Diversity in wealth management
Diversity in wealth management
Is the banking, finance, and insurance sector doing enough to reflect the population of the UK? A major initiative, still ongoing, was launched by trade body Investment Association and the Bank of England In November 2016.
As reported by the FT, the drive “intends to address accusations that the industry is an old boys’ club that protects the interests of white, middle-aged men”.
The Diversity Project
The Diversity Project’s aim is to “achieve diversity across all dimensions, including gender, ethnicity, socio-economic background, LGBTI+, age and disability.” In a report published in March 2017, the Project stated that while 44% of accountants were women, only 9% of investment and wealth managers in the UK were female.
There is evidence to suggest that having more women involved in wealth and investment management makes a positive difference to clients’ bottom lines.
Citing a US survey called "Boys will be Boys: Gender, Overconfidence and Common Stock Investment", Helena Morrisey, Head of Personal Investment at Legal & General, told the Daily Mail that women performed better in investing because they traded 45% less than men.
She told the paper that "If you are really confident your views are right – and I don’t want to be judgmental but it would appear men are more likely to be overconfident – then you trade more, and the trading costs reduce the return".
If this is bad, Wall Street has greater challenges to overcome to tackle gender diversity. According to a 2017 study from the Knight Foundation, 1.1% of $71.4tr of assets are managed by firm owned by either minorities or women, reports MarketWatch.
Minority Ethnic candidates
There is also an increasing push to hire more candidates from minority ethnic groups into the sector as part of the Diversity Project.
Nineteen major companies declined to share their racial and ethnic data with the Diversity Project. Three did – M&G said that 13% of its fund managers were from ethnically diverse backgrounds, a third of Legg Mason’s, and 42% of the Capital Group’s.
Speaking to the FT, Ms Morrisey said that diversity in the fund and wealth industries had worsened primarily because of hiring practices. According to the companies’ websites, half of 20 of the fund companies surveyed would only accept applications for roles in investment from those with a good degree in maths or economics.
"Diversity of perspectives are essential to connect with customers and to make the right decisions...If everyone [in fund management] has an economics degree from Oxford or Cambridge, there will be a narrow perspective and we won’t have our finger on the pulse. An unintended consequence of trying to have professional standards is that [the industry] has become much more homogenous,” she told reporters Aliya Ram and Madison Marriage.
The Diversity Project has produced advice for those wanting to enter the wealth management industry, those already in it, and those wishing to return. It also produces guidance for employers and for asset owners.
Supporters of equality in banking, finance, and insurance
Here at Additional Resources as a major recruiter of candidates to the banking, finance, and insurance sectors, we’re completely in favour of the aims of the Investment Association.
If you’re looking for a role in wealth management and investment management, call professional recruitment specialists on 01277 822 668 to find out more.