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Connecticut's Treasurer, Shawn Wooden, is holding powerful institutions accountable for their abysmal diversity stats. For him, it's personal.

Danielle Walker   

Connecticut's Treasurer, Shawn Wooden, is holding powerful institutions accountable for their abysmal diversity stats. For him, it's personal.
  • Shawn Wooden is at the forefront of an investor-driven push for more diversity on Wall Street.
  • He's required disclosures that revealed a lack of Black and Hispanic talent at big money managers.

When giant asset managers get a phone call from a state treasurer located more than 100 miles from Wall Street, they know they're in for some tough questions.

That's because the money managers seeking to do business with Connecticut's $44 billion pension system have to go through Shawn Wooden, the sole trustee of those assets. In the almost three years since he's been sworn in as state treasurer, Wooden, 52, has turned up the pressure on money managers to not only disclose their diversity statistics but make them public. And they've done just that — even when they know that what they disclose won't be pretty.

"Most of these institutions are not where they could or should be on this," Wooden said in an interview with Insider. "So it's uncomfortable."

Many companies publish some level of workforce-diversity data in annual corporate-responsibility reports, but those figures rarely disclose specifics on the representation of Black and Hispanic staff at asset-management firms, especially at the executive level.

Wooden requires would-be managers to disclose data on a much more granular level — showing the gender, racial, and ethnic makeup of their workforces by job type and seniority level over a three-year period — before he makes a decision on whether to invest in their funds.

In his role, he has persuaded industry giants such as The Carlyle Group, Morgan Stanley Investment Management, and Wellington Management to respond to his requests, which have revealed glaringly low numbers of Black and Hispanic staff in senior roles.

Connecticut has requested this kind of workforce data from money managers and other business partners with the state since the early 2000s, Wooden said. But those who know him say he can take a big chunk of the credit for pushing asset managers to disclose uncomfortable truths.

"He is very smart and strategic in his investment decisions for the state in our pension fund, but he's also an extraordinary advocate and champion of equity in our social and economic system," Sen. Richard Blumenthal (D-Conn.) said of Wooden. "He's really a leader in a national movement for more transparency and disclosure."

Wooden has his work cut out for him. Almost 84% of executives employed by the US asset-management industry were white, while almost 75% were male, a recent survey by the Investment Company Institute and the compensation-data provider McLagan indicated. The organizations polled 65 asset-management firms representing $21.9 trillion in assets under management.

While Connecticut was an early mover, other investors, Congress, and even regulators have now taken a keen interest in firms' diversity track records. In recent years, the Securities and Exchange Commission has begun asking that regulated entities voluntarily disclose their diversity data to the agency. Meanwhile, institutional investors, and the investment consultants who advise them, have also ratcheted up the pressure they're putting on the asset managers they invest in to do better at diversity and inclusion. In Washington, DC, legislators have repeatedly put Wall Street chief executives in the hot seat over a lack of diversity.

Wooden, who was sworn in on January 9, 2019, is currently the only Black elected state treasurer in the U.S. as well as the only Black elected official in New England who is serving statewide. Beyond his work overseeing the state's pension assets, he's at the forefront of a larger movement to improve diversity in the financial-services industry.

In a May 2020 op-ed in the Hartford Courant, Wooden detailed how, as the father of Black teenagers, he'd had "the talk" with his elder son, prompted after Wooden was "pulled over for allegedly turning without signaling."

"Many Black parents have accepted the necessity of warning their kids about driving while Black, and what to do in the event they are stopped. It is a dreaded ritual for us — it's so difficult to explain to our children the danger they may face when venturing out beyond our reach," Wooden wrote.

The treasurer called out the "inconsistent protections" of the criminal-justice system for Black Americans in the op-ed, which was published soon after the murder of George Floyd. But he also said that Wall Street had its own role to play in the country: "It is time for the wealthy and privileged to start pulling the levers of power they hold. Wall Street and corporate America, I'm speaking to you."

He mentioned that Franklin Templeton, a money manager for Connecticut's pension funds, "took swift and transparent action" in firing Amy Cooper last year, after a video went viral of her calling 911 on Christian Cooper, a Black bird-watcher in Central Park.

Months after the piece was published, Wooden and the Ford Foundation formed a coalition of CEOs in financial services, including Jenny Johnson, Franklin Templeton's chief executive, to tackle racial economic disparities.

