Podcast: Intentional Inclusion – The Role of Culture in Recruiting and Retaining Diverse Talent

For the second podcast in our D&I series, SIFMA’s Amena Ross, Managing Director of Advocacy, sat down with Jim Reynolds, Chairman & Chief Executive Officer of Loop Capital Markets LLC, to discuss the financial services industry, diversity and inclusion, and how building an intentional company culture can help recruit and retain diverse talent.

For more information on fostering and expanding workforce, client, and supplier diversity and inclusion, please visit www.sifma.org/diversity.

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Transcript
Edited for clarity

[Amena Ross] Thanks for joining us for the second episode in SIFMA’s D&I podcast series. I’m Amena Ross, Managing Director of Advocacy at SIFMA. I’m here today to talk about diversity and inclusion in the financial services industry, the opportunities and challenges we face, and some of the innovative programs at firms currently.

I’m joined by Jim Reynolds, Chairman & Chief Executive Officer of Loop Capital Markets LLC. Welcome Jim!

[Jim Reynolds] Hi, Amena. Thanks so much, I appreciate it. Thanks for having me.

[Amena Ross] Jim, let’s begin with Loop Capital’s vision of the future. What does the future of the industry look like and how does Loop Capital fit into that vision?

[Jim Reynolds] This is an amazing industry. I’ve been in this business now for 38 years. I started out as a trader in 1982 at Smith Barney, went on to PaineWebber and Merrill Lynch, and then started my own firm 23 years ago. From the day I stepped into this business, and even today, I think it’s one of the finest industries anyone could ever work in. If it’s a challenge you like, you get it. Any upsides that you like, you get it here. Outsized rewards for your work and contributions, you get it here.

The financial services industry has evolved quite a bit over the last 23 years and Loop Capital has been a big part of it. I started the firm with six people, and there’s over 200 of us now. We’re one of the largest privately held investment banking firms in the country in all of the businesses. I think financial services will continue to be probably the business of choice. Tech has come on and is a competitive business, certainly when looking for talent.

Yet when you look at the financial services industry, it touches everything. Everything revolves around finance. The products may change, but folks are going to continue to invest, businesses will want to continue to grow and need capital to grow. The markets will be active and vibrant. And the business is global. At Loop Capital, we feel good about our place in the industry.

[Amena Ross] As you look at the initiatives that Loop Capital is implementing in the D&I space, which do you view as the most innovative and why?

[Jim Reynolds] That’s a different question. For the industry, itself, I’ve painted a rosy picture. Diversity in the industry is not so good; we’ve gone backwards decades in financial services. When I came into the business in the 1980’s, I think there were more Blacks and Browns in the business than there are today – or at least not appreciably more.

Folks are trying to understand why we’re going backwards, and it is an issue that we have to address. I hear things like maybe African Americans and Latinx aren’t interested in this profession, which could not be further from the truth. I don’t think anybody would not want to be in a profession where the average compensation is several hundred thousand dollars a year.

So, as we look out at the industry and diversity and inclusion, we have work to do. Over the last few months, I’ve had a lot of conversations with leaders in various firms for the first time ever in my 38-year career who want to explore what had happened to set the clock back in terms of African Americans and Latinx folks in financial services. We’re exploring those things and I have very strong opinions on it.

Loop Capital, as a firm, is probably the most diversified and integrated firm on Wall Street. We have a significant number of African Americans and every other group for one distinct reason: I hire talent. And I haven’t had a problem hiring talent. In all genders, in all races, the talent is there. I think if we just focus in on that component of it, this problem can be fixed.

[Amena Ross] You talked a little bit about the last few months. Pivoting for a moment, given the overarching impact the COVID-19 pandemic has had on the globe, has it also affected the way you approach D&I during this time?

[Jim Reynolds] No. I think the issues of diversity and inclusion have been decades in the making. Diversity and inclusion have nothing to do with COVID-19. COVID-19 has taken a more devastating toll on African Americans and Hispanics and senior citizens, but it’s for reasons that don’t have a lot to do with Wall Street and D&I.

When I came into the business in the eighties, there were really no women on the trading floor; there weren’t many women on Wall Street at all. Women wouldn’t even walk across the trading floor, they felt so uncomfortable because of the comments on their shoes and about their dresses. The only women you saw on the trading floor were sales assistants and secretaries. That was it. That was in the eighties. You fast forward to now: women run most of the business on the trading floor. Several of our [SIFMA] member firms are run by women. Many of the business units across the industry are headed by women. Now there is a plethora of women and no African Americans and Hispanics on the trading floor. What has happened? The industry decided to focus on bringing women onto and integrating them into the trading floor and the business. Gender became a focus and I think once the industry focused on it, they unleashed the talent that was already there – they just didn’t get the opportunity to play. Women could always do the functions; they just didn’t get the chance to do it. That was reversed and we now see the result.

With the discussions that I’m having now, there’s a focus on Black and Brown folks coming onto the trading floor and with that focus and that intentionality to recruit, retain, train and advance those folks, I think we’ll turn that corner pretty quickly. But it has no connection to COVID-19 whatsoever.

[Amena Ross] Now in July you spoke with CNBC on your efforts to diversify your workforce. In it, you were quoted as saying, “I’ve found it so amazingly easy to recruit minority candidates — African American, women — and promote them very easily because I focus on talent. And the talent really comes through.” Can you walk me through how you’ve achieved this and what are the strategies you’ve used to retain your most valuable talent?

