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Press Release

Willis Towers Watson sets out diversity action plan for investment industry

Investments|Inclusion and Diversity
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October 26, 2020

ARLINGTON, VA, October 26, 2020 — Progress on diversity across the whole investment industry has remained disappointingly slow, according to research from Willis Towers Watson (NASDAQ: WLTW). In its paper, “Diversity in the Asset Management Industry,” the company sets out a clear action plan to accelerate the pace of change, which it believes will lead to better investment outcomes, including specific actions for its own business.

Focusing on data-driven measurement and engagement, the paper outlines Willis Towers Watson’s updated methodology for assessing and encouraging diversity within asset managers, investment consultants and asset owners.

This approach leverages insights gleaned from new research into inclusion and diversity (I&D) issues at asset management firms, including demographic information collected at both a firm and product level. This data-led process goes beyond a reliance on a single metric, such as minority or female ownership, and instead uses a new more broadly based Willis Towers Watson Diversity Score to establish a baseline view on gender and ethnic diversity. This is supplemented with the more nuanced aspects of diversity gleaned through its qualitative manager research process.

Willis Towers Watson has also established clear actions to encourage the use of a more diverse set of asset managers in its clients’ portfolios, with an expectation that these measures will improve end-saver outcomes. Its manager research team has targeted an increase of 20% in discovery meetings with firms that have a diverse investment team, to identify new, best in class asset managers. It also expects to increase its allocation to diverse investment teams within its delegated portfolios, as it believes this will lead to better investment outcomes allowing for risk.

Willis Towers Watson is making a call to action across asset managers, investment consultants and discretionary investment solution providers and asset owners to support progress in diversity. The company is encouraging:

  1. Greater transparency and disclosure: high-level statistics to understand how diversity is reflected across different functions
  2. Increased sourcing of diverse talents, e.g., through graduate and returner programs
  3. Measurement of diversity of asset managers that goes beyond just equity ownership
  4. The removal of requirements that may unwittingly exclude diverse funds/firms
  5. Progressive compensation structures and policies around flexible working arrangements
  6. Shifting away from a star portfolio manager model to a team-based investment approach, with a strong focus on ensuring decision-making teams are diverse
  7. Asset owners and investment consultants to establish targets for increasing the diversity in portfolios, with the associated improvement in expected performance
  8. A focus on internal policies, training and networks designed to increase diversity and address the challenges of racism, sexism and other unconscious biases

Willis Towers Watson is keen to engage with asset managers who are working on improving their diversity; however, asset managers who fail to encourage greater diversity or do not respond to growing asset owner expectations, may face a downgrading of their rating — a measure Willis Towers Watson has used in the past.

“Addressing the systemic issue of poor diversity in the asset management industry requires a collective effort and, in many cases, a fundamental change in mindset and culture,” said Chris Redmond, head of Manager Research, Willis Towers Watson. “Although some efforts will take time to bear fruit, as an industry we need to challenge ourselves to do more now.”

Improving diversity is key to building a stronger investment industry, and our initial findings show it is positively linked to performance outcomes. We recognize businesses are at different points in their diversity journey today, and these proposed actions are just the starting point for the industry to build. While we understand the challenges ahead, we believe by taking these steps, the investment industry can evolve in better reflecting our society and delivering better performance outcomes for savers.”

The full “Diversity in the Asset Management Industry” paper can be accessed here.

Forward-looking statement

The information included in this presentation is intended for general educational purposes only and does not take into consideration individual circumstances. Such information should not be relied upon without further review with your Willis Towers Watson consultant. The views expressed herein are as of the date given. Material developments may occur subsequent to this presentation rendering it incomplete and inaccurate. Willis Towers Watson assumes no obligation to advise you of any such developments or to update the presentation to reflect such developments. The information included in this presentation is not based on the particular investment situation or requirements of any specific trust, plan, fiduciary, plan participant or beneficiary, endowment, or any other fund; any examples or illustrations used in this presentation are hypothetical. As such, this presentation should not be relied upon for investment or other financial decisions, and no such decisions should be taken on the basis of its contents without seeking specific advice. Willis Towers Watson does not intend for anything in this presentation to constitute “investment advice” within the meaning of 29 C.F.R. § 2510.3-21 to any employee benefit plan subject to the Employee Retirement Income Security Act and/or section 4975 of the Internal Revenue Code.

Willis Towers Watson is not a law, accounting or tax firm and this presentation should not be construed as the provision of legal, accounting or tax services or advice. Some of the information included in this presentation might involve the application of law; accordingly, we strongly recommend that audience members consult with their legal counsel and other professional advisors as appropriate to ensure that they are properly advised concerning such matters. In preparing this material we have relied upon data supplied to us by third parties. While reasonable care has been taken to gauge the reliability of this data, we provide no guarantee as to the accuracy or completeness of this data and Willis Towers Watson and its affiliates and their respective directors, officers and employees accept no responsibility and will not be liable for any errors or misrepresentations in the data made by any third party.

In the absence of its express written permission to the contrary, Willis Towers Watson and its affiliates and their respective directors, officers and employees accept no responsibility and will not be liable for any consequences howsoever arising from any use of or reliance on the contents of this document including any opinions expressed herein.

Views expressed by other Willis Towers Watson consultants or affiliates may differ from the information presented herein. Actual recommendations, investments or investment decisions made by Willis Towers Watson and its affiliates, whether for its own account or on behalf of others, may not necessarily reflect the views expressed herein. Investment decisions should always be made based on an investor’s specific financial needs.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.

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