B U I L D I N G A F R I C A N - A M E R I C A N A N D L A T I N O P I P E L I N E S F O R T H E F I N A N C I A L S E R V I C E S I N D U S T R Y

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B U I L D I N G A F R I C A N - A M E R I C A N A N D L A T I N O P I P E L I N E S F O R T H E F I N A N C I A L S E R V I C E S I N D U S T R Y F I N A N C I A L S E R V I C E S P I P E L I N E E X T E R N A L F O R U M May 24th 2016 R O B E R T O R E Q U E J O, F E D E R A L R E S E R V E B A N K O F C H I C A G O C E D R I C D. T H U R M A N, B M O F I N A N C I A L G R O U P B E S S T S C H A N T Z - H A H N, M E R C E R

Nationwide, representation of African- Americans and Latinos in the financial services industry remained virtually unchanged from 1993 to 2013. The situation was no different in Chicago, in spite of the individual efforts of various financial industry firms to increase their diversity. Sources: Equal Employment Opportunity Commission and Government Accountability Office, 2010 and 2013 MERCER 2016 2015 1

T H E C H A L L E N G E Representation in the Chicago area financial industry is not comparable with metropolitan area demographics. But, the lack of representation of Latinos and African-Americans becomes more troubling at higher-levels within the industry Chicago Chicago FS Industry Sources: Equal Employment Opportunity Commission and United States Census Bureau American Community Survey 2013 MERCER 2016 2

T H E C H A L L E N G E M Y T H O F T H E P I P E L I N E Chicago FS Industry Chicago FS Execs /Sr. Mgt. Chicago FS Mid-Mgt.. Chicago FS Prof. / Tech. / Sales.. Source: Equal Employment Opportunity Commission 2013 MERCER 2016 3

W H A T I S T H E F I N A N C I A L S E R V I C E S P I P E L I N E I N I T I A T I V E? The FSP Initiative is a funder collaborative of participating financial services firms developing a long-term human capital business strategy (not a philanthropic endeavor) Working collectively, the goals of the FSP Initiative are to: W H A T 1 Increase the representation of Latinos and African-Americans, at all levels, within the Chicago-area financial services industry 2 Improve the overall cultural competency within the Chicago-area financial services industry HOW 3 Develop metrics and conduct applied research to better understand the pipeline challenges and the most effective solutions to address them 4 Provide a forum for financial institutions to discuss best practices, lessons learned and challenges 5 Support, develop and participate in programs intended to address systemic challenges within the pipeline MERCER 2016 4

F S P I N I T I A T I V E : M E M B E R S H I P ( A S O F 6 / 2 0 1 6 ) MERCER 2016 5

F S P G O V E R N A N C E CEO LEADERSHIP COUNCIL Provides strategic oversight over programming, funding, and management Provides direction to the Steering Committee Members serve as the primary executive ambassadors STEERING COMMITTEE Working board of directors Establishes goals, objectives and metrics Drives the work and activities of the FSP Provides strategic direction to the staff Establish and lead working groups MEMBER COMMITMENTS Participation on CEO Leadership Council and Steering Committee Financial and/or in-kind support Participation in joint research MERCER 2016 6

F S P I N I T I A T I V E : P H A S E S A N D D E L I V E R A B L E S P H A S E I F O R M AT I O N ( O C T. 2 0 1 3 M A Y 2 0 1 4 ) P H A S E I I A N A LY S I S ( J U N E 2 0 1 4 J U L Y 2 0 1 5 ) P H A S E I I I I M P L E M E N AT I O N ( J U L Y 2 0 1 5 ) Formed a collaborative of Chicagobased financial institutions, housed at The Chicago Community Trust (CCT), to manage funding and other administrative activities. Developed a governance structure and a Participation Agreement to formalize membership. CCT Executive Committee approved a $50,000 grant as initial funding. Issued an RFP for consulting services and interviewed finalists. Founding members signed Participation Agreement and submitted 1 st year funding. Engaged consulting firm (Mercer). Invited other financial services firms core to Chicago to become founding members. Completed Interviews with key leaders (Mercer). Completed Internal Labor Market map and projections (Mercer). Started the Survey preparation and administration (Mercer). Convened Industry Summit (November 20, 2014). Shared preliminary research findings. Established 3 Working Groups: Recruitment, Retention and Cultural Competency to start Action Plan. Conducted media outreach. Conducted Career Conferences for 250 FSP summer interns (July 14, 2014, and July 13, 2015). Completed Survey administration and analysis. Launched FSP website www.fspchicago.org. Published Final Report. Convened 2 nd Summit. Prioritize collective next steps based on Working Groups recommendations and Summit feedback. Solicit additional members/participants to the FSP Initiative. Plan and develop programming for 2015-2017. Conduct additional research. Completed In process Not yet started MERCER 2016 7

