Diversity in Financial Services
A diverse industry: the challenges of installing long-term change in asset management
Never has there been a more important time for firms to buy into the correlation between improving the diversity of a firm and delivering on other KPIs. Indeed today, improving diversity at a firm goes hand in hand with increasing company profitability, with a diverse pool of candidates able to promote independent thinking and better business opportunities overall.
In an ideal world, an asset management firm would take steps to increase the level of diversity among employees simply because it is the right thing to do: talented people regardless of gender, ethnicity, or social class should be given the opportunity to compete on equal terms for a role they are qualified for.
Yet, understandably, an investment business’ primary objective is often focused on its clients, generating returns for said clients, and profits for the firm as a whole. As such, the UK finance and asset management industry has suffered an image problem that contravenes it’s declaration to be more ‘diverse’.
And whilst it would be unfair for me to define financial markets as an industry where an investment portfolio is, at times, more diversified than the team or firm managing it, a detailed research report conducted by Incisive Works earlier this year investigated the state of diversity within the asset management sector in 2019 and put forward some unflattering figures for the industry.
Drawing on interviews with some 230 financial intermediaries and leading asset managers from across the industry, the Diversity in Asset Management report provided an interesting statistical analysis of the current make-up of the sector. The figures were stark and, unfortunately, won’t surprise many.
Not only was an overwhelming majority of its 230-plus respondents male (82%), most of these respondents tended to be much further along in their careers with 42% of males surveyed having worked in the industry for over 20 years. Only a quarter (26%) of women responders’ made the same claim. Meanwhile, more than half of female financial intermediaries (51%) interviewed agreed the asset management industry had an image problem because of a lack of diversity and this could potentially be off-putting to clients. And whilst 60% of respondents viewed the improvement of workplace diversity within their firm as either ‘important’ or ‘very important’, this issue fell behind a number of other business growth.
It is important to note that change is occurring in our industry, and the rise of diversity as a discussion topic is helping firms to navigate challenges they see in instilling change.
Yet never has there been a more important time for firms to buy into the correlation between improving the diversity of a firm and delivering on other KPIs. Indeed today, improving diversity at a firm goes hand in hand with increasing company profitability, with a diverse pool of candidates able to promote independent thinking and better business opportunities overall.
In many cases, achieving such diversity at a firm needn’t require dramatic changes. To promote long-term change, companies must increase their chances of finding the best individuals by actively reaching out to the widest possible recruitment pool, rather than passively continuing with a ‘business as usual’ process. There is also a need to ensure firms are engaging with diverse recruitment policies that introduce cognitive diversity – allowing for a greater breadth of ideas that are explored and mitigating the risk of ‘affinity bias’. Most importantly, by embracing diversity in both senior and junior roles we can all encourage a more inclusive, welcoming environment – and help implement a cultural change that improves productivity at a business level as a whole.
While for many years, ‘stale, pale and male’ as a descriptor has been useful in attracting attention to the issue of diversity and inclusion, it is time for the industry to move on from that. By the subject’s very nature, diversity should be about our industry and individuals working together to determine how we can create a better profession and a better society for our investors.