It is time for investment management firms to rise to the diversity challenge

By Veronique Morel-Kane, Senior Wealth Manager & Branch Principle, Raymond James

Large bodies of research have highlighted the benefits of diversity with organisations. However, despite, the large and every increasing research that recognises the need for diversity in firms, the percentage growth of female asset managers has been almost non-existent over the past 20 years.

Veronique Morel-Kane explores what the reason for this slow growth is, what more firms should be doing to increase the number of female asset managers in the industry, what more needs to be done to attract and retain women within the industry and why diversity and inclusion is more than just a ‘box to tick’.

The percentage growth in women asset managers has been non-existent, even now the growth is in the negatives. The percentages are in direct contrast with the “money” numbers predicting a huge, expected growth in wealth held by women in the UK, around 60% by 2025. This is due to a change in demographics, as there are more female entrepreneurs or female members sitting on boards.

It is more widely acceptable to have female members sitting on boards in more developed markets rather than in emerging markets. This is due to shifts in cultural attitudes in more developed countries compared to those that

are still operating with a more patriarchal attitudes such as Japan.

We have seen a rise in wealth ownership with almost 40,000 women around the world falling in the category of HNW (High-Net-Worth) and UHNW (Ultra-High-Net-Worth). This rise in numbers is due to an increase in intergenerational wealth transfer and more female board members. There has additionally been an increase in female entrepreneurs, with nine female entrepreneurs for every 10 male entrepreneurs in the USA, as well as countries such as Qatar, Madagascar and Saudi Arabia seeing a higher numbers in female dominance!

Also, the lack of a female support network could also deter women from working in the finance industry. The lack of role models and female presence in either industry panels, financial publications or mentoring, is certainly a deterrent to seek employment in this industry.

I think investment management firms have a duty to make sure they are involving, hiring, retaining and following the career of women within the industry.

Perhaps women feel that they would be starting their career already at the back of the racecourse, leaving little chance to succeed.

If they want to manage the assets of the women who are set to hold 60% of the world's wealth by 2025, they need to make sure that women are being represented in their decision making for their investment process. Not only will they have a better return on investment, as the statistic shows, but they will have that diversity of thought that could lead to better performance with lower volatility.

The new age investors are very mindful of where their money is being invested, hence the extraordinary inflow of funds into ESG investment products. ESG has that diversity element that is highly regarded by female investors too.

It is time for investment management firms to raise to the diversity challenge and challenge the diversity! Perhaps making the working

environment safer would make it easier and encourage more women to work in this industry, as there have been too many reports highlighting that at least two thirds of women in the industry have faced discrimination based on gender. Firms should also encourage the right demographic to be represented within their internal structure and additionally should be demanding for outside change.

Firms can lead by example by appointing more females to boards or within their fund management as well as have female mentoring schemes in place. They should additionally support their existing female employees to become role models and enable them to have a voice.

Women should not be a minority, but have a place in society that represents their demographic, 51% of the world population.

Having more female representation on boards is essential to the successful functioning of a corporate. Socially, having a woman’s perspective is to have the 'full picture', diversity of opinion, diversity of risk assessment, attitudes, problem solving etc. It is not just for the quota, but brings concrete evidence that companies will perform better and have lower risks.

A study from BofA Global research highlighted empirical evidence that S&P 500 companies with a superior diverse workforce and board have an increased ROE, 15% higher, and lower earnings risk. And generally, women tend to be more risk averse, hence their lower earnings volatility strategies. This is a very strong metric to use as selection criteria for a fund. We need the right representation on boards to represent the agenda of society.

If 60% of wealth is going to be held by women, we will need to better cater for female investment styles and priorities. There a focus towards ESG should be made as it has been shown to be an important factor for the new generation as well as females.

There is a definite diversity challenge in our industry therefore we need to challenge the diversity!

Our industry has a reputation to be highly pressured and highly demanding. With an already male predominance, there are very little female role models. Additionally, financial firms are not widely encouraging diversification. Therefore, from a young student female perspective, or even a mature female one at that, The wealth and investment industry is not a very attractive sector to work in and therefore, many would prefer to choose a career path in an industry where there is more female representation and where women have a better chance at making a career without the added pressure or responsibility ‘to make it as a woman too’.