Bridging the investment gap
It’s fair to say that my family were surprised I ended up in in finance. My brother was blessed with business nous and an aptitude for numbers; I was relieved simply to pass my maths GCSE. However, somewhat tenuously cast as the ‘artistic’ one in the family, I happily relinquished the obligation to worry about subjects such as science and maths – after all, I had a loftier destiny (though, as it turned out, I’d still need to know how to use brackets).
Yet fate intervened and I somehow found myself, at 24, working in finance, and I write now as a woman with over 15 years’ mostly happy experience working in the City, a good deal of it spent within investment management. Thanks to the exposure I’ve had through my work, I now feel confident and empowered investing my money. Investing offers me the potential to grow my wealth, gives me a feeling of autonomy and control, and helps me to plan for my future.
However, I am unfortunately in a minority. Kantar’s 2017 report showed that long-term investments and pensions remain a man’s world. The implications of this extend beyond finances: Kantar’s follow-up white paper, Winning over Wealth, found financial autonomy to be a key factor in women’s self-esteem, making investment important to women’s financial and mental wellbeing.
More than just a case of innovative marketing
So why aren’t women engaging in investments? Practical barriers are far from the only deterrent. Being time-poor and accumulating sufficient capital are serious hurdles, but women often also feel unconscious emotional impediments to investing, borne of a lack of trust in the wider financial services industry. Many women feel that the industry has no interest in them and does not speak their language; these feelings are often confirmed by negative articles in the press, especially those that relate to the poor treatment of female employees.
These barriers pose a major challenge for the investment management industry. Unless firms find a way to overcome them, the engagement gap between men and women will persist, regardless of changes and innovation in product design or marketing. While it’s true that marketing can play a role by inviting women to participate and speaking to them in a relevant way, the first step in addressing the emotional hurdles to women’s engagement is to improve women’s representation and participation within the industry itself. Without that, even the best marketing runs the risk of sounding tokenistic and, worse, insincere.
Need an investor? I know just the man
Over recent decades, investment managers, along with other financial companies, have begun to make efforts to address inequality and improve diversity within their workforce and management structures. Such efforts, be they genuine or token, are undoubtedly steps in the right direction. But when asked to picture a typical investor, most people still see a middle-aged white male. And who can blame them? There remains a persistent male bias within the industry.
Research undertaken by Morningstar in 2018 found that males were hired for 85% to 90% of newly created fund management roles in the US and that women’s representation has actually fallen as the industry has grown. More recently – and rather shockingly – Morningstar reported that there are more UK funds run by men named David than there are female fund managers in total. This bias persists, despite a raft of evidence that women fund managers perform as well as men.
Worse still, despite efforts by the UK government to embarrass UK firms into improving their gender pay equality through disclosure, the UK gender pay gap barely narrowed over the year since the introduction of wage disclosure rules. More than eight of out ten women work for an employer that pays men more, and UK financial services firms continue to have the worst average gender pay gap.
Changing the Culture
Investment management companies have the power to actively invite and foster women’s participation, retention and promotion, if they are genuinely minded to do so. As highlighted by PwC in its Women in Work Index 2019, governments create the policy environment conducive to gender equality and diversity in the workplace, but it is up to individual organisations to put it into practice. Let’s consider the top tools at their disposal.
- A truly flexible working policy
The benefits of offering flexible or ‘smart’ working are increasingly recognised by firms (not least, Copylab). As well as helping employees to balance the demands of their home and working lives, flexible working can improve efficiency, increase job satisfaction and boost productivity. And an ability to work flexibly is often of particular value to women, who are more likely than men to have an unremunerated ‘second shift’ which involves caring.
Therefore, firms that invest in enabling their employees to work flexibly in a variety of ways, including part-time working and flexitime – and, crucially, offer this at all levels – are more likely to attract and retain women. Equally, firms that take care with the scheduling of professional development, social and networking events to facilitate maximum participation, including for those who work flexibly or part-time, will also be more valued by women.
- Fostering diversity and inclusivity
Companies that embrace diversity and foster a genuinely inclusive culture attract candidates from a broader range of backgrounds and to build a more diverse workforce; this is recognised as source of competitive advantage, as this broad range of approaches and perspectives is key to combating ‘groupthink’. McKinsey’s 2018 report Delivering through Diversity found gender diversity correlates with both profitability and value creation, and a positive correlation between gender diversity on executive teams and financial performance. A wealth of research and guidance is available online for firms wishing to improving inclusion and diversity within their organisations, but it is generally recognised that such efforts must be spearheaded by those at the very top of the organisation, aligned with the firm’s overall business strategy and measured for effectiveness.
- Promoting shared parental leave and pay
Four years since the introduction of the government’s shared parental leave scheme, uptake has been exceedingly low. A lack of awareness, the disparity in men’s pay versus women’s – which results in a higher cost to men taking time out – and complicated rules have all contributed to low participation. However, employers have tools at their disposal to encourage higher uptake.
A key reason for the low uptake of shared parental leave in financial services is the stigma: men still worry that it will impact their career development. Firms that work hard to dispel this perception and demonstrate there is no detriment to either male or female employees’ careers from taking parental leave – be it shared, maternity or paternity – will find themselves more able to attract and retain staff of both genders.
Financial services employers will often provide a period of enhanced pay to those opting to take shared parental leave. However, enhanced pay is often restricted to the first three to six months after the birth of the baby, when mothers are often still physically recovering from birth and breastfeeding most frequently. If employers were to offer flexibility in the timing of any enhanced pay, this could encourage greater participation in shared leave.
- Pay gap reviews
Firms needn’t wait for government regulation to disclose their gender or ethnicity pay gaps. In early 2019 the Government Equalities Office published two new pieces of guidance designed to help employers to identify the causes of their gender pay gap and address it. While small and medium-sized enterprises are not yet legally obliged to report their gender pay gaps, some do so already: smart firms recognise that transparency on this issue is valued by both employees and clients, and helps address the underlying issues.
Gender equality is everyone’s business
It is clear that investment managers have a long way to go in terms of achieving gender equality in the workplace. But there are significant prizes available for those firms who can rise to the challenge and address these long-standing inequalities. Helping women to overcome their negative feelings about the financial services sector and investments will encourage increased participation and engagement by women in investing (thereby increasing profits both for individual firms and the industry as a whole).
More importantly, these firms will also be doing a societal good: furthering gender equality and helping to boost women’s self-esteem through financial empowerment. But perhaps more importantly still, by working to improve diversity, inclusion and equality of opportunity, firms will benefit from a more diverse, content and engaged workforce, and have the ability to attract and retain the best people, regardless of gender or ethnicity.
- The Gender Gap in Investment: Shattering Barriers - February 20, 2020
- The Key, the Secret: Key-Man Risk Management For a Happier Team - July 11, 2017