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The UK’s huge asset management industry must get serious about tackling a widening gender pay gap amid pushback from some in the sector who see the drive to narrow the discrepancy as merely a politically correct, box-ticking exercise, a new report says.
Of the five UK business sectors with the biggest gaps between what men and women are paid—banking, investment management, insurance, real estate and travel—asset management is up there with the worst performers. It was the only one where the gender pay gap actually increased in the last year.
At 31%, the gender gap in average pay in the sector is only topped by banking, according to the report by accountancy firm PwC and the Diversity Project, an industry group campaigning for a more inclusive culture in the sector.
“The evidence suggests that in most firms, attention and intention still aren’t translating into concerted, decisive action and results. Diversity and inclusion are often still being treated as second order priorities and, for some, a tick-box exercise,” the report said, noting signs of “diversity fatigue” and “push back”.
“Business leaders may be convinced of the need to act, but too many investment professionals perceive the issue to be more about political correctness than a driver of investment performance or the long-term success of their firm,” it said.
The UK’s investment management industry is the second biggest in the world, after that of the United States, handling $9.5 trillion of assets and employing 115,000 people.
But the report said the industry faced mounting commercial, regulatory and reputational risks if it failed to give priority to the gender pay gap and diversity. “It’s time for the industry to get serious, to prioritize the issue at every level, to drive modern behavior, working practices and cultures,” it said.
The report highlighted a wider problem with lack of diversity in the asset management industry, noting that senior leadership and investment management roles remained dominated by white, middle-class, and straight men.
The New Financial think tank said in a report last September it had identified only 12 black portfolio managers based in London, and that only 4% of UK fund assets were managed exclusively by women, compared to 85% run by men.
Helena Morrissey, chair of the Diversity Project and head of personal investing at Legal & General Investment Management, said the lack of diversity risked becoming self-reinforcing, with young women discouraged from even considering a career in fund management because of the wide gender pay gap.
There was a similar lack of role models for ethnic minorities and people from poor backgrounds, she said.
Calling for a much bolder approach to attract the best talent, Morrissey said in the report: “Diversity and inclusion needs to be treated just like any other business issue, featured on every strategy day agenda, in every performance review, every hiring, promotion and reward decision, every risk and culture assessment.”
Karoline Rosenberg, a fund manager at Fidelity International, said people had the wrong idea of what investment management was like. “It’s an amazing place for women to work. People think it’s like ‘Wolf of Wall Street’ where we all sit around with 10 screens, shouting at each other. In reality, our work is thoughtful, quiet and calm,” she said in the report.
In 2017, the British government made it mandatory for organizations with more than 250 employees to report annually on their gender pay gap. In its latest figures for the whole economy, the Government Equality Office said nearly 53% of employers reported a narrowing of their mean gender pay gap while 44% reported a widening one.
Eliminating the gender pay gap has taken on new urgency on both sides of the Atlantic, rising to a major political issue in recent years. Under U.K. law, men and women must be paid the same for doing the same work.
The gender pay gap reflects more men working in higher-paid roles.
The report called on asset management firms to reinforce accountability from the top for reducing the pay gap and to tackle reticence among middle managers.
“Senior leadership buy-in can really help drive change within a firm. If you have this, everyone in the firm starts to think about it,” Shruti Khandekar, of HSBC Global Asset Management, said in the report.
Firms should translate the goal of improving diversity into an action plan setting out measurable goals and how to achieve them, PwC and the Diversity Project said. When recruiting, firms could remove the applicant’s name and gender before screening applications to remove any risk of unconscious bias, it suggested.
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