Welcome to our four-part blog series on gender equality in the UK investment management industry. As both employers and allocators of capital, investment managers play a crucial role in promoting diversity and inclusion (D&I) in the workplace. In this series, we will be taking a deep dive into the progress made towards gender equality in the industry, identifying key barriers to female progression, and providing actionable recommendations to accelerate progress and meet regulatory requirements. Whether you are a board member, senior executive, or part of a team accountable for implementing D&I policies, this series is a must-read for anyone looking to drive positive change in the investment and wealth management sector. |
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Investment management firms are addressing the historical gender imbalance across sectors through various measures. Some aim to balance graduate recruitment, while others review measures to retain female talent for the long term. Firms which embrace diversity, equity, and inclusion (DEI), and maximise the contributions from the wider workforce, including those who are underrepresented, are more likely to succeed1.
According to Amanda Pullinger , former CEO of 100 Women in Finance, investment management firms can support the advancement of women by taking three key actions:
These recommended actions are discussed in more detail below.
1. Clear paths to the top
Some innovative programmes have been launched to support and develop future female fund managers. For example, the Pathway programme, launched in 2023 by the Diversity Project, is a collaborative initiative among leading asset owners, investment managers, wealth managers, and more, with over 108 members representing more than £13tn AUM and more than 85,000 employees. The project aims to see more women becoming fund managers, with an initial target of 20%. It also aims to reduce the gender pay gap by one-third from 2019 levels by 20263. The programme's bespoke curriculum provides relevant experience through activities including managing a model portfolio and developing technical skills in areas such as portfolio construction, risk management, ESG, and technology. The community aspect connects participants with successful female portfolio managers, assigns sponsors within their organisations, and forms buddy groups for mutual support, mentoring, and career guidance. Participating in these (or similar) programmes can give talented female employees at UK investment management firms the opportunity to progress to senior investment management roles.
2. Making women more visible
Pullinger also recommends that women should be encouraged to be increasingly visible not only within their firms, but externally as well. This approach benefits both women in senior leadership roles as well as in the Next Generation talent cohort, who, she says, will be inspired by the example set by trailblazing female colleagues. Making connections with peers and speaking publicly would increase female investment managers’ visibility and make it easier to effect change in industry demographics.
3. The role of men as allies
The role of men in women’s careers is fundamental, Pullinger asserts. The opinion of fathers regarding what careers daughters should aspire to, the sponsorship of male bosses and the support from husbands or partners in managing parental responsibilities all contribute significantly to women staying the course all the way to the top.
So, what should the industry do to accelerate progress in these crucial action areas? We have identified five steps to success for market participants to consider when reviewing their own progress towards gender equality.
Investment management firms can empower their employees to build track records by funding and running portfolios internally. This allows female talent to showcase their investment skills, build a track record, and demonstrate their abilities in managing assets. To broaden the candidate pool and improve retention, firms should focus on nurturing talent internally. This includes increasing awareness of any development programmes and growth opportunities available to female employees in their early-stage careers. Additionally, it is crucial to improve the gender balance when appointing managers for new funds and strategies as well as in succession planning for retiring fund managers. Consistently replenishing the supply of female talent and prioritising the retention of talented female fund managers are both essential steps towards achieving a diverse and talented workforce.
Investment management firms should set and communicate gender equality goals and implement policies with transparent measurements and assessments, covering recruitment, retention, advancement, representation and pay. There are a few questions firms need to consider though, for example:
In this way, managers can more closely monitor a range of critical metrics (see Table 1) across key dimensions such as female staff turnover, training, and qualifications, absenteeism, and workforce maturity, documenting the evolution of their female workforce overtime and using their findings to drive strategy4.
Traditionally, caregiving and time off for raising children have been viewed as female responsibilities, but it is important to recognise that these responsibilities affect individuals of all genders. Recent changes in the law, such as amendments to paternity leave and the introduction of shared parental leave, aim to provide more flexibility. However, firms may struggle to support female leaders taking maternity or any form of parental leave. For instance, female fund managers often express concerns about the potential impact on their funds’ performance and client relations when taking maternity or parental leave. Normalising time out and equalising caregiving responsibilities remain ongoing challenges5.
By law, firms have a legal obligation to ensure that employees taking time off for childcare are not subject to discrimination or detriment as a result of exercising their legal rights. In practice however, firms do not always do as much as they could in terms of addressing challenges related to transitioning portfolios, client management, and providing necessary support during the leave period.
Investment management firms may review their current D&I strategy and policies in five key areas: infrastructure; talent; culture; analytics; and leadership (as shown below in Table 2). Leaders also need to ensure that their firms’ D&I goals are aligned with other company priorities.
D&I have been key priorities in strengthening the investment management industry. The UK’s Investment Association has stated that it is committed to continue focusing on these priorities, not only within the investment management industry, but in investee companies as well. As investment managers pursue diversity, they should not lose sight of inclusion.
Laura Weatherup, Global Head of Integration & Change at Columbia Threadneedle, told Deloitte in a 2022 podcast interview that inclusion is key for superior performance for investment management firms, and argued that it is easier to embed than diversity6. Firms should focus on how best to develop the talent available, according to Weatherup, who also emphasises that inclusion should not be seen as accommodation for individuals’ need. Rather, it is the best way for firms to use all the brainpower available.
"It is not the diversity that gets you performing better – it is diversity plus inclusion. Diversity just means difference. It does not mean anything other than a difference from the reference point. Whereas inclusion at the start means acceptance, [or] positive welcoming, the further it becomes embedded, it means positive collaboration, positive engagement. It is about the constructive utilisation of different perspectives and ideas and embracing and seeking out different ways of coming at things."
-Laura Weatherup, Global Head of Integration & Change, Columbia Threadneedle, 2022 podcast
Companies often prioritise reporting on metrics that are easy to measure, such as gender diversity, rather than focusing on what is truly important7. While diversity metrics are valuable, it is equally crucial to capture cognitive DEI through holistic measures like the DEI measure developed by Edman et al at the London Business School8.
In our last blog of this series, we will discuss how investment managers can act as change agents by influencing capital allocation. We will also look at the role wealth managers will increasingly play in helping to redress the gender balance as the concentration of wealth shifts in future years.
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