ILLINOIS STATE TREASURER CALLS FOR MORE WOMEN AND PEOPLE OF COLOR IN FINANCE

Illinois State Treasurer Michael W. Frerichs was recently invited by the U.S. Securities and Exchange Commission’s Asset Management Advisory Committee to testify about the need to increase the number of women and people of color in financial institutions, which includes big banks and investment houses. Photo courtesy of Illinois State Treasurer’s Office
Illinois State Treasurer Michael W. Frerichs was recently invited by the U.S. Securities and Exchange Commission’s Asset Management Advisory Committee to testify about the need to increase the number of women and people of color in financial institutions, which includes big banks and investment houses. Photo courtesy of Illinois State Treasurer’s Office

 Illinois State Treasurer calls for more women and people of color in finance

BY TIA CAROL JONES
Illinois State Treasurer Michael Frerichs recently testified at the U.S. Securities and Exchange Commission’s (SEC) Asset Management Advisory Committee about the need to increase the number of women and people of color in financial institutions, which includes big banks and investment houses.
Frerichs said he was invited by the SEC because of the successes with promoting diversity and inclusion in the Illinois State Treasurer’s Office.
     “We know that using diverse investment firms is not only about creating growth and opportunities in our communities, but it’s integral to increasing our investment returns. We know this, because in Illinois, inside our office—we did it,” he said.
      Frerichs said there has been a 216-fold increase in assets managed by diverse-owned firms, from $18 million to $3.9 billion in August. Total assets brokered by diverse owned firms have increased $603 million, before Frerichs took office, to $43 billion this last year. Illnois State Treasurer’s Office also has engaged portfolio companies to increase corporate board diversity. He said it is vital to performance.
    “We take a variety of actions to advance equity, diversity and inclusion of the financial services industry,” he said.
Frerichs laid out a four step plan, which included adoption of the Garcia Rule, to require financial institutions to consider women and people of color-led enterprises when nominating directors or selecting executive officers, as well as when selecting firms, including broker-dealers and asset managers.
      The plan also included mandating the disclosure of diversity data of workforce – race, ethnicity, religion, nationality, disability, veteran status and sexual orientation – including data on outside vendors, with disclosure every two years.
     Step three of the plan includes requiring financial institutions and publicly traded companies to disclose the race and gender of nominees, executive officers and directors annually. And, step four, is for the SEC to commission a study to evaluate the practices of investment consultants and the systemic and structural barriers to diverse investment firms.
   “I think we have data on our side that show these all make good business sense. I’m hopeful the Commission will consider them on their financial merits. In addition, it’s just the right thing to do,” he said. “It is good business, but it’s also the right thing to do.”
      In June, Frerichs and city of Chicago Treasurer Melissa Conyears-Ervin convened CEOs of financial institutions to join the Advancing Equity in Banking Commission to address systemic racism in the banking industry.
      Frerichs said he and Conyears-Ervin are looking to bring their experiences to advancing equity in the banking community. There also is the Financial Services Pipeline Initiative, which seeks to increase the representation of Latinos and African Americans within the Chicago area financial services industry with a focus on talent pipelines, recruitment, hiring, development and retention. The goal of the initiative is to improve the cultural competency with the financial services industry in the Chicago area.
         “If you don’t have diverse people working in your financial institution, you may not see opportunities out there in different communities, in underrepresented communities. You may have fears or biases, and may suffer from systemic racism,” he said. “When you are more thoughtful about who you hire and who you promote and who you ask to serve on your board, you’ll see more opportunities in communities around the city and around the state that maybe you didn’t see before.”

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