[Jim Reynolds] Recruiting is where it starts, and this is where I’ve been working closely with SIFMA. SIFMA member firms say they can’t find folks to recruit. I ask which schools they recruit [their talent] from and it’s the same top schools – the Harvards, the Princetons, the Whartons, etc., where there are African Americans and Latinx, but there aren’t that many. So, firms may have some success but, by and large, they don’t. But when you recruit an African American from Harvard, that is a very sought-after individual. That person has fought a lot of odds and has achieved the pinnacle in that school, and they are going to be alright. They’re going to be fine.

Loop Capital recruits from different schools.

Why aren’t firms going to Historically Black Colleges and Universities (HBCU)? That’s where African Americans are, and they certainly have the skill and talent to work in a job available on Wall Street. It’s not something you only have to go to a select number of schools. I think more and more of the member firms are now starting to question: why don’t we go to different sorts of schools? So, now firms are starting to branch out.

We’ve [Loop Capital] been branching out to different schools. We go to the city schools in Chicago, we go to state schools, we go to HBCUs.

So, some of it starts with recruiting but once you get talent in, the other problem that I hear a lot about is how do we retain them? If you get someone from Harvard or Yale or Princeton, you may have a hard time because they are very sought-after and every year, that person will get a lot of job offers from every hedge fund and private equity firm and tech shop. But the person from the state school, the HBCU, who may be extraordinarily talented, isn’t going to have that same sort of attention but could do the job just as well.

The issue of retaining the talent of African Americans and Latinx comes down to middle managers. CEOs have written about the injustices of George Floyd and written so much about what is happening in America. But that’s the CEOs, who aren’t running the business units, and aren’t seeing and talking and training and interacting with young people every day. It rarely filters down to middle managers and that’s where the challenge of retaining diverse youth comes in. If they don’t see any support network in place in middle management, it’s not going to work. The buy-in has to be part of the entire organization and managers need to be held accountable for the recruiting and retaining of talent.

Loop Capital spends a lot of time on retaining and promoting, helping people to learn and to grow and flourish. We develop our young people and I talk to my managers almost daily about how our young people are doing and what they are learning. You have to be, as an organization, very intentional about it.

[Amena Ross] That’s really helpful and we can all learn from your leadership in this space. Do you believe the issue with middle management is one of the largest difficulties that the industry is dealing with or are there other challenges that must be overcome to move the ball forward for diversity and inclusion?

[Jim Reynolds] Jared Kushner said something the other day that you may have heard or read about –

[Amena Ross] I did.

[Jim Reynolds] He implied that African Americans don’t want to be successful. I go back to the CEO of the firm. One of the reasons why Loop Capital is as effective as it is because everybody in our firm knows that I am committed to them. Everybody. Everybody knows that I’m asking about these youth: who are we recruiting, where are we recruiting them from and how are they advancing? CEOs have to make it a part of their culture within their organization. They already did it with women.

To just say that African Americans and Latinx don’t want these jobs, that answer is too simplistic. And it’s not true. Every organization has to do its part to understand how to recruit, where to recruit, how to retain, and how to promote. It’s difficult, especially when there’s an African American in the organization and they’re the only one. It’s just tough. So, you want to make sure that it’s a part of your culture and you’re bringing in as many as you can that are qualified to do the job and you have the infrastructure around them to retain them.

[Amena Ross] Finally, what is an area of diversity and inclusion that you believe is commonly overlooked? How have you addressed those disparities at Loop Capital?

[Jim Reynolds] I think on Wall Street, African Americans and Latinx have been overlooked. I think right now, you can pretty much take your pick on which area of the industry you want to focus on. Is it wealth management? Is it fixed income trading? Is it equity trading? Is it M&A? Is it corporate debt? There’s room in every aspect of every firm – investment banks and broker dealers – to make some headway on this. Everyone. It’s been an industry that has overlooked African Americans and Latinx. The thing that I’m excited about is we now have a dialogue about it and it’s at the top levels, where the CEOs are now starting to say some things a little more meaningful because they’re looking at their organizations.

I’m excited to be coming in as Vice Chair at SIFMA. A big part of my agenda is really going to be to enlighten our member firms who, by the way, many have already reached out to me. They say they want to figure this out. They want to do better, and they want to hear my views on how we can do better – being an African American and a CEO is a factor. I know it is a factor because I know that the myths and stereotypes about these folks aren’t true and I know these jobs are incredibly sought-after.

We have an internship program with 25-30 slots, and we’ll get 300-400 applications for those slots. So, there is an amazing number of people that want to work in this industry. We just need to connect the dots and that’s going to be my focus.

[Amena Ross] With that, thanks so much again, Jim, for joining me today. It was a real pleasure chatting with you.

To learn more about SIFMA and our work to promote diversity and inclusion, please visit us at www.sifma.org, and to learn more about Loop Capital’s amazing work in this space, please visit www.loopcapital.com.

Amena Ross is Managing Director of Advocacy at SIFMA. Jim Reynolds is Chairman & Chief Executive Officer of Loop Capital Markets LLC.

Related: First episode in the D&I podcast series
Podcast: D&I Initiatives – Opportunities for Positive Impact