Ariel’s John Rogers Talks Diversity on Wall Street and Beating Michael Jordan One-on-One
By Beecher Tuttle
“The state of diversity in the finance industry is appalling,” said John Rogers, founder and chief executive of Chicago-based Ariel Investments, one of the nation’s largest minority-run mutual fund firms. “Ninety-nine percent of leaders talk a big game (about promoting diversity), but in places like Chicago, we have gone backwards. We’re just not fighting hard enough,” Rogers said recently during an informal speech at the Securities Industry and Financial Markets Association (SIFMA) in New York.
Rogers is quite literally putting his money where his mouth is, and has been doing so for the better part of two decades. Among numerous other efforts to promote diversity, Rogers in 1996 helped launch the Ariel Community Academy, a public school located on the south side of Chicago with 98% of the student body being African-American, the majority of whom receive subsidized lunches. Since 2005, the Academy has outperformed all schools in its district and remains one of the top public schools in Chicago.
One of Rogers’ legacies is the Ariel Nuveen Investment Program, a self-perpetuating program at the school that gives students access to a financial world that may otherwise be foreign to them. Each first grade class receives $20,000, which is managed for them for the first half of their schooling life. Students become more active in making investment decisions until the sixth grade, when a board of student directors begins making all the investment decisions.
After graduation, half the profits are given back to the school in the form of a gift. The other half is distributed amongst the graduates in the form of cash, or a 529 college savings program with a $1,000 match from Ariel. The principle goes back to the next group of first graders.
The program is Rogers’ crown jewel, and one of his many efforts to bring more diversity to Wall Street and board rooms around the U.S.
Growing up on the south side of Chicago, how did you become interested in finance, and at what age?
My father bought stocks for every one of my birthdays after the age of 12, rather than giving me toys. I got to keep the dividend checks. I would read the quarterly reports that came in mail, and, eventually, my father introduced me to his stockbroker, Stacy Adams (one of the first African American brokers in Chicago). I would spend every moment in the summer working with him, watching the ticker tape.
Who was the biggest influence in your career?
Stacy was a clear role model. He helped me get an interview at [Chicago investment bank] William Blair, where I met former chairman Ned Jannotta, a fellow Princeton alum. Blair had everything: trading, investment banking, mutual funds. I got to learn everything about finance. Blair is where I began to understand that working with smaller companies is a great business decision.
I also read everything from Warren Buffett and John Templeton. I didn’t know them, but they had great influence on my career.
Tell me about the Ariel Community Academy and the Investment Program?
It’s born from my father’s concept. The kids watch us invest the money for the first six years, and then they take the reins. We make finance real for them, giving them real money to invest. It gets kids who otherwise wouldn’t have access thinking about financial careers.
We’ll expose them to analysts, have Ariel employees come to the school and even take them to a McDonald’s annual meeting to see how the world of business works. This is the first year to have kids graduate from college. We’ve got some real success stories. One of the kids is at the University of Chicago, already working part-time at Morningstar.
How would you describe the state of diversity in finance?
It’s unfortunate. One of the most lucrative parts of the economy; it’s so dynamic, offering so much wealth, and people of color have not participated. Here in Chicago, at major funds and banks, you can count the number of black partners on one hand. That is just the reality of it. It’s something that needs to be addressed. People aren’t demanding that industries reflect the society in which they live.
What needs to be done?
Public schools must have more robust financial literacy programs. They need to introduce students to industries that can help them thrive, personally and financially.
We also need to encourage what some of our nation’s greatest mayors have done in the past: insist that companies that are headquartered in our cities reflect the communities that they’re in.
We must also have business leaders who demand diversity, not only within their own company but also from their suppliers and business partners. We must ask: Where is the diversity?
I’m on an endowment board that partnered with an investment bank. There was nobody of any color on their team. I raised my hand and asked why. By the next meeting, the firm had hired their first African American investment banker.
What advice do you have for young adults who are considering getting into finance?
I absolutely recommend people getting into finance. It’s one of the most dynamic fields there is. To get started, people need to work outside their normal thinking. Take a look at major mutual fund companies, or think about careers in the endowment world. It’s a great way to help society, maybe help your alma mater, and learn about the investment world. People always want to work for biggest banks, but there are a lot of opportunities outside of those areas.
What are your thoughts on the fiscal cliff?
It’s not as big a deal as people think. We have a way of resolving these issues; our democracy is too resilient. As a long term investor, you can’t get caught up in the short term noise. Eventually, America will come to the right solution.
Is it true you were the first person at Michael Jordan’s camp to beat him in a game of one-on-one?
Haha. He played about 20 campers by the time he got to me. No one had beaten him in first seven years. I was helped by a combination of overconfidence, fatigue and luck. If you listen to him at the end of the video, you can hear him say ‘oh no’ when the last shot was in the air.