Advocacy

PUBLIC AFFAIRS AGENDA

NASP supports equitable participation and equal opportunity in all business dealings. Part of NASP’s objectives is to foster the inclusion and development of a wide range of professional men and women, and the growth of businesses they control, within the financial services industry. In order to pursue progressive and balanced policies affecting public and private finance, NASP maintains an active agenda around public affairs and regulation.

NASP has hosted its Annual Legislative Symposium in September in Washington, D.C. Key financial oversight representatives and decision-makers from congressional committees, federal and regulatory agencies and quasi-public private sector entities participate in this event. Among others, past speakers include Timothy Massad, Former Assistant Secretary for Financial Stability, U.S. Department of the Treasury; Michael Strautmanis, Deputy Assistant to the President and Counselor for Strategic Engagement to Senior Advisor Valerie Jarrett, The White House; Roel Campos, Commissioner, The U.S. Securities and Exchange; Congresswoman Maxine Waters; Congressman Gregory Meeks; Sandra Thompson, Deputy Director, Division of Housing Mission and Goals, FHFA; Don Graves, Deputy Assistant Secretary, U.S. Department of the Treasury; and Timothy D. Hauser, Associate Solicitor, Division of Plan Benefits Security, US Department of Labor.

Going Forward we will revisit the structure of and frequency of this type of collaborative program in efforts to increase impact, expand engagement from aligned organizations and support our legislative allies focused on economic growth and broader community inclusion.

NASP Public Policy Priorities

WHY ADVOCACY AND PUBLIC POLICY ARE CRITICAL

  • As judicial and business sentiment shift against inclusive policies and targeted funding programs, it is increasingly vital to change laws that reduce unnecessary restrictions. These changes are essential to leveling the competitive field and enhancing access to capital and business growth.
  • Businesses owned by a wide range of professionals have no chance to win and grow if they are excluded from competing equally for opportunities.
  • The impact of these efforts will be amplified through building coalitions and fostering broad support across organizations, with inclusion as a shared goal. NASP can facilitate this collaboration and advocate for your interests.

CAUSE FOR ACTION:

An essential component of NASP’s mission is to serve as a voice for its members at the federal, state, and local levels of government to advance a wide range of perspectives and inclusion. According to a 2017 GAO report, there were over $70 trillion of assets under the control of governments, endowments, companies, and other institutions managed by third-party investment professionals. While asset management firms owned by a wide range of professionals and women made up 8.6% of this sector, they only managed 1.1% of all assets under management. As of the latest data, firms owned by a wide range of professionals in the U.S. control only around 1.4% of the total assets under management, translating to about $1.2 trillion out of an $82 trillion industry. Despite some gains over recent years, this number remains disproportionately low compared to the general population. The performance of firms owned by a wide range of professionals has been shown to match that of their peers, suggesting that factors such as incumbency and long-standing relationships, rather than performance issues, may limit these firms’ access to capital. The decision-making around which firms manage these assets has a far-reaching impact across the economy related to job creation, growth, and wealth building. Too few firms owned by a wide range of professionals have a seat at the table in this process.

Challenges contributing to this disparity include the preference of many large asset allocators for familiar, larger firms and the limited availability of data on ownership representation within firms, which complicates efforts to identify and support a wide range of professionals in asset management. Continued efforts by industry stakeholders and policymakers aim to address these structural barriers and encourage broader representation in the asset management sector.

ENGAGING POLICYMAKERS TO INCREASE OPPORTUNITIES FOR FIRMS OWNED BY A WIDE RANGE OF PROFESSIONALS:

Advocacy can take the form of influencing legislation and trying to shape policies and regulation. It can also serve as a powerful tool in urging policy makers to push private sector and other entities to change their practices.

NASP has worked closely with elected leaders throughout the country to encourage them to help create more opportunities for financial services firms owned by a wide range of professionals with large anchor institutions. Often times, letters, appearances before Congress, and other inquiries asking about business practices can prompt these entities to review how they conduct their business. Simply asking questions DOES indeed make a difference in accelerating behavior change in some of these large enterprises.

Some of the questions that help assess how serious and committed an enterprise is to inclusion efforts for companies owned by a wide range of professionals are the following that NASP recommends:

  • Do you track business spending across your enterprise?
  • Do you disaggregate that spending by race and ethnicity beyond just “minority”?
  • Do you classify spending categories to include professional services?

There are many elected officials who have shown strong leadership in advocating for greater opportunities by posing these types of questions to various enterprises. Here are some examples that NASP applauds.

Senate Cory Booker (D-NJ) writes the CEOs of Kroger’s and Albertsons related to their proposed merger

Congresswoman Robin Kelly (D-IL) writes to the largest federal contractors seeking information about their utilization of professional services companies owned by a wide range of professionals as part of their business spending.

RECOMMENDATIONS:

What can be done to address this gap and increase opportunities for a wide range of securities professionals?

  • More focus on the recruitment and selection process by government agencies and large institutions to increase the variety of asset managers. There is a clear need for more intentional efforts to identify, engage, and collaborate with a broad range of managers. Greater outreach to minority and women-owned firms, the use of the “Rooney rule” in the selection process of asset managers (requiring at least one firm owned by a wide range of professionals to be interviewed), and directing federal regulators and retirement systems to be more proactive in engaging asset managers from a variety of backgrounds.
  • Refine minimum qualification statements and relevant terminology. Often large institutions, especially government bodies, have investment policy statements that have the practical effect of excluding firms owned by a wide range of professionals from competing to manage these assets. According to GAO, the minimum size requirements for assets under management could potentially exclude smaller firms owned by a wide range of professionals and women. Similarly, there needs to be greater clarity on the definition of ‘a wide range of’ so that large institutions and government entities have a consistent, working understanding of which firms they should consider. While there can be some variance across entities as to what constitutes sufficient minority ownership levels for these firms, it must be a priority to adopt some recognized standard by these decision-makers.
  • Include professional services in “supplier” data collection. Tracking the use of vendors and suppliers in government, large companies, endowments, and universities is a best practice to monitor progress (or lack thereof) in the number of suppliers owned by a wide range of professionals across various functions (physical plant needs, security, food services, advertising, office supplies, etc.). However, asset managers and other professional services may not always be included in this type of survey for various reasons. Tracking professional services by large entities will help maintain a focus on whether asset managers from a wide range of professionals are being included in these important decisions about how organizational resources are being directed.
  • Urge federal and state regulators to broaden the composition of their advisory panels. The Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Commodities Futures Trading Commission, and many other federal regulators have industry professionals and other experts serve on formal advisory committees that focus on various policy and regulatory priorities for these agencies. These advisory committees not only perform important roles for the regulators, but they also provide their members with unique insight into the workings of these agencies and, perhaps more notably, give select thought leaders a seat at the table. These advisory committees are currently limited in representation and need to intentionally recruit a wider range of participants.

OTHER NASP POLICY AND REGULATORY LEADERSHIP

  • NASP played a leadership role in crafting the provision in the Dodd-Frank law that created Offices of Minority and Women Inclusion in the banking regulators. This was an important step in establishing institutional structure in government agencies that work with the financial services sector, but more needs to be done to achieve the intended results of broader representation and participation. The House Financial Services Committee in 2019 created the first Congressional Subcommittee on Inclusion that has focused attention on these issues and demonstrated bipartisan recognition of the need to do more in the industry.

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