2014-2015 H I G H L I G H T S P R O G R A M M I N G F S P I N D E X A tool to track the representation of African-Americans and Latinos over time in the Chicago metropolitan area s financial services industry includes: Snapshots of racial and ethnic representation levels in 2013. Five-year trends in racial and ethnic representation, with a focus on African-Americans and Latinos. Representation gaps for African-Americans and Latinos. S U M M E R I N T E R N C A R E E R C O N F E R E N C E ( 2 0 1 4 ) 125 interns attending, from 6 financial institutions. 15+ speakers from the financial sector. Four panels covering: Retail and Commercial Banking. Community Impact: A Business Imperative. Investment Banking and Asset Management. Support Functions in Finance. MERCER 2016 8

2014-2015 H I G H L I G H T S P R O G R A M M I N G 2 0 1 4 S U M M I T ( N O V E M B E R 2 0 1 4 ) 120+ executives and professionals from all FSP member organizations and other firms. FSP and Mercer research findings introduced to larger audience, including media coverage (Chicago Tribune, Sun-Times, First Business, Fox News). Four breakout sessions covering: Early Diversity Recruiting: College and Before. Creative Ways to Fill Key Jobs with Diverse Talent. Cultural Competency in the Financial sector. Supporting People of Color in their Early-Mid Careers. S U M M E R I N T E R N C A R E E R C O N F E R E N C E ( 2 0 1 5 ) 150+ interns attending from 17 financial institutions and 6 nonprofits. 20+ speakers from the financial sector. Four panels covering: Dealing with Individual Clients. Dealing with Institutions. Dealing with the Big Picture. Helping the Firm Operate. MERCER 2016 9

2014-2015 H I G H L I G H T S P R O G R A M M I N G WORKING GROUPS ESTABLISHED Recruitment. Retention (and Development). Cultural Competency. Brainstormed and recommended action items for collective action. 2 0 1 5 S U M M I T ( O C T O B E R 2 0 1 5 ) 120+ executives and professionals from all FSP member organizations and other firms. Mercer research released. Participants brainstormed ideas for collective action, adding to the work from the Working groups. Keynote speaker: Dr. Catherine Chandler-Crichlow, President of 3C Workforce Solutions. MERCER 2016 10

2014-2015 H I G H L I G H T S W E B S I T E W E B S I T E L A U N C H E D : W W W. F S P C H I C A G O. O R G MERCER 2016 11

2014-2015 H I G H L I G H T S R E S E A R C H R F P I S S U E D T O C O N D U C T R E S E A R C H Mercer selected from a pool of four responses MERCER 2016 12

MERCER S RESEARCH BRIDGING THE DIVERSITY G AP: BUILDING AFRICAN-AMERICAN AND LATINO TALENT PIPELINES FOR THE FINANCIAL SERVICES I NDUSTRY I N CHICAGO MERCER 2015 13 MERCER 2015 13

F S P R I O R I T I E S A N D C H A L L E N G E S What we heard in interviews with Chicago s FS employers RECRUITMENT Competition for experienced diverse talent is fierce Most larger organizations hire from the same top schools and build up their recruitment functions to be able to compete DEVELOPMENT Employers emphasize the importance of developing diverse talent and building more inclusive environments Effective talent management is seen as foundational RETENTION Diverse talent is moving along LaSalle Street Sponsorship during onboarding and throughout careers is essential to retention Managers play a critical role in retaining diverse employees MERCER 2016 14

T H R E E K E Y M E A S U R E S O F D I V E R S I T Y A N D I N C L U S I O N REPRESENTATION TALENT FLOWS EMPLOYEE EXPERIENCE MERCER 2016 15

