The Milken Institute launched its first fellowship program with Historically Black Colleges and Universities to prepare students for careers in finance, with the aim of building a more diverse talent pipeline to help close the racial gap in asset management.
While minorities make up 30.5% of the asset management industry's workforce, Black Americans comprise only 6.5% of the industry,
The HBCU Strategic Initiative and Fellowship Program selected 16 students from 10 HBCUs who through mid-April will learn everything from private equity and hedge fund, to how asset management firms operate. Participating schools are: Bethune-Cookman University, Bowie State University, Florida Agricultural & Mechanical University, Howard University, Lincoln University, Morehouse College, Morgan State University, North Carolina Agricultural & Mechanical University, Spelman College, and Tuskegee University.
Blair Smith, the senior director of the Center for Financial Markets of the Milken Institute, said the finance industry is still unaware of the potential of students coming out of HBCUs.
"There's sort of a natural assumption that you're making a safe bet on students (from Ivy Leagues)," he said. "What people are finding, as the industry grows, is that there's a greater need for talent, not just diversity of race and diversity, but also ideas and backgrounds."
A 2015 study on the hiring practices of top-tier investment banks, management consulting firms and law firms showed that those employers still look for talent almost exclusively in Ivy Schools. "Even before applications are received, employers allocate jobs based on alma mater, skewing opportunities toward (and against) students from particular campuses,"
Smith said the Milken program is helping Black students to feel confident in competing with others from different schools. "It provides them with a sense of comfort being in these organizations and on a personal level, financial empowerment that leads to wealth creation, and most importantly for the fellows self trust," he said.
The Milken Institute, a nonprofit think-tank in Santa Monica, California, didn't disclose how many applications the program had received, but said demand was high and that students from non-participating HBCUs reached out in hopes to join. "You're opening up a world to them that they haven't been exposed to yet," he said.
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The fellowship program partnered with firms including Ares Management, Apollo Global Management, Carlyle Group and Blackstone to build the curriculum and provide potential internship opportunities for when the students graduate. "I think there's a sincere desire to achieve diversity in a lot of asset management firms," Smith said.
According to the Congressional report, there wasn't much improvement in diversity in the finance industry despite public commitments after the nationwide Black Lives Matter protests in 2020. The share of people of color in the executive workforce increased only by 1% to 17.6% from 16.6% to 17.6% between 2019 and 2020. And just 3% of executives in investment management firms were Black in 2019. In 2020, the figure nudged up to 3.4%.
"They're either going to provide these organizations with the financial return they're looking for, or they're going to help mitigate some of the potential risks that come from a homogeneous environment with a lack of diversity," Smith said.
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