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How Wealth Managers Can Support EDI Objectives Through Asset Manager Selection  

Roraj Pradhananga and Jane Swan

4 October 2023

The following article on the topic of how to improve representation of certain groups in the financial services industry comes at an important time. While many firms have talked about diversity, equity and inclusion initiatives, the impression one gets is that the sector continues to have a problem. As more People of Color and women are among the ranks of high net worth clients, it is also hard commercial sense for firms to improve. There's also, as readers know, a war for talent out there, with the average of financial advisors, for example, in the upper fifties. For all kinds of reasons - social, cultural, ethical and commercial - there is a need for improvement and measurable progress. 

To consider these issues are Roraj Pradhananga, managing partner of research and partner at Veris Wealth Partners. Jane Swan, CFA is a senior wealth manager and partner at Veris Wealth Partners. The editors at this news service are pleased to share these comments; the usual editorial disclaimers apply. Email

The financial services industry has an uncorrected legacy of placing obstacles to employment opportunities and career advancement for People of Color and for women. Black, Brown, and Indigenous people remain severely underrepresented across the financial services industry. 

Traditional due diligence and risk-assessment frameworks in the asset management industry have led to a system in which White, male asset managers control ~99 per cent of the $82.24 trillion in assets under management . 

Diversifying who sits at the decision-making table will be critical to building diversity, equity, inclusion, and belonging in our economy and in communities across the US. 

EDI due diligence framework 
To address this, Veris Wealth Partners developed an equity, diversity and inclusion due diligence framework to help our firm identify fund managers that are diverse and inclusive at all levels of the organization, have an EDI lens in their investment process, are focused on intentional investments in under-resourced communities, and are working to dismantle obstacles to racial and gender equity through their policies and practices.

A rigorous EDI due diligence process should not being a “check the box” exercise. Veris collects detailed information about the policies and practices of our managers and their investments such as:

Firm and policies 
-- Diversity across investment team, senior management, board, and ownership levels; 
-- EDI commitments and goals, implementation plans, and outcomes;
-- Hiring, retention, and promotion practices;
-- Promotion ratios for women and people of color; and 
-- Vendor and supplier policies 

-- How EDI is incorporated in the investment process;  
-- EDI focused engagement efforts with portfolio companies; 
-- Tracking of portfolio company EDI data; and 
-- Impact outcome data.

We aim to differentiate between investment strategies and companies that are making superficial or performative adjustments and those that are intentional.

Veris goals for adding more EDI managers
We believe our definition of an EDI Manager is both stringent and needed. EDI Lens Investing requires integration of equity, diversity, and inclusion factors in the investment process and not only in the demographics of the investment firm/manager. 

Veris made a commitment to ensure two-thirds of all new managers we perform due diligence on annually are either EDI managers or have an explicit EDI lens in their investment process. We will continue to assess this goal annually until most of the managers on our platform are classified at the EDI Manager or EDI Investment Process levels. To achieve our goal, we are actively working to source and identify managers and/or funds that are significantly owned and/or led by women and People of Color and engage with our managers on best practices for them to become an EDI Manager or EDI Investment Process Manager.

Ongoing efforts and engagement
EDI integration is not only part of our due diligence process, but also a significant part of our firm’s pipeline prioritization, investment committee discussion, and approval processes. Veris takes a data-driven EDI engagement approach and collaborates with our approved fund managers on an ongoing basis as we have found that some managers are not yet tracking or reporting on this data. We also provide support and share best practices to help those that are striving to make improvements, so that they can become EDI managers.

We have seen significant improvements in the amount of EDI-specific data we are able to collect, levels of engagement, and the number of EDI commitments. 

There are many studies that show that diverse fund managers tend to invest in diverse founders and marginalized communities .  Thus, we look to amplify the impact of investing in marginalized communities by also investing with diverse fund managers.

We acknowledge that the racial wealth gap is a complex, multifaceted issue rooted in history and that there is no single solution. However, we believe that investors have many opportunities to advocate for policy changes and invest in intersectional solutions that will work together to help build racial equity in terms of housing, employment, business ownership, healthcare, education, and overall quality of life.

Veris aims to hold our firm to a higher standard when it comes to incorporating EDI in our investment decision making. We look forward to collaborating with our investment managers as we seek new ways for their investment processes and portfolio companies to further drive diversity, equity, inclusion and belonging in our industry, broader workforce, and our economy. 

About the authors
Roraj Pradhananga, CPA is the Managing Director of Research & Partner at Veris Wealth Partners. Jane Swan, CFA is a Senior Wealth Manager & Partner at Veris Wealth Partners. Founded in 2007, Veris Wealth Partners is an independent, majority woman-led firm that serves as investment consultants for endowments and foundations and as wealth managers for high-net-worth individuals and families.

The information contained in this document is intended for informational purposes only, provides only a summary of topics discussed, and reflects the opinions of Veris Wealth Partners . Certain information contained herein is derived from third parties. While we believe such information is accurate, we make no guarantees as to the accuracy or completeness of such information.