F U T U R E R E P R E S E N T A T I O N O F A F R I C A N - A M E R I C A N S I N S E N I O R M A N A G E M E N T T H E S T O R Y : N O C H A N G E I N 5 Y E A R S, P R O J E C T E D D E C L I N E A F T E R T H A T Rate of hiring, promotions, and turnover brought to parity with all other ethnic groups Turnover rate brought to parity with all other ethnic groups Hiring rate brought to parity with all other ethnic groups Promotion rate brought to parity with all other ethnic groups Representation projections for African-American employees with no changes to hiring, promotion, and turnover rates MERCER 2016 16

F U T U R E R E P R E S E N T A T I O N O F L A T I N O S I N S E N I O R M A N A G E M E N T T H E S T O R Y : N O C H A N G E I N 5 Y E A R S, P R O J E C T E D D E C L I N E A F T E R T H A T Rate of hiring, promotions, and turnover brought to parity with all other ethnic groups Turnover rate brought to parity with all other ethnic groups Hiring rate brought to parity with all other ethnic groups Promotion rate brought to parity with all other ethnic groups Representation projections for Latino employees with no changes to hiring, promotion, and turnover rates MERCER 2016 17

N E A R L Y 1 0, 0 0 0 C H I C A G O - A R E A F I N A N C I A L S E R V I C E S E M P L O Y E E S R E S P O N D E D Total respondents 9,660 4,645 male 4,463 female 15 other/in transition 537 declined to answer African-American respondents 1,092 291 male 800 female 1 other/in transition Latino respondents 746 304 male 442 female 63% survey response rate MERCER 2016 18

F A C T O R S M O S T I N F L U E N C I N G T H E I N T E N T T O L E A V E T H E F S I N D U S T R Y Satisfaction with the opportunity to reach long-term career goals is the strongest driver of intent to remain in the industry for African-Americans and Latinos African-American Latino White Opportunity to reach long-term career goals FS industry reputation Type of work I do Level of work stress Ethics and integrity of co-workers Quality of leadership Interesting and challenging work Relationship with co-workers Prestige and status of FS industry MERCER 2016 19

S A T I S F A C T I O N W I T H O P P O R T U N I T Y T O A C H I E V E L O N G - T E R M G O A L S Satisfaction with the opportunity to reach long-term career goals tends to be higher for whites at the management levels W H I T E A F R I C A N - A M E R I C A N L A T I N O % SATISFIED OR VERY SATISFIED MERCER 2016 20

W O R K P L A C E E X P E R I E N C E S A S S O C I A T E D W I T H L O N G - T E R M C A R E E R O U T L O O K MERCER 2016 21

D I F F E R E N C E S I N E X P E R I E N C E S A M O N G A F R I C A N - A M E R I C A N S, L A T I N O S, A N D W H I T E S Joining the industry: African-Americans and Latinos tended to make their decision to join the industry earlier than whites. MERCER 2016 22

My first job, at the age of 17, was at an FS institution. I was absolutely fascinated with the industry and the possibilities of establishing a lifelong career. MERCER 2016 2015 23

D I F F E R E N C E S I N E X P E R I E N C E S A M O N G A F R I C A N - A M E R I C A N S, L A T I N O S, A N D W H I T E S Working in the industry Perceptions of fairness vary by race/ethnicity W H I T E A F R I C A N - A M E R I C A N L A T I N O Application of policies Opportunities Rewards MERCER 2016 24

The amount of hard work does not translate to the amount of success that one should have. Many people work extremely hard only to be given very marginal success in terms of career progression. I have found it difficult to advance my career within this industry, because it ultimately comes down to who you know... 90% of positions already have candidates before they are even posted. MERCER 2016 2015 25

D I F F E R E N C E S I N E X P E R I E N C E S A M O N G A F R I C A N - A M E R I C A N S, L A T I N O S, A N D W H I T E S BLACK FSP vs WHITE FSP LATINO FSP vs WHITE FSP Satisfaction with the reputation of the financial services industry Satisfaction with ability to impact community as part of my job Satisfaction with job security Satisfaction with access to financial assistance for my education Treated fairly at work with regard to opportunities Company has a good mix of male and female role models I can look up to as role models Company has a good mix of people from different racial and ethnic backgrounds that I can look up to as role models Senior leaders are passionate advocates of diversity & inclusion One or more professional champions outside of my company Commitment to the Financial Services Industry Have never considered leaving the Financial Services Industry Less favorable Small or no difference More favorable MERCER 2016 26

