Fund consultants and ratings agencies have just as big a role to play in helping to improve diversity within portfolio management as asset management companies, according to The Diversity Project's Jane Welsh.
In late 2018, capital markets think tank New Financial, in association with The Diversity Project, released a report outlining key barriers to improving diversity in portfolio management.
Welsh, project manager for The Diversity Project, told Investment Week two of these barriers - low turnover of portfolio managers and gaps in track records due to leaves of absence - were "peculiar to [the asset management] industry".
"Those were two very specific issues that that we needed to address," Welsh, who worked as an investment consultant at Willis Towers Watson, said.
"We knew that it could not just be asset managers fixing that problem, because of the role that asset owners and consultants play in this market.
"I was a consultant, and I know that I used to jump up and down if a fund manager made a change to the team. I now realise I was not helping, in some cases."
A key barrier was the fact that asset owners and consultants do not like turnover.
"Once a portfolio manager is running a particular fund, they can hang onto it for years," Welsh, who now runs her own investment consultancy, explained.
"So, asset management firms are loathe to make changes to their teams, because they know that may be perceived negatively by their clients."
This makes it unlikely a team will be able to improve its diversity.
However, in many cases, Welsh said change can be healthy and "should be seen as positive" as it can "bring in new ideas and new perspectives".
Welsh added asset owners should consider putting less pressure on asset managers to fill vacancies immediately, for instance.
"If you put pressure on a firm they are likely to hire a usual suspect, rather than really take that time and consider introducing somebody who has a slightly different background."
Welsh said fund managers' track records need to begin to take career breaks into account, with transparency around the process of promotions another key area of improvement.
"One of the main things that I took away from it was the need for transparency," she continued.
"At the moment, many organisations are reluctant to be public about subjects such as how maternity and paternity leave is handled, how fund managers are selected, and how promotions are determined.
"If we could encourage organisations to be more public, either externally or at least internally with their employees, about how that operates, it would be very helpful for everybody."
Welsh said a focus group of people from across the industry had been put together to devise solutions to the issues, which has "proved to be very powerful".
"We are now in the process of sharing this with the wider industry, and I think so far it has been received very well.
"It has really helped people to have a good conversation internally about the processes and the ways that they do things, but it is early days.
"So we need to make sure that we keep spreading the word, ensuring that people are taking this back into their organisations and thinking about how they need to change a few things."
The New Financial report was supported by Allianz Global Investors, Hermes Investment Management and Singapore's sovereign wealth fund GIC.