In Larry Fink’s much-discussed last two letters to shareholders, the founder, chairman, and CEO of BlackRock demanded CEOs make a positive impact on the world. Yet according to a recent study from Bella Research Group and the John S. and James L. Knight Foundation, less than 1.3% of the $69.1 trillion in global assets are managed by women or men of color. More than $6 trillion of those assets are managed by BlackRock, which means that the lack of diversity in the investment world is an imbalance Fink can almost single-handedly begin to correct.

Talk of inclusion and greater representation for women and people of color has swept Hollywood (remember April Reign’s #OscarsSoWhite campaign?), corporate boards, and even the U.S. House of Representatives. But finance, from Wall Street investment banks to venture capital firms to asset management, remains the last rampart of the white, male elite. A 2018 Wall Street Journal study of the top 50 hedge funds, measured by assets under management, turned up only two with women as the top investment executive. Goldman Sachs, the multinational bank and financial-services firm, most recently reported a U.S. workforce that is 5.4% black, 8.5% Latinx, and 37.8% female.

Prominent women and men of color in finance have been sounding the alarm for years, but the industry’s solution, so-called “emerging fund manager” programs for up-and-coming investors, just isn’t scaling, despite evidence from across asset classes, such as hedge funds, that these managers tend to outperform other investors.

To understand why it is so difficult for new managers of color to break out—and we’ll get back to Larry Fink in a minute—it is important to understand how the most powerful funds work. These household-name investors, from Marc Andreessen to Bill Ackman, are actually also founders who have to raise money from investors—limited partners—who, in turn, demand quarterly updates and great returns. Here’s how it usually works:

An independently wealthy operator (recent exit in hand) or investor (track record in hand) decides to start their own fund to invest in companies in various different sectors and stages.
They will initially raise capital with smaller checks from high-net-worth individuals or large family offices, who become “limited partners,” or LPs.
Only once they’ve raised $100 million to $300 million can they be considered an emerging manager or gain entrée to large, institutional investors, like Larry Fink’s BlackRock, as well as pension funds, insurance companies, and college endowments, which make minimum investments in the dozens and hundreds of millions of dollars. The big leagues.

Once you know the typical trajectory, it’s not hard to see why the emerging-manager programs that were designed to open pathways to new, underrepresented investors, have largely failed. Emerging-manager programs have structural issues that all but guarantee racial and gender disparities. Requirements that on the surface seem benign and neither gender- nor race-oriented succeed at ensuring that most women and men of color are left out. Not only do most emerging-manager programs require at least $100 million on the balance sheet; most of them require fund partners to have an investment track record as a team, not just as individuals, and at least one previous fund together. In an industry where less than 2% of assets are managed by women or men of color, how are new players supposed to raise money and build investment track records? No chicken, no egg.

As if those long-standing structural barriers were not enough, now insert bias into the equation. A 2019 study by Stanford University psychologist Jennifer L. Eberhardt, in collaboration with Illumen Capital, asked 180 asset allocators to assess black-led and white-led investment teams and concluded that, paradoxically, black-led funds with proven track records encountered more bias from potential limited partners. The asset allocators essentially undervalued the funds run by black investors and overvalued the white-run teams.

And who are these asset allocators? They’re the people we’ve charged with managing our retirement funds, our college endowments, and our future. Whether they realize it or not, the largest investors in the world are missing opportunities for better financial outcomes, and in the process they’re violating their fiduciary obligations to maximize returns and be good stewards of our hard-earned capital.