D I F F E R E N C E S I N E X P E R I E N C E S A M O N G A F R I C A N - A M E R I C A N S, L A T I N O S, A N D W H I T E S Higher-level African-Americans and Latinos are more likely to be considering leaving the industry. TOP-LEVEL MANAGEMENT MID-LEVEL MANAGEMENT PROFESSIONALS SALES ADMINISTRATIVE % Intending to leave the industry MERCER 2016 27

If there is an opportunity that I am interested in outside the industry... I will take it. You have to be fluid in this marketplace, and that is what the future will be like... forever. MERCER 2016 2015 28

D I F F E R E N C E S I N E X P E R I E N C E S A M O N G A F R I C A N - A M E R I C A N, L A T I N O, A N D W H I T E S E N I O R M A N A G E R S BLACK FSP vs WHITE FSP LATINO FSP vs WHITE FSP Satisfaction with opportunities to develop on the job Satisfaction with promotion opportunities and opportunity to achieve long term career goals Satisfaction with pay (salary, incentive compensation, pay-performance link Treated fairly with regard to opportunities and the distribution of rewards Treated fairly with respect to application of policies I feel accepted for who I am. I am able to be authentic rather than play a role Company has a good mix of male and female role models to look up to Company has a good mix of people from different racial and ethnic backgrounds to look up to as role models Satisfaction with quality of leadership and belief in senior leaders are passionate advocates for diversity and inclusion Have a mentor inside the company Have a sponsor outside of the company Happiness working in the industry and commitment to the industry Less favorable Small or no difference More favorable MERCER 2016 29

T A L E N T F L O W S : S U M M A R Y O F K E Y F I N D I N G S A F R I C A N - A M E R I C A N S A N D L A T I N O S Representation will decline at the leadership levels A choke point exists in the flow of talent into leadership positions Retention is a major challenge The Professionals career level offers significant advancement opportunity MERCER 2016 30

E M P L O Y E E E X P E R I E N C E S : S U M M A R Y O F K E Y F I N D I N G S A F R I C A N - A M E R I C A N S A N D L A T I N O S Having a positive long-term career outlook has the greatest influence on African- Americans and Latinos intent to remain in the industry Satisfaction with long-term career opportunities increases as management level increases for whites, but not for African-Americans and Latinos African-Americans and Latinos at the highest levels are more likely than whites to consider leaving the industry African-Americans and Latinos are less likely than whites to see senior leaders as passionate advocates for Diversity and Inclusion African-Americans and Latinos give lower ratings than whites to the fairness of opportunities Supervisor and leader support are viewed as key for advancement MERCER 2016 31

K E Y R E C O M M E N D A T I O N S F O R E M P L O Y E R S Fill senior leadership from within Emphasize retention and build solutions tailored to specific talent segments Hire African-American and Latino talent at the Professionals career level Monitor fairness and transparency Leadership matters MERCER 2016 32

K E Y R E C O M M E N D A T I O N S F O R T H E I N D U S T R Y Create early awareness of career opportunities in the sector Expand the sources of recruitment of new graduates Identify diverse talent with skills transferable to the financial services sector MERCER 2016 33

F E E L F R E E T O D O W N L O A D T H E F U L L R E P O R T www.fspchicago.org MERCER 2015 34

THE ACTIONS TO BRIDGE THE GAP 2016 FORWARD MERCER 2015 35 MERCER 2015 35

2 0 1 6 F O R W A R D K E Y P R O G R A M I N G D O M A I N S Preparation and community presence Recruitment/Hiring Development/Retention Cultural competence development at all levels in member organizations E X E C U T I O N S T R U C T U R E Steering committee members co-chair domains Member firms focus on specific domains Each domain has sub-categories All of the work will be supported by a communications plan, inclusive of a social media strategy MERCER 2016 36

F S P O N G O I N G I N I T I A T I V E S Annual FSP Index Annual Intern Career Conference Annual FSP Summit Internal Labor Market Analysis and Survey As requested by new FSP members Updated ILM and survey pulse every 3 years FSP Website (fspchicago.org) MERCER 2016 37

S T R A T E G I C P R I O R I T I E S : P O T E N T I A L P R O J E C T S I N E A C H D O M A I N MERCER 2016 38

Q U E S T I O N S & A N S W E R S www.fspchicago.org MERCER 2016 39