Gender diversity in financial services

Financial Services lagging behind

2023 celebrated 50 years of female traders on the London Stock Exchange, a huge milestone. However, 2023 also sees women in finance suffering nearly double the wage disparity compared to the UK average. Recent gender pay gap data has shown that the share of leaders who are female across top financial firms sits at just 35%.

According to the Women in Finance report, of the 400 plus signatories signed up to the HM Treasury Women in Finance Charter to improve gender balance in senior management, there have been improvements from 2021 to 2022 in every sub sector area, with the average levels of senior representation increasing from 33% to 35%. But advisers and asset managers have some of the lowest proportions of women in senior management, illustrated below, with the lowest levels of diversity targets across the sector. Being able to measure the gender diversity of customer-facing advisers, however, is tricky given that Financial Conduct Authority (FCA) titles do not contain a gender category to be able to measure.

A recent study found that only nine FTSE 100 companies were headed by women. 19 of the FTSE 100 are in financial services and, of the nine, there were four in this space.

Clearly, in the financial services sector, as career levels rise, female representation falls.

Combatting gender diversity through recruitment and retention strategies

Having access to data and dashboards that help to illustrate the scale of gender disparity within each business area is key to starting to tackle any issues. Of course, tackling problems around gender diversity is difficult, but not unsolvable and businesses have a number of options available to support their D&I strategies.

Culture

In our most recent Real Economy survey, 32% of businesses identified that finding people who want to work in their company culture was one of their biggest challenges. Embedding a diverse culture with a tone from the top and transparency is key to breaking down barriers. Increasingly, financial services businesses are enhancing focus on policy development, covering areas such as pregnancy loss, premature birth, menopause, family related policies and fertility treatment. These are often kickstarted by networking groups leading on change and encouraging allyships. Teamed with this is training for all staff on diversity and bias, publicising and celebrating efforts and embedding the culture.

Hybrid working models

Of those surveyed, the main reasons for turnover of employees in the last 12 months was work/life balance, with the key offering to attract and retain employees being a hybrid working model. The financial services sector, in the main, is seeing a slow but certain shift back to the office, and this could be damaging for women in the workforce.. For example, JP Morgan mandated managing directors worldwide return to the office five days a week in March 2023 and Goldman Sachs report attendance similar to pre-pandemic levels.

Additionally, there has been a jump in relocation benefits, paying new hires to move so they can be nearer the office to attend in person. Despite this, the Financial Conduct Authority (FCA) accepts that hybrid working remains a desired model, particularly those who are required to juggle other commitments, such as caring responsibilities, that might not offer the same flexibility, and have set out their expectations. Having different models of hybrid work, allowing greater autonomy within teams to operate what works best for them, their productivity and their team takes a step toward removing barriers for women. In gathering an understanding of employee preferences, many are taking to staff surveys and seeking feedback from established network groups. Each organisation will need to be mindful of their own culture, systems and processes when making decisions of how to adopt hybrid working preferences, as well as focusing on metrics to measure the success of the models adopted.

Unfortunately, there is a heightened cyber fraud risk which comes with agile working, so businesses should ensure their cyber strategies and staff training is robust. Additionally, the boom of generative artificial intelligence can make roles far easier to perform, which could enable remote workers to juggle more than one job at the same time, so managers must be astute to the activities undertaken by those under their supervision and not just what is being produced. In our survey, 57% of respondents had invested in upskilling their managers to be able to manage hybrid working - a promising start.

Pipeline and succession

A strategy harnessed by firms striving for a diverse senior team is generating internal talent by having a pipeline of people, including women, who will be able to take on more senior roles in future. This involves the early identification of female talent, supporting growth, with initiatives such as female leadership programmes, coaching and mentoring opportunities, and being transparent with regard to promotions and progression. Firms are turning to data to understand why women may be dropping out of the pipeline, where the glass ceiling actually is and why it exists, and to enable a more proactive, rather than reactive approach.

Benefits

Harnessing network groups and staff surveys can also shape the benefits offered to staff, which go beyond the traditional basic benefits with a focus on breaking down inequalities, for example, inadequately paid parental leave policies can disproportionally impact women. A report by Equileap found that the number of companies with adequately paid parental leave was just 23%. Abrdn, for example, offers 9 months of fully paid parental leave to all parents – the female to male representation on the board at this firm is 5:6.

Recruitment

To ensure that female talent is identified and utilised as a business resource, the recruitment strategy must be right from the outset, with policies encouraging diverse recruits. For example, ensuring shortlists or longlists are diverse, having diverse interview panels, considering job descriptions, and not requiring applicants to note their current pay so as not to compound previous pay inequalities. Widening the pool of candidates by using initiatives such as returning to work programmes following career breaks and focusing on markets to identify and source talent, from grassroots to senior hires, are being ever more utilised, particularly considering the tight labour market faced by the UK.

Moving forward

Meeting the goal of increasing gender diversity will require a focus on recruitment, retention and promotion, behaviour and culture and embedding diversity and inclusion into the business. The monitoring, as well as sharing of data illustrating improvements and targets, and even external accreditations, can build a profile to attract talent as well as retain it. This data is not restricted to internal monitoring data, but external publications on diversity data to drive change.

As economic conditions get tougher, it is important that diversity and inclusion remains on the agenda in the battle to secure and retain talent as well as hit their gender diversity targets.