Of the 122 managers Redington surveyed as part of its annual Sustainable Investment (SI) Survey, representing an aggregated £37.7 trillion in assets under management, 97% believe diverse teams improve their ability to deliver a more effective investment strategy.
Despite this, the data suggests that for every one female investment team hire, a manager is, on average, recruiting two men.
Overall, the study finds that the average team’s gender split is currently 78% male and 22% female. Just 5% of investment teams consist of more than 40% women, while 60% are three-quarters or more male – an increase of 2% since last year.
Sarah Miller, Vice President at Redington commented: “While it is encouraging that managers are so positive about the benefits that diverse teams can bring, there sadly remains little evidence to suggest this is translating into hard action.
“The common reason cited for the uneven gender split in the financial industry is the challenge of retention; however, this isn’t reflected in our survey results. On average, there was no gap in turnover in 2021 between men and women. There is, however, a gender gap in recruitment figures, with one female investment team hire for every two men. This means that the pace of change to address the balance remains glacial, and we’re still a long way from societal or even broader industry levels of representation.
“We would urge managers to contend with the lack of diversity within their teams and consider what more they can do to offset this trend. Only through openness and transparency can we improve the future outlook and progress towards building an investment industry that truly represents the wide spectrum of beneficiaries we seek to assist.”
The need for improvement applies to all areas of diversity, not just gender
Overall, 58% said they consider their investment teams to reflect the regional demographics of where they are based.
However, Redington found that the number of asset managers disclosing investment team ethnicity data has fallen relative to 2021 (39% vs. 32%). Representation of Black investment professionals, in particular, continues to be notably low – at just 2%, on average. Representation of Asian and mixed groups sits at 23% and 4% respectively.
Miller continued: “These statistics uncover the uncomfortable truth as to how underrepresented some minority groups continue to be in our industry. Diversity is not just about recruiting individuals to meet a quota, it is about seeking out candidates who will bring valuable new perspectives to the table, thanks to their different backgrounds, skillsets and experiences. We would expect managers to be taking a close look at their recruitment practices and considering how they can make them more inclusive.”
Diversity in regards to due diligence also found lacking
The study shows that, overall, 54% of managers consider diversity as part of their investment processes. Gender appears to be the dominant factor, with 80% of the aforementioned group of asset managers assessing potential investments based on this.
The only other area at the aggregated level to gain consideration from more than 50% of asset managers is ethnicity. Other factors considered by asset managers were: education (33%), age (36%), religion (19%), cognitivism (31%), professionalism (43%) and sexuality (19%).
Despite these figures, only 8% of strategies that engage on diversity actually integrate and report on related KPIs.
Moreover, while 61% of surveyed asset managers have firmwide diversity targets, just 40% have KPIs linked to senior leadership remuneration.
Miller continued: “A closer link between senior remuneration and diversity performance is most certainly something we would like to see coming through in next year’s research. Managers have signed up to the initiatives and designed the processes, but incentivisation is arguably now the quickest win when it comes to driving meaningful change.”
She stressed that, while the data highlights clear concerns, it also presents plenty of opportunities for future progress.
“We cannot expect managers to transform their teams and processes overnight, but it is critical that firms step up their game when it comes to diversity. It is our belief that teams drawn from a wide range of backgrounds are far better equipped to tackle complex problems – and ultimately serve clients more effectively.
“We don’t claim to have all the answers, but we do know from experience that openness in sharing experiences, best practices and insights is the most effective route to progress. Touting the importance of diversity is not enough - true change will only be achieved by replacing box-ticking with honest conversations, actionable policies and collaboration.”
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