Trenton – Legislation sponsored by Senator Ronald L. Rice and Senator Troy Singleton, which would to require the New Jersey Department of the Treasury’s Director of Investment to use the services of qualified minority and women owned (MWO) financial institutions, was signed into law today by Governor Phil Murphy.
“Minority and women owned firms often struggle to get contracts from pension plans because the investment councils of these plans favor bigger management firms with strong brand recognition and longer track records,” said Senator Rice (D-Essex). “New Jersey can now start to give more women and minorities a chance in an industry which has traditionally only benefited a few businesses. We have an opportunity to steer towards a more equitable course.”
Under the former law, in the financial management industry, only 12% of senior management positions are occupied by minorities and just 29% by women. According to a September 2017 report by the United States Government Accountability Office, minority and female owned firms struggled to compete against larger firms with more recognition. Although thousands are registered to operate in the United States, the 100 largest asset managers account for more than 50 percent of total reported assets under management. This new law puts these usually smaller brokerage and investment management firms on equal footing with larger, more established institutions.
“New Jersey is one of the most diverse states in the nation, and we possess a wealth of qualified minority and women owned businesses,” said Senator Singleton (D-Burlington). “Our state government can lead by example and employ financial management firms which reflect the diversity of our state. This will ultimately raise the standard of fair practice in this industry.”
Since 2016, New York State has mandated an increase in state contracting and subcontracting opportunities for MWO business enterprises. In Illinois, state law currently requires a state agency or institution of higher education subject to the state Pension Code to set aspirational goals of at least 20 percent of the plan’s assets to be managed by MWO and persons with disabilities-owned asset managers. New Jersey’s new law will place the State at the vanguard of the diversification movement.