Let’s face facts: All is not well in our world. From the pandemic and racism to political upheaval, gender-based violence and sadly so much more, we all, as citizens of the world, continue to struggle to cope with today’s incredibly difficult challenges.
Against this backdrop, we face deeply ingrained inequities in our society that have been with us for generations. As a woman in the financial services industry, which historically has been dominated by men, I have personally witnessed and experienced the challenges that women have faced in their careers.
This has turned me into a crusader for gender equality. I’m not alone in this fight, for sure, as many women throughout the industry have become agents for change.
There’s no denying the truth about gender representation in the investment industry. A Morningstar report found that in the UK funds industry, there are more fund managers named Dave or David than there are women running such funds — and while some may find humor in that capricious factoid, it points to a hard reality about female representation in such roles.
Beyond that, Citywire reported that women fund managers have a much higher level of turnover, at 42% compared to 28% among their male peers. Not only does this point to the lack of support women feel within their organizations, but it underscores a broader theme that inhibits their growth potential.
We see a significant underrepresentation of people of color and women in senior positions in the investment industry too. Women of color in financial services face a 90% drop-off from entry level to C-suite — it’s time we confront the reasons for this.
These stark figures illuminate the battle that women face when entering and navigating today’s workforce. But there are signs that this environment is changing.
At CFA Institute, we have reached gender parity among our CFA program candidates in a number of important global markets, and women represent more than 40% of our candidates worldwide. While we proudly mark such progress, we also acknowledge that our efforts need to make deeper inroads with diverse potential candidates.
Goldman Sachs research found that even after adjusting for risk, female-managed funds have outperformed their counterparts amid the 2020 swings. Yet women are collectively managing only 2% of total assets. In contrast, 380 funds (77% of the total) are managed by an all-male team.
Professionals in the investment management industry all recognize the importance of diversification within portfolios, so why then is diversity within an organization not held to the same standard?
Having diverse disciplines and skill sets among staff will enable organizations to better serve clients. In fact, T-shaped skills — defined as expert knowledge and experience, combined with the ability to collaborate with experts from other areas — have proven to produce better investment outcomes. Additionally, a Willis Towers Watson 2020 assessment of diversity and performance outcomes found that investment teams with diversity generate better excess returns.
So what can be done? The first step is often listening with humility.
It’s the