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June 21, 2018 at 03:14 PM
According to Mellody Hobson, the diversity at Ariel Investments — and lack thereof throughout the rest of the industry — is a competitive advantage for the firm.
Hobson is the president of the Chicago-based Ariel Investments, which was founded in 1983 by John Rogers Jr. She recently gave a keynote speech at the Morningstar Investments Conference in Chicago.
“We think diversity is a competitive advantage for Ariel,” she said during the conference. “It’s shocking to us that other people don’t see it.”
The Chicago Tribune reported recently that 51% of Ariel Investments’ staff are women, while 27% are African-American, 13% are Asian and more than 7% are Hispanic. Two-thirds of the leadership team is female, as well.
Meanwhile, the Tribune also reported that a 2015 report on the Chicago financial services industry compiled by Mercer found that African-Americans made up only 12% of employees.
The Certified Financial Planner Board of Standards’ Center for Financial Planning recently conducted a study that found that only 3.5% of CFP professionals are black or Latino.
One way Ariel sees a diverse staff as an advantage is it believes that leads to diverse thought, according to Hobson.
She described a passage from a book called The Difference by Scott Page, a professor at the University of Michigan — a book, she adds, that every one at Ariel reads.
“[Page] says if you’re trying to solve a really hard problem — super hard — you want a diverse group of people trying to solve it, including those that have diverse intellectual levels,” Hobson said.
The example that Page gives in the book is the smallpox epidemic that was ravaging Europe.
As Hobson tells it, the greatest scientists from around the world were brought in to try and solve this problem. Yet the actual first understandings of what was the vaccination and what would be the way to deal with this epidemic came from the observations of a dairy farmer.
“A dairy farmer noticed that the milk maids were not getting smallpox, and the smallpox vaccination is a bovine-based vaccination because of that dairy farmer’s observations,” Hobson said. “Now, maybe the dairy farmer was a genius and … maybe he wasn’t, but he was different than all the scientists who were mostly taught to think the same. And that lead to the breakthrough in that instance.”
While Ariel isn’t trying to solve smallpox, Hobson said the firm has plenty of problems to solve.
“We believe that every single day when we’re sitting down and we’re thinking about ‘do we buy this stock, sell it, hold it, etc.’ we’re trying to solve a really hard problem,” she explained. “And that problem is magnified by the fact that people’s livelihoods ultimately depend on the decision that we make.
“If they can send their kid to college, retire comfortably, etc. That’s always in our minds. It’s not billions of dollars, it’s real people and their money.”
