Super diversity comes of age: CMSF

After 20 years of attending the Conference of Major Superfunds you get a good feel for when an industry is at a turning point.

This year’s conference held in Adelaide struck me for its insistent focus on achieving better diversity in our sector.

Not just gender diversity, which gets the most airtime – but true diversity of opinion and approach from people of different backgrounds as a way to achieve better outcomes for members.

Last week I had the pleasure of working with Mellody Hobson, President of asset manager Ariel Investments and also Chairman of the Board of DreamWorks Animation SKG, and director of The Estée Lauder Companies Inc. and Starbucks Corporation.

You could hear the sharp intake of breath amongst CMSF delegates when Hobson told the audience that she was one of only two board Chairs of US publicly traded companies who are black women. Yes you read that right. In her club of two is also Ursula Burns of Xerox.

Hobson quotes a book by Scott Page called the difference: how the power of diversity creates better groups, firms, schools and societies, (princeton, 2007) – where Page shows in considerable intellectual rigor when diversity does lead to better outcomes and how and why, as well as when it doesn’t. According to the publisher, The Difference reveals that progress and innovation may depend less on lone thinkers with enormous IQs than on diverse people working together and capitalising on their individuality.

Page also builds a mathematical calculation for diversity that finds if you are trying to solve a truly difficult problem (which is arguably what asset managers do all day) the best results come from diverse groups of people with dissimilar intellects.

And Hobson is a clear fan: “We need to look at the evidence and I say, just do the maths, because maths has no opinion,” she says. “Diversity ups the game, it makes us better.”

Closer to home, investing giants like the Future Fund are also looking at how a lack of diversity within an investment team might add to overall risk. According to Greg Bright’s Investor Strategy News (ISN), the fund has been looking to reduce its longer-term Anglo, western and, probably, male biases in the management of its $120 billion portfolio.

Raphael Arndt, the Future Fund’s chief investment officer, says the fund’s management wants to be agnostic about whether it is investing in emerging or developed markets going forward, ISN reported last month.

“So, we are upskilling ourselves so that we have the people to share all the experiences. We want people with diverse backgrounds,” he says. “We thought we needed to challenge ourselves to learn more… By and large, we are Anglo and western biased, so we have different challenges if we want to get to wherever we want to be [for example] in emerging markets in 10 or 20 years’ time.”

Interested readers can see Mellody Hobson’s TED Talk: Color blind or color brave here. No doubt there is plenty more debate to come.

FSC life insurance conference – an industry in the spotlight

Re-building trust and ensuring clear and plain communication with consumers – these were some of the messages to come out of the Financial Services Council’s (FSC) life insurance conference held in Sydney this week.

For an industry undergoing unprecedented change and scrutiny and a potential Senate Inquiry looming, the conference pondered – how can we do things better?

FSC CEO Sally Loane announced that the life insurance Code of Practice would be strengthened to include a steering group made up of consumer representatives, the Financial Rights Legal Centre and the Consumer Action Law Centre, as well as senior life insurance executives.

ASIC’s Peter Kell sent a clear message to the industry by saying the Code would need to go above and beyond what the law already does and that it would need ‘substance and bite.’

Many of the conference speakers acknowledged the challenges facing the industry and that wholesale changes were needed to regain consumer trust and confidence. Changes to legacy systems, definitions, data collection and sharing, language and the overall way the industry communicates. No easy task, but a necessary one, especially when dealing with such an emotive topic.

It was encouraging to see insurers tackling this from within their own organisations, especially in addressing the rise in mental health issues. With 1 in 3 financial services workers affected by some form of anxiety and stress, MetLife CEO Deanne Stewart said it all needed to start in the work environment – we need to help create positive workplaces that can still be high performing but also caring and compassionate.

The life insurance industry is at a tipping point. Change is needed to protect the industry’s reputation and all the good work that is done for the benefit of consumers.

As ANZ Wealth MD Alexis George put it ‘”it can’t just be about talk – there has to be action.”