Members of the Corporate Call to Action working group pledged to disclose the diversity data they filed with the Equal Employment Opportunity Commission this year, including AllianceBernstein, Franklin Templeton, Invesco, and Wellington Management. The companies joined other members of the coalition, including BlackRock, Goldman Sachs, Morgan Stanley, and State Street Global Advisors, that already disclose this workforce data. All private employers with 100 or more employees are required to report this data to the commission annually. The data provides a snapshot of firms' demographic breakdown by race, ethnicity, and gender, as well as across job categories.

Insiders say the Hartford native brings a perspective and a passion for the issue that was seeded decades ago.

"He's always been active in creating pipelines of diversity," said Arunan Arulampalam, who ran against Wooden for state treasurer in 2018 and now serves as the chief executive of Hartford Land Bank. "He grew up as a Black man in Hartford. We are a city that has experienced generations of disinvestment, which is related, I think, to the fact that we've become an increasingly Black and brown city."

'Really bright, but really intense'

Wooden, the youngest of six children, participated in Hartford's desegregation busing program in the third grade. He went on to earn a four-year scholarship to Trinity College, a private liberal-arts college located southwest of downtown.

After Trinity, Wooden got involved in politics, working for Carrie Saxon Perry during her time as mayor of Hartford. Perry was the first Black woman to be elected mayor of a major New England city and had been a mentor to Wooden, said Anthony Gray, the president and CEO of Austringer Capital Group, a real-estate-development company in Madison, Wisconsin. Gray has known Wooden for more than 30 years, since the treasurer's Trinity College days.

"He's been working on racial-equity issues since we were kids, and he was an important part of the electoral machine for Carrie Saxon Perry," Gray said. "She was a friend and a mentor to him since he was a very young man, but she also ran on a platform of diversity, equity, and inclusion — and that was long before we even knew what those words meant."

Wooden earned a law degree at New York University, where he became close friends with another trailblazer — Rep. Hakeem Jeffries, the chair of the House Democratic Caucus.

In 1997, Wooden began working at law firm Day, Berry & Howard LLP (now called Day Pitney LLP). In 2001, he left Hartford for New York, after his then-wife was hired as an internist at New York-Presbyterian Hospital. At the time, an editorial writer for the Hartford Courant lamented the departure of the "Can't Miss Kid" and said he was "arguably the brightest prospect in a thin pool of young lions looking to ascend politically in the city."

Wooden, who is now divorced, continued to work for Day Pitney during his time in New York and after his return to Hartford in 2007. Prior to running for state treasurer in 2018, he was a partner at Day Pitney and led the firm's public-pension-plan investment practice.

Arulampalam, who also served as the former deputy commissioner for Connecticut's Department of Consumer Protection, said he was a summer intern at Day Pitney when he first met Wooden years ago.

During his time at Day Pitney, Wooden was active in increasing the diversity at the firm, as well as in the legal profession more broadly, Arulampalam said.

"Diversity and equity have mattered to him all of his life," he said. "I remember thinking then that when partners talked about individuals who had a commitment to diversity, they all talked about Shawn. They mentioned that he took paternity leave when one of his kids was born. He came up a lot as someone who cared deeply about diversity and tried to act it out."

Gray, who worked as an associate at Day Pitney from 2007 to 2010, said he saw two sides of Wooden's personality when they worked together.

"It's funny. As a person, he is pretty laid-back," Gray said. "As an attorney, he was really bright, but really intense."

But that intensity served Wooden well, Gray added.

"In bond work, you get it wrong, and a whole business can go bankrupt. The margin for error is close to zero," Gray said. "You don't get to make mistakes. He practiced in a really complex area of law and made it look easy. He's a really sharp guy."

Gray said Wooden has applied that level of discipline to his political career.

"In politics, you have to develop a message and stay on message," he said. "To do it well, it's harder than it looks, and Shawn is exceptionally good at it. He's just an incredibly disciplined person."

Wielding his power as an investor

Wooden acknowledged that he has benefited from the work of his predecessors. While some firms, such as BlackRock, have recently begun to voluntarily publish data on the ethnic and racial diversity of their workforce, public officials in Connecticut have been pushing companies to disclose this data even before Wooden's tenure as treasurer.

