Tiffany McGhee, founder of Pivotal Advisors, told CNBC on Tuesday that the increasing opportunities for various companies are starting to recognize historical barriers that have been present in the financial services industry in particular.
“If you’re interested in working with a company that is variously owned, the traditional metrics may not work. We may not have a 50-year track record,” McGhee said in an interview. But she emphasized, “that doesn’t mean we don’t know what we’re doing.”
McGhee officially founded New York-based Pivotal Advisors this week after nearly a decade at Momentum Advisors where she was CEO and Co-CIO of institutional investment practice. Pivotal, which is outsourcing the duties of chief investment officer, specializes in working with institutional clients such as pensions and foundations, McGhee said.
According to a press release, Pivotal is the first company in its class to be run by an African American and an Afro-Latina woman. McGhee, whose career began on Wall Street 16 years ago, believes the 2020 calculation of racial justice helped create an opportunity for Pivotal to be formed.
“I think there has never been a better time to start a company for someone like me because it seems the world is ready and open,” said McGhee, who is also a CNBC employee. She pointed to the protests against Black Lives Matter that swept the nation that summer, and subsequent commitments companies made to increase board diversity, for example.
Businesses can do more to address economic inequalities in the US, such as hiring differently owned companies for professional service contracts, she said. “If you want to move the needle, that’s how you do it.”
John W. Rogers Jr., Co-CEO and Chief Investment Officer of Ariel Investments, offered a similar roadmap for fueling the success of companies in differently owned companies. In an interview Tuesday on CNBC’s “Mid-Term Report”, Rogers said that established organizations have a role to play across the US economy.
“If you really want to build a big business, you need access to both customers and capital. And many of us in the financial services industry who started our own businesses fondly remember those early customers,” said Rogers.
For Ariel, which Rogers founded in 1983, those early customers were the city of Chicago and Howard University, a historically black college in Washington, DC, he said.
“They gave us the opportunity and once we had those early customers it gave us the confidence to get more customers and it attracted more customers, so customer access is vital,” said Rogers, whose Ariel’s first led by African Americans was firm to have a family of mutual funds.
McGhee agreed with Rogers, especially for various financial firms. “Nobody in the investment industry likes to be your first. And I think when you’re a fund, people get the idea that you’re starting from scratch,” she said. “If you’re an investment advisor, that first client is difficult to find because the first thing they’ll ask you is, ‘How much money are you managing?'”
Typically, Rogers said companies have focused their efforts on creating opportunities for minority-owned companies through supplier contracts. In today’s knowledge economy, however, Rogers cautioned decision-makers to take a broader perspective.
“That’s why we want anchor institutions in our country – whether it’s a university, a museum, a hospital, or a large corporation – to ensure that they really do business with minority companies in everything we do.”