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Current Developments in Diversity, Equity & Inclusion in the Financial Services Industry

By Cheryl Crispen, Executive Vice President for SIFMA and staff advisor for SIFMA’s Diversity & Inclusion Council | 5 minute read | June 12, 2023

Key Takeaways From SIFMA’s 2023 Compliance & Legal Annual Seminar

Here at SIFMA, we believe that the financial services industry should reflect the diversity of the clients it serves. Not only is prioritizing diversity, equity and inclusion (DEI) the right thing to do, it is a business imperative. Investment banks, asset managers, and broker-dealers that fail to recognize and embrace this risk falling behind their competitors.

At SIFMA’s 2023 C&L Annual Seminar, compliance and legal professionals from across the financial services industry convened to hear from expert industry and regulatory speakers and to discuss the most pressing topics in the field.

During a panel session on current developments in diversity, equity and inclusion, industry leaders shared expertise, best practices, and anecdotes from their work advancing DEI at their respective firms.

In this blog post, we highlight the key themes from the panel discussion, discuss the importance of DEI in the financial services industry, and provide examples of how firms are leveraging DEI to drive innovation and growth.

Abiding By the Rule of Law: Understanding the Current Legal & Regulatory Landscape

The financial industry has been committed to increasing diversity and inclusion for decades, and its progress is measurable.

A major challenge facing firms and their proactive efforts is navigating the ever-changing landscape of regulations around DEI. While some states have passed laws mandating diversity and inclusion initiatives, others are pushing back against such requirements. It’s important for firms to stay up to date on the latest regulations and to work with legal counsel to ensure compliance.

One of the hottest regulatory issues at the moment is environmental and social governance (ESG). As we inch closer to the 2024 election, more and more states are pushing back on ESG disclosure requirements compared to the federal government. With many firms having multiple offices spanning the country, it is vital that they stay abreast of new regulations at the state level.

Nikki Lewis Simon, shareholder and chief diversity, equity and inclusion officer at Greenberg Traurig, pointed out two sides of DEI: the hard side of data and metrics versus the soft side of programs and initiatives. Without robust data of various demographic groups, retention rates, employee engagement surveys, and promotion rates to measure progress, Simon said that firms’ DEI goals are only aspirational. It is critical to use both to implement an effective DEI strategy.

When it comes to navigating the regulatory landscape, “our skills as lawyers and compliance professionals are really leveraged here, and we have to be prepared for the potential risks and potential exposure to risks,” said Tonia Bottoms, managing director and senior managing counsel for BNY Mellon | Pershing. “The skills that we bring to that analysis are hugely important to our companies. The programs that we offer must do more than just demonstrate good intentions. We have to be able to base them on data, legal analysis, and show how our programs are benefitting not just our diverse associates, but every single one of our associates.”

Business Imperative of Strong DEI Commitment

When evaluating the business benefits of a strong DEI commitment, Charlie George, head of enterprise financial crimes compliance and chief AML officer and Fidelity Investments, said that not having programs in place to deal with an increasingly diverse marketplace will cause firms to fall behind.

A diverse workforce brings different perspectives and ideas to the table, yielding new creative solutions to business challenges. Additionally, when employees feel included and valued, they are more likely to be engaged and committed to their work, which can lead to higher productivity and job satisfaction.

Striving for Equity: Ways to Level the Playing Field and Nurture Inclusion and Belonging

People are in very different places in their DEI journey, but that doesn’t mean they don’t have a role to play in making their organization more inclusive and cultivating a culture of belonging. Everyone from the C-Suite to entry-level analysts have something to contribute, and it’s up to a firm’s leadership to show their employees that DEI is a company priority.

There is an ongoing discussion whether the “E” in DEI should represent equity or equality. McKinsey & Company defines equity as the “fair treatment for all people, so that the norms, practices, and policies in place ensure identity is not predictive of opportunities or workplace outcomes. Equity differs from equality in a subtle but important way. While equality assumes that all people should be treated the same, equity takes into consideration a person’s unique circumstances, adjusting treatment accordingly so that the end result is equal.”

It is critical for industry leaders to become more curious in their approach to achieving DEI results, said Michael Freedman, senior vice president and head of regulatory enforcement and associate general counsel at LPL Financial.

Instead of thinking too broadly, DEI leaders should focus on key strategic initiatives and pick a few strategic priorities that they’re going to work on personally. “We’ve tried to boil the ocean, and when we boil the ocean, things don’t get done,” Freedman said.

One of the strategic initiatives LPL Financial started prioritizing is writing job descriptions in a more inclusive manner. For example, do we really need a lawyer with seven years of experience, or will five years suffice? Do we truly need a candidate with this skillset, or can our experts easily train them? By having unnecessary requirements in job descriptions, it’s possible to overlook capable diverse talent who can excel in the role. An audience member also suggested using technology that helps identify and eliminate bias in job descriptions.

Additionally, LPL has established DEI-focused mentorship programs to address issues relevant to underrepresented groups. They’ve also made it a regular practice to review diversity metrics with senior leadership.

Initiatives to Ensure Retention and Promotion of Diverse Talent

Now that the bulk of job applications are submitted online, we have increased data and analytics revealing gender inequality in job applications. Males are more likely to apply to a job even if they don’t meet all the listed requirements, while most women won’t submit an application if they lack just one or two qualifications.

When it comes to recruiting, it can be difficult to find diverse candidates in a city that doesn’t have a diverse population. At Greenberg Traurig, Simon said the firm has focused on tapping into local universities and students at other universities who grew up in that city. They’ve found success in hiring diverse students who grew up in their area but went away to college and want to come home to their existing support network of family and friends.

Making an Institutional Impact: SIFMA C&L Society 2023 DEI Advocate Award Winner

How can we make a lasting impact that sweeps through not only a firm’s entire organizational structure, but also out into the industry? Well, this year’s recipient of the C&L Society’s DEI Advocate Award, Jill Centella of J.P. Morgan Chase & Co. (JPMC), showed us exactly how.

In 2018, Centella spearheaded a powerful initiative at JPMC called “Leading with Diversity,” which mandates that at least 50% of all the firm’s litigation, regulatory, arbitration, and employment matters be led by diverse lawyers at law firms hired to represent the bank. So, not only are significant opportunities being given to diverse attorneys, but they also are receiving proper recognition within their firms, changing the power dynamics.

Within two years of its launch, 51% of JPMC’s litigation matters were overseen by a woman or someone with an ethnically diverse background. By taking this step—and publicizing its intentions—JPMC is motivating other financial institutions to measure diversity in its outside counsel more rigorously.

Centella emphasized the importance of building internal and external relationships when it comes to DEI efforts, which in turn builds trust. As Freedman noted during the panel discussion, it is important for firms not to assume that a baseline level of trust exists between them and diverse hires – this trust is developed over time by investing in internal and external diverse relationships.

Do More with Industry Resources

SIFMA and its members strive to provide firms across the financial services industry with the resources needed to achieve, expand and promote workforce, client, and supplier diversity and inclusion.

To learn more about SIFMA’s Diversity, Equity & Inclusion efforts,

This article was originally published on May 10 in SIFMA News

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Cheryl Crispen

Executive Vice President for SIFMA and Staff Advisor for SIFMA’s Diversity & Inclusion Council