Wooden's predecessor, the former State Treasurer Denise Nappier, laid the foundation for work he continues.

Arulampalam said Nappier also had a reputation for holding companies that wanted a slice of Connecticut's business accountable to diversity standards.

"She was really a leader in pushing her firms to improve their own numbers," Arulampalam said.

Wooden said his efforts have gotten a boost from how the treasurer's office is structured in his home state. Given his authority as sole trustee of the Connecticut Retirement Plans and Trust Funds, a system that comprises six state pension funds and nine state trust funds, he can make diversity disclosures a priority for vendors seeking business with the state without the support of legislation, he said.

"There's more flexibility for me to proceed" when it comes to incorporating these policies into the pension system's operation than in some other states, Wooden said. For some state treasurers who care about these issues, "it becomes helpful to have legislation passed and making certain things requirements," he explained.

So far, the work that Wooden and others have done to increase transparency in the financial-services industry has appeared to yield results — or at least concrete commitments to improve. Financial firms that have publicly shared the diversity data they reported to the Equal Employment Opportunity Commission, such as BlackRock and Citigroup, have set workforce-representation goals with timelines and have agreed to undergo racial-equity audits of their businesses.

Wooden is taking his mission to advance racial equity beyond Wall Street. On June 30, he signed into law CT Baby Bonds, a program aimed at narrowing the wealth gap by creating savings accounts for children born into poverty. The measure made Connecticut the first state in the nation to pass so-called baby bonds. Blumenthal has cosponsored federal legislation on baby bonds, which inspired the Connecticut law.

"His spearheading the baby-bond proposal in effect creates a nest egg that helps disadvantaged people seek the American dream," Blumenthal said.

Tina Byles Williams, the CEO, CIO, and founder of Xponance, a money manager in Philadelphia with more than $12 billion under management, called Wooden's diversity requirements laudable.

"We need allocators like the treasurer," said Byles Williams, who counts Connecticut Retirement Plans and Trust Funds as a client. "He insisted on transparency and accountability. His legal background coupled with a passion and an interest around moving the needle, with respect to diversity — both of those need to be housed in the person, and I think that is what we are seeing with Treasurer Wooden."

Blumenthal said allocators such as Wooden ultimately hold the most sway when it comes to driving change.

"States have power because they are an investor," Blumenthal said. "Sometimes these asset-management companies care more about their investors than they do members of Congress."

And Wooden isn't afraid to wield that power. Connecticut has pushed for more revelatory data on the number of minorities at some of the industry's biggest players, and some of them have played ball.

Earlier this year, Morgan Stanley Investment Management pitched the state on a $375 million investment in a real-assets fund. As part of that, the firm filled out Connecticut's compliance review, disclosing that Black and Hispanic employees accounted for 2% and 3%, respectively, of US employees at the executive level in its investment-management unit. A Morgan Stanley spokesperson declined to comment in September when Insider first reported the details.

Other managers have reported similar figures when answering the state's compliance-review questions as part of their own pitch for the state pension's money or as part of continued due diligence each year as an existing manager. In May, Insider reported that the private-equity giant The Carlyle Group employed less than 3% of US staffers at the managing-director level or above who were Black. At Wellington Management, a money manager in Boston that oversees $1 trillion in assets, Black employees accounted for 0.75% of US executive-level employees, as of December 2019. Wellington declined to provide more recent figures to Insider, but it said the firm plans to release global workforce-diversity data in a transparency report in January.

While firms may not be eager to share their workforce data with Connecticut — and have their paltry diversity figures laid bare — Wooden said getting the data was "typically not a problem" in the end. He added that leaning into that discomfort was a critical first step for managers to change. "It demonstrates a level of commitment and interest, and it leads to more accountability for the institution," he said.

He recalled only one money manager that required more prodding.

"They clearly wanted our business but had never disclosed demographic data," Wooden said. "I got involved and said, 'I don't know what your numbers are going to look like. It's probably not good, but that's beside the point. We're requiring this because we believe in the importance of transparency.'"

Wooden said the firm eventually coughed up the numbers, but he declined to name the manager.

"I have no desire, unless I need to, to embarrass people," he said. "I'm trying to move the needle here on these issues. It's a success story because they advanced as an organization. Yes, they were pushed to do so, but I think they will agree that they will be better for it."

Dakin Campbell contributed to this report.


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