Increased scrutiny of diversity claims from asset managers, women-only events and broad-based diversity, equity and inclusion (DEI) initiatives could mean the asset and wealth management industry is ready to move to ‘the next stage’ of harnessing gender equity, according to several senior investment professionals and diversity advocates.
It is undisputed that gender diversity across the industry has improved over the decades, and has continued to follow this trajectory – for the most part – during the past few years. However, when looking at the data alone, that progress seems to be slowing.
According to research from Deloitte, more women have taken C-suite roles in financial services over the past decade than men. In 2012, 12.1% of C-suite positions were held by women. This number has increased incrementally every year and, as at the end of 2023, stood at 18.4%. Deloitte predicts this upward trend to continue but at a slower pace, with 21.8% of C-suite roles projected to be held by women by the end of 2031 (see graph on opposite page).
Similarly, London Stock Exchange research published last year concluded that the percentage of women in managerial roles in financial services rose by an average of 8.2% each year between 2016 and 2021, compared with 6.3% for men. However, the employment gap between men and women has fallen consistently every year since then.
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And, data from EY’s European Financial Services Boardroom Monitor shows that appointments of female board directors to the UK’s largest financial services firms declined 28 percentage points in 2023: just 33% of all appointments last year were of female directors, compared with 61% in 2022.
This is not to lambast an industry that is clearly making good progress, with numerous initiatives designed to increase gender parity, as well as the number of women both entering and remaining within the industry.
Diane Earnshaw, research and consulting director at Square Mile, tells Portfolio Adviser: “I have been in the industry over 25 years. While a lot more can be done, there are more woman leaders now and more young women entering the industry than when I began my career.
“Great initiatives like, GAIN (Girls Are Investors) exist now and are supported by a strong network of females in the industry committed to supporting other women. They work directly in schools, sixth-form colleges and universities to help overcome stereotypes and encourage greater diversity.”
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Camilla Esmund, public relations manager at Interactive Investor, adds: “What is encouraging – but what I’d love to see more of – within the investment industry is the growth of grassroots activity to help encourage more women to not only invest but to be aware of the breadth of opportunity within the world of investment.
“The staggering gender investment gap is well documented and researched, but it is fantastic to see the emergence and growth of practical ways to actually address it.”
Indeed, it is common knowledge that only 12% of fund managers in the UK are women. This amounts to fewer than 200 managers, amid an Investment Association universe of more than 5,000 funds. But if 60 more female fund managers are trained each year, according to The Diversity Project’s Pathway Programme, the number of female fund managers could almost double by the end of 2026.
And, with initiatives such as the Pathway Programme, alongside the aforementioned GAIN, the CFA Institute’s Women in Investment Management and 100 Women in Finance – to name but a few – it is clear there is an appetite, and the tools, for change.
“It’s encouraging to see an appreciation of diversity of thought become mainstream,” says Yasmina Siadatan, chief revenue officer at Dynamic Planner. “This is an important step that means firms increasingly see DEI not as something they have to do, but as something they want to do.”
Asa Norrie, CEO and head of distribution, Europe, at Principal Asset Management, says she is also encouraged by the increasing number of young women who want to embark on a career in financial services.
“This is supported by grassroots initiatives in schools,” she explains. “I was recently a member of an all-girls school governing council, where we spent a lot of time discussing STEM subjects and how to encourage more women into these subjects.
See also: Why women are the shining stars of asset management
“By introducing them to role models in these areas and showing it isn’t just a masculine focus area, more women are able to envisage a career in these fields.”
Apiramy Jeyarajah, chief commercial officer at Nedgroup Investments, adds that she has seen both fund selectors incorporating more detailed questioning in regards to diversity and increasing diversity in senior roles which “will drive change”.
“Furthermore, these individuals will look at things from a different mindset and accelerate the trend,” she says.
There is myriad evidence to support that greater diversity achieves a ‘snowball’ effect. A study from Deloitte last year found that, for every woman added to the C-suite of a company, an average of nearly four women tend to join senior leadership roles.
And yet, the opposite effect seems to be taking hold within investment management at present, with gender diversity progress stagnating as opposed to ramping up. What is causing the disparity between greater awareness of the need for diversity, relative to the physical changes taking place?
Has DEI ‘shot itself in the foot’?
Some believe that greenwashing within DEI is partially responsible, with the increase in gender diversity events giving some firms the chance to ‘talk the talk’ on the subject without being intentional and action-focused. As a result, some members of the asset management industry are switching off.
Natalie Kempster, head of client and proposition at Argentis Wealth, believes this stems from “external pressure to attract socially conscious investors”.
“Unfortunately, it seems to be somewhat performative with companies implementing superficial initiatives for optics, lacking a genuine commitment to change,” she says.
Baroness Helena Morrissey DBE, chair of The Diversity Project, explains that while she has always encountered “dissenters, sceptics and eye-rollers” and “those who clearly regard the efforts as ‘political correctness’” over her 20 years of campaigning, she says the backlash against DEI has “reached a whole new level” during the past couple of years.
“In the US, a culture war rages and DEI has to some extent shot itself in the foot, with a distinct lack of tolerance on university campuses,” she reasons.
“Far from welcoming a wide spectrum of viewpoints, DEI has been distorted to approve and advocate very specific ‘correctness’. The opposite, really, of what was originally intended.
“In the UK, the anti-DEI movement across the Atlantic is grist to the mill of those who have never been supportive of diversity efforts – whether that’s because they are worried about it all being a ‘zero-sum game’, feel excluded from DEI efforts, or are just totally sceptical. The crescendo is growing.”
Bev Shah, founder and CEO of City Hive, says: “There has been an increase overall in micro-initiatives, some of them good and some less impactful. The increased attention that has been given to topics should be welcomed, but needs both guide rails and responsibility to make sure this energy is poured into meaningful actions. Simply putting a name to something or stating platitudes can give the impression progress is being made when nothing underlying is really changing.”
When it comes to greenwashing in terms of ESG, it has led to a concept now known as ‘greenhushing’. According to a study from KBI Global Investors, 97% of advisers surveyed were concerned about the potential for mis-selling allegations when it came to ESG-labelled funds, meaning they were more likely to shy away from using them.
Could the same be happening for firms in terms of publicly implementing DEI initiatives? Dynamic Planner’s Siadatan says: “I have not seen evidence of this. DEI is on the agenda now and my view is that no news is bad news. Even if genderwashing has occurred, it means those companies recognise they need to be doing something in this area.”
Morrissey agrees that she does not see this happening and that, if anything, it means firms who are serious about improving DEI are “even more determined to make progress”.
“But they recognise the backlash and are conscious of the need to draw a distinction between their actual aims and the new negative connotations of the ‘DEI’ label,” she explains. “The rewards of cognitive diversity have been underplayed at this point; true diversity is not at the expense of the majority, but will improve decision-making and ‘grow the pie’. But that rationale has been lost in many DEI initiatives – it needs strengthening. The best teams aren’t made of the best individuals; the dynamic between them is key.”
Nedgroup’s Jeyarajah says the issue is less about ‘genderwashing’ and “more about the lens through which workplaces are looking at the issue”.
“It’s not about headcount and ratios of men to women on the floor. It’s about taking a longer-term view – creating an embedded and practiced company culture that enables individuals – both men and women – to thrive. For managers, this means focusing less on ‘managing’ people and more on ‘leading’. Asking the question: what do you need from me to do your best work?
“If you are approaching diversity (and I mean gender diversity, diversity of thought, cognitive diversity, racial diversity) as a tick-box or numbers exercise then it’s not going to stand up to scrutiny. However, if it is a part of the culture and ethos of a company then it’s about finding, attracting and retaining the right skills and fostering the right environment to achieve better business results.
“This is what truly diverse companies will be talking about. You are unlikely to hear the DEI narrative as that’s only one part of the bigger picture.”
Are we there yet?
Given improved rhetoric around DEI – in particular gender, there is sometimes a belief that ‘enough has been done’ and that attention must be focused elsewhere. An additional conundrum for DEI advocates is cross-sectional diversity, and the fact gender is only one piece of the puzzle.
Katerina Kosmopoulou, partner at J Stern & Co and vice-chair of CFA UK, says: “There is a recognition that diversity is multi-faceted and includes other aspects, including socioeconomic diversity, neurodiversity and ethnic diversity. Ultimately, it is about ensuring there is broad-based representation, which translates into diversity of thought and perspective, which ultimately leads to more robust investment outcomes, a more resilient industry and a richer client experience.”
“That doesn’t take away from the fact that more needs to be done to foster gender diversity and, importantly, inclusion.”
Anna Anthony, UK financial services managing partner at EY, agrees gender diversity should remain a strong focus for financial firms, but should not come at the cost of progressing other areas of DEI.
“All forms of diversity should be seen as a key driver of performances,” she reasons. “While firms have made great strides in terms of gender diversity, there is still work to be done. Change has come, but an absence of senior women in the boardroom, in the c-suite and in leadership roles at all levels of organisations is telling of the work that lies ahead to support gender equity.”
She adds that many of the measures already implemented to progress gender diversity “can be evolved to support the whole DEI agenda”.
“These measures include encouraging senior leaders to self-reflect on personal bias and challenge it, and encouraging everyone to provide an opinion in team meetings. The key to supporting diversity is a firm-wide effort, to be enacted daily by everyone across the organisation, rather than tasked to a single team.”
Dynamic Planner’s Siadatan says the concept of having ‘done enough’ does not apply when it comes to diversity, explaining: “This is an always-on concept that must live and breathe in our organisations. It’s social progress and, as such, it will have to be tackled over generations.”
This article first appeared in the March issue of Portfolio Adviser magazine
