A fintech startup founded by ex-Vanguard and BlackRock veterans is opening its platform to help recently launched asset managers gain scale and boost diversity in the industry.
The new collaboration
Advisors play a pivotal role in asset management through their fund recommendations. In contrast with asset managers who select the stocks, bonds or other securities within a given fund or portfolio, intermediaries like advisors pick which products are the best fit for clients. Firms with female, Black, Hispanic, Asian American or other minority owners currently control just 1.4% of the industry's assets under management, according to a December 2021
DFD founders Bilal Little and Devon Drew are working with The Center to provide "greater transparency by demystifying the diligence process," Drew said. "For a lot of these managers, they probably have a sour taste in their mouths from going through diligence after diligence with nothing really happening. That's a common experience. The frustrating part is just not hearing the feedback."
The Center has reached more than 1,000 members among "asset owners, asset managers, public and private institution trustees, financial services providers, investment consultants, academics and regulators championing the importance of inclusion in the financial services industry," according to its website.
It started "as an informal conversation" in 2020 that has developed into programs including discussions among experts, research and resources for emerging funds in the industry, said board member Rodney Herenton, the founder of
"It's a platform that really allows you access to capital and access to allocators," Herenton said in an interview about DFD and the share of women and minority-owned asset managers in the industry. "We hope to see the needle of that low percentage go up, and we'll be tracking it."
That struggle is playing out for many startup asset managers competing against the giants of the industry. Adasina Social Capital has proven
An existing base of investors at Robasciotti and Philipson's
She called the low percentage of women and minority asset managers in the industry "kind of unbelievable" in 2023 and credited DFD for "blowing open a hole in that wall" for up-and-coming managers. "We need some drastic measures, and I'm excited about their technology doing something to get the people who want diverse managers access to those managers," Robasciotti said.
Technology carries a great deal of potential for startup managers, according to Liz Fritz, the co-founder of fintech consultancy
"The human side and behavioral components of wealth management are more important than ever — and I feel like women and Black, Hispanic, Asian Americans and other minorities have a very differentiated strength in this area," Fritz said in an email. "Technology will allow them the time to hone their value propositions, streamline their internal processes (allowing them more time) and provide accessible platforms like social media, podcasts, etc. to create a wider spread of their differentiated messages."
DFD's collaboration with The Center could aid the newer managers seeking to expand the investments to their funds through resources like lead generation, marketing and other tech tools, according to Drew.
The DFD team and members of The Center will go through the managers' answers to a questionnaire that's similar to the industry's so-called requests for information or requests for proposals to pick candidates. The judges will evaluate "the commercial viability of the manager, how they fit within a broader ecosystem" and other factors, such as potential barriers they face and the level of seed capital sought by the funds, Drew said. At the end of the year of free services, the managers can decide whether to become full-fledged DFD clients.
"The end goal would be to scale the AUM," Drew said. "We know that, in order to get to that end goal, there's a lot that has to happen between A and Z."
