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  1. SDGs
  2. SDG 5, Gender Equality
March 10, 2022updated 11 Mar 2022 8:22am

Gender equality: It’s hard to hire female fund managers

The investment sector's push to attract and retain more female executives is gaining momentum, but industry-wide issues are seen to be curbing meaningful change. Some firms in the sector have recognised the need to adapt their approach.

By Tom Higgins

Apiramy Jeyarajah of Aviva Investors and the Diversity Project says the asset management industry does not have enough female applicants to achieve gender equality. (Photo courtesy of Aviva Investors)
  • The proportion of women managing money remains low, averaging 11.8% globally last year, according to Citywire. 
  • Some fund houses are trying to redress the gender balance, but there are cultural and structural issues to contend with. 
  • Suggested solutions include taking more time over hiring, adapting language used in job descriptions and even using artificial intelligence. 

Gender equality and diversity in areas such as pay and staff headcount has been a rising theme across most corporate sectors in recent years – from construction to transport to finance.

For its part, the asset management industry has been steadily increasing its focus on the hiring, retention and promotion of women, whether spurred by societal shifts, a desire to live up to commitments to gender equality (such as under UN Sustainable Development Goal 5), pressure from clients or shareholders – or a combination of these. There is also some evidence that investment teams that are more gender and ethnically diverse generate higher returns. 

However, upping the proportion of female fund management executives is easier said than done – and not only because of a relative lack of supply. Fund houses and other institutions face other barriers, some of them self-imposed. 

The percentage of women managing passive funds has increased in recent years, although progress has plateaued of late in the active fund space, shows Morningstar data as of the end of 2020, the latest the research house could provide. Ultimately, though, the percentage is at the same level as 20 years ago (see chart below). 

But the proportion did rise a little between 2020 and 2021, according to a Citywire database of 16,353 individuals who manage active mutual funds or their equivalent. Globally, 11.8% of fund managers were women last year, up 11% from 2020.   

A core issue to gender equaity is that there is a smaller pool of female talent in certain areas.  

One senior Hong Kong-based recruiter tells Capital Monitor: “Many of our [asset manager] clients now, quite rightly, want a gender-diverse shortlist when hiring."   

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The push to retain more women in the investment management world has incrementally risen over the past five years, as the industry works hard to redress a historical imbalance, he adds.  

“We clearly want a diverse slate too, but we have to acknowledge and educate that in some areas it’s quite tricky,” the recruiter says. “It is harder to find a gender-balanced shortlist in areas such as portfolio management, trading or technology, for instance.” 

The proportion of women is greater in sales and marketing in the asset management industry in Asia at least, he adds.  

Financial services companies have been “making proactive efforts to balance their hiring shortlists”, agrees Henry Adefope, associate partner in the pensions and investments team at strategic communications and advocacy group SEC Newgate UK.  

But ultimately there is a shortfall in interest from women, he says. “At the core of this is the fact the investment sector still has a PR problem: the investment field is not the most appealing to talented young women, be this because of its structural inflexibility or being historically male-dominated. 

“These barriers will never cease unless firms play a proactive role in making gender balance a strategic priority,” he says. 

Mind your language

They should, for instance, consider why women may be being deterred from entering the asset management industry in the first place.  

At the junior level, recruiters often inadvertently put women off roles by using non-inclusive language, says Apiramy Jeyarajah, head of UK wholesale at London-based fund house Aviva Investors. She is also an ambassador of the Diversity Project, a cross-company initiative championing a more inclusive culture within the financial sector. 

Women may see as less appealing a role that entails “masculine terms” in the job description, Jeyarajah says. This is backed by a January 2011 study by the Gender Action Portal, set up by the Harvard Kennedy School’s Women and Public Policy Program. It found that adverts that used more masculine wording – for instance, citing words such as ‘competitive’, ‘dominant’ or ‘leader’ – were more likely to make female applicants feel they would not be welcome in or suited to the post. 

In addition, Jeyarajah says, women tend to “look at the 10% of the role they can't do and then say they can't do it”, whereas men are more likely to assume that they are capable enough for the position. 

“At a basic level, the industry doesn't have enough female applicants and employees in the first place,” she adds. “So employers should be considering how they can tap into that talent.”  

Schroders appears to have taken this on board. The fund manager’s recruitment practices are “inclusive by design, from the language used in the job description to interview processes”, says Melisa Fung, Schroders’ inclusion and diversity specialist.  

Events specifically targeting female students have proven beneficial, she adds, by bringing in a more balanced cohort of graduates, interns, apprentices and trainees. 

However, Fung acknowledges that Schroders needs to do more to encourage more women to continue their careers with the organisation or join in mid-level or senior roles. 

Retention issues

One issue that may be hampering fund houses in their bid to achieve gender equality is a big pay shortfall for women, going by figures from the UK, which is home to large and respected companies such Legal & General Investment Management ($1.8trn under management), Insight Investment ($1.14trn) and Schroders ($990bn).   

Analysis of some 8,000 UK companies’ pay disclosures across different sectors from 2020 shows that women in finance earned 75p for every £1 made by men, as against 88p in other sectors, as reported in Capital Monitor analysis published last month. 

However, one of the biggest obstacles to the recruitment of women into mid-level roles is the notion that organisations need to bring in a “like-for-like hire”, says Jeyarajah. If an organisation chooses to backfill a role, “you’ll end up looking for a white male with ten or 15 years’ experience. And that is the problem.” 

Jeyarajah says she would “not have even made the first cut” for her current role if Aviva Investors had sought an individual with ten-plus years’ experience in UK wholesale. 

Instead, the company sought out a certain skill set to fit the role rather than a specific level or type of experience, she adds. “It’s a different thought process and it made the search process different. 

“Having more individuals with different diversity of thought and background in more senior positions will help get you to that point,” she says. 

Recruiters are increasingly being tasked with creating long lists of diverse candidates, Jeyarajah says, but a focus on targets and key performance indicators risks making diversity-focused appointments “superficial”, resulting in lower levels of retention. 

Ultimately, asset managers looking to diversify their staff may need to allow more time now to find suitable candidates, says Anne-Marie McConnon, global chief marketing and client experience officer at BNY Mellon Investment Management. 

“We believe companies need to be prepared for a longer search process, as it does take time to identify, engage and cultivate a diverse talent pipeline, so taking a longer-term view in both the attraction and onboarding of diverse talent is key,” she adds. 

To help address the challenges involved, BNY Mellon is using artificial intelligence to “mitigate bias, enhance efficiency and improve the recruiting experience”, London-based McConnon says. 

The increased focus on improving the gender equality in finance is welcome, but the suggested solutions will take time and perseverance to take effect.

Joe Marsh contributed to this article.

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