms cover more than 30 asset classes from US to international equity, core bonds, municipal bonds, high yield debt, convertible bonds, hedge funds and private equity. The managers are all in the US but Truist is open to those domiciled abroad as and when opportunities come up.

Diversity can be measured in a variety of ways, such as race, ethnicity, culture, gender, but also cognitively and seeing the value that people bring when they haven’t had the same career path coming into wealth management, Bowens-Richard said.

“We have amazing managers on our platform,” she said, giving the example of one, whose analysts have backgrounds as investigative journalists, and who use their skills to dig into the firms they might invest in, examining customers, former employees and suppliers to gain insight that a more conventional analyst might not consider.