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Meeks, Waters, and Booker Statement on GAO Report of Disparities in Asset Management

September 20, 2017
Press Release
"The GAO’s report reaffirms much of what we know – minority and women-owned asset managers experience barriers to entry in the financial services industry..."

 

Meeks, Waters, and Booker Statement on GAO Report of Disparities in Asset Management

Washington, D.C.—Senior Member of the Financial Services Committee, Congressman Meeks (D-NY), along with its Ranking Member, Maxine Waters (D-CA), and Senator Corey Booker (D-NJ) released the following joint statement on a new Government Accountability Office (GAO) report, “Investment Management: Key Practices Could Provide More Options for Federal Entities and Opportunities for Minority- and Women-Owned Asset Managers” (GAO-17-726). Originally requested by the lawmakers, the report identified key practices (below) that institutional investors can use to increase opportunities for MWO asset manager:

  1. Top leadership commitment. Demonstrate commitment to increasing opportunities for MWO asset managers.
  2. Remove potential barriers. Review investment policies and practices to remove barriers that limit the participation of smaller, newer firms.
  3. Outreach. Conduct outreach to inform MWO asset managers about investment opportunities and selection processes.
  4. Communicate priorities and expectations. Explicitly communicate priorities and expectations about inclusive practices to investment staff and consultants and ensure those expectations are met.

However, only a handful of the federal entities reviewed by the GAO used all of the above practices. Most utilize one or two, if any.

“The GAO’s report reaffirms much of what we know – minority and women-owned asset managers experience barriers to entry in the financial services industry, and those barriers are even more pronounced when it comes to financial firms contracting with the federal government,” said Gregory W. Meeks. “The federal government’s overreliance on one or two asset managers carries with it operational risks. A diversification of the firms it contracts would bring more security for federal employees, who are investing their hard-earned money. Moving forward, I will push the federal retirement plans to adopt the reforms recommended by the GAO which will bring them more in line with what’s taking place on the local and state levels.”

I applaud the federal entities that have acknowledged their shortcomings and committed to working to improve equal opportunities by incorporating these practices. However, I am deeply disappointed that the Federal Retirement Thrift Investment Board, which administers the Thrift Savings Plan (TSP), disagreed with the GAO’s recommendations…” Ranking Member Waters said. “I strongly urge the Board to rethink its resistance to addressing this important issue and to incorporate the GAO’s recommendations to help remove barriers faced by MWO asset managers and benefit investors, as a first step towards leveling the uneven playing field in the asset management industry.” 

"This is a matter of access and opportunity, and one of many factors leading to the deep socio-economic inequities that exist between women and people of color and their white and male counterparts,” Senator Booker said. “Of the $70 trillion under management by asset management firms in the U.S., less than one-percent is managed by minority and women-owned firms. This is an unacceptable reality that we must change and the federal government should lead the way. As the GAO report demonstrates, federal pension plans must ensure that institutional investors make an intentional commitment to diversifying the firms they do business with and redouble efforts to reach minority and women-owned firms about opportunities. Studies have shown that women and minority-owned asset managers do just as well or better than their peers. It’s on us to make sure they have a seat at the table.” 

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