Originally published on June 15 on LinkedIn by Katherine Jollon Colsher | Chief Executive Officer at Girls Who Invest. View On LinkedIn | Requires Login
Tina, congratulations on Xponance turning 25 this year! As you look back over that time, how has the conversation around gender equity in investment management evolved?
The first thing that comes to mind is that it’s a conversation now. Early in my career, as a plan sponsor Chief Investment Officer, there was little gender or racial diversity at senior investment positions. I was often one of just a few women in the room, and almost certainly the only Black person in the room. Back then, the benefits of diversity were not talked about and certainly not understood as beneficial to performance.
I have always found the absence of diversity among portfolio management teams and firms problematic on two dimensions: from a social justice aspect, and also from an investment perspective. If 50% of a population is excluded from something, that’s a problem. In the late 1980s/early ‘90s, there were no prominent studies that showed that diverse investment teams led to better outcomes. But, given that the fundamental law of active management states that one’s performance is a function of selection skill, times the number of independent opportunities for investment, I was bothered that the firms presented to me for investment consisted of white men who came from very similar social, cultural and academic backgrounds. That’s why I would query investment firms about their lack of diversity, and frankly, my frustration inspired me to create a pilot program at the pension fund to hire little known, diverse and women-owned investment firms and managers.
Over time, data started to emerge that showcased the benefits of diverse investment teams, and that’s been a game changer. Diverse teams make profitable decisions, and considering we’re managing people’s money, we owe it to them to provide the strongest possible investment team we can. This is why the mission of Xponance is to generate investment excellence across a broad range of solutions (direct & passive systematic equity, fixed income, global equity multi-manager strategies, as well as private markets) generated by diverse investment teams.
You famously funded your business through a SBIC loan secured by the equity in your house, which is such a courageous decision. We talk so much to our scholars and alumni about the importance of confidence. How did you find the confidence to take that jump?
My parents, and my father in particular, really drilled into me that the best investment you can make is in yourself. That’s something I’ve carried with me through my entire life.
Confidence is important but I will also say that confidence without determination and purpose can quickly traverse into fantasy. Pairing these qualities together is therefore critically important.
I am not one that needs to start with a 20-point plan which solves for every conceivable risk before I dive in, because perfect certainty is illusory. This is something that I have counseled many women entrepreneurs and professionals who sometimes undermine their opportunity for growth by undervaluing their own ability to navigate risks. Some may say that using the equity in my home to securitize a loan to fund a start-up business was ridiculously risky. But in the mid-1990s, access to conventional funding sources for a startup investment firm run by a Black female investment entrepreneur would have been the very definition of an oxymoron. Failure wasn’t an option for me because it would’ve meant both unemployment and the loss of my home. This reality gave me the drive to work harder than anyone else and along the way, really treasure the clients, colleagues and employees that sufficiently believed in our mission to join me on this journey.
For GWI’s scholars and alumni, I encourage them to develop confidence by learning as much as they can about their craft. That lets them build credibility in their own eyes as well as the eyes of others. And confidence flows from that. There will be many bumps along the way, both in life and in business, and there will be a lot of highs and lows. However if they can pair purpose and determination with confidence, they will make it through the rough patches.
Last June, you wrote an article about Facing Our Racial Demons and Healing Them, and recently you wrote about Jackie Robinson. How do you choose when to use your voice?
I firmly believe that conversations around racial and gender equity should be framed as an opportunity for all Americans to enhance economic growth and investment returns. My own voice on these matters has evolved over time. 15 years ago, I might’ve thought the things I wrote, but I don’t know I would have had the courage to write them. So, some of the use of my voice is a reflection of the stage I’ve attained in my career. The starting point then and now is to acknowledge that my field of expertise is investments and that professionals who specialize in DEI policies can and should speak with greater frequency and authority on these societal issues. However as one of the largest and longest lived Black women owned and led firms, we believe that one of the responsibilities of this great privilege is to use our voice to encourage greater inclusiveness in the investment industry.
In doing so, I am acutely aware that the risk of me publicly speaking out in response to societal challenges such as racial and gendered injustices, is that we become defined more by that voice and by my identity as a woman and person of color, than as accomplished investors. In the investment world, this framing has traditionally meant often being relegated to the materially smaller emerging manager or minority manager allocation bucket. Would, for example, consultants see us as an investment manager eligible for all client searches for which we qualify, or do they only consider our services when there is a specific client request for a diverse manager?
Moreover, while I am happy to provide my perspective and even share my own experiences with racism and/or sexism when appropriate, it is disheartening when the primary objective of such forums has occasionally been to allow the listener(s) to “check a box” for having participated in the conversation, without catalyzing meaningful change. That’s why I am encouraged by the re-energized push by asset owners and consultants for more inclusive hiring practices, particularly in light of extensive research suggesting that doing so would not sacrifice investment performance. It’s also why we wholeheartedly support organizations like Girls Who Invest, who provide vehicles for tangible and transformative outcomes.
What’s one piece of advice you like to give to young professionals?
Build and nurture relationships in addition to honing your investment skills. Asset management, like so many industries, is a relationship business. People have to recommend you to clients and in order to do that they need to know who you are, so building and maintaining your network is key.
The social nature of the hiring process was a hard lesson to learn for me as a natural introvert and something I wish I’d figured out sooner. I assumed that if I worked hard and kept my head down, the world would see me. And that’s not necessarily how it always works. Working hard AND actively growing your network and connecting with experienced professionals is a better combination. That will allow you to be seen.
Related to that, as you build your network, build it in every direction possible. This way you can maximize your impact, as well as your social capital, because opportunities can come from all and unforeseen directions.
Community is a huge part of Girls Who Invest. How have you relied on mentorship and sponsorship over the years?
Early on I had experience managing investment portfolios, but I had very little knowledge of running a business, which is a completely different skillset. Fortunately, I had some fantastic people who were very helpful in mentoring me.
One was Patricia Garrison Corbin, who is now sadly deceased. As a Black woman who ran a major financial advisory business in the Philadelphia area, her insights were extremely helpful. Some of the early investment contracts for our fledgling firm came through Pat’s referrals. We had breakfast every month and simply talked about the challenges of running a business and nurturing a family. We would cover mundane but important details, like how to manage cash flow, negotiate deals and how to scale a business in an industry where your identity as a Black woman made you a bit of unicorn. Her advice and counsel were indispensable and resonate to this day.
Another influential person is Fred Choate, who ran the SBIC which invested in our firm and remains on our board today. He would insist on financial discipline and that has always served us well. There’s one funny story with him: he’d insist we have audited financials back when we only had two employees and one client. We were so small at that time it seemed silly to pay a CPA firm to figure out such basic numbers. I’d say, “Fred, this is not that complex. We only have one client!” But he insisted on it and preached the importance of financial discipline at all stages of a company’s growth, especially during the early days, a lesson that continues to serve the company well.
Working with diverse managers has long been important to you and Xponance, but it had to be challenging to keep your focus while also managing everything else that comes with running a business. How did you stay on track with your vision and push for so many things at once?
It always helps to have a mission that one really believes in to sustain you through the vicissitudes of investment performance cycles, running a business, and life in general. Our mission is to be a complete investment solutions provider, to strive for investment excellence generated by diverse investment teams, and to be a force multiplier for positive change. Fortunately, it has been my great privilege and pleasure to build and work with a talented and dedicated team to further our mission and keep things on an even keel as the business has grown.
Over the last 25 years, we have earned the trust of marquee institutional allocators for whom we manage almost $13 billion in assets. Our team, of which 67% is comprised of women and/or persons of color, is a counter narrative to the homogeneity that I observed earlier in my career. Through our multi-manager business, we have been a force multiplier for positive change and opportunity by funding nearly 200 investment products, 60% of which were offered by women and / or diverse founders. We have also been able to extend our mission of expanding opportunity to diverse and marginalized communities. Since we established our community engagement non-profit affiliate, A Good Measure Foundation (AGMF) in 2006, we have exposed hudreds of children from Philadelphia’s inner city schools to leadership and financial literacy skills.
From a leadership standpoint, you wear a lot of hats. What does your hiring strategy look like and what can people learn about the way you hire and assess talent?
My hiring approach has changed along the way. When we were first starting out, we were undercapitalized and so our focus was on finding people that had similar passions and raw material. We couldn’t afford, quite frankly, to hire fully baked professionals. We were looking for raw capability, talent and passion. And that remains a big part of what we look for.
Today, we have more resources to hire accomplished professionals across multiple departments, but we still harken back to those early days. We like to hire people who think differently and bring a new perspective to us. For example, our analysts don’t need to be a finance professional, per se. You can teach someone how to evaluate a stock or bond or an investment manager, but it is much more difficult to teach people to think creatively.
Lastly, what’s a “bucket list” item you’ve accomplished in your career?
On a personal level, reaching the firm’s 10th anniversary was both an important milestone and turning point for me. We marked the occasion by hosting an inspiring event, which included my husband and business partner Mac, our children, parents, and in-laws. We enjoyed performances from children from an inner-city public school who had completed AGMF’s inaugural financial literacy and leadership skills program. It was incredible.
Clients in attendance said nice things about the work we were doing in the community, while some of the diverse managers in our Multi Manager program spoke about the opportunities we helped provide them. It was a special event for me because it brought together the most important people in life, including the aforementioned mentors, some of whom are no longer with us. The event also evidenced the impact our dual mission of striving for investment excellence and expanding opportunities within otherwise overlooked communities really had. It was then, and continues to be, all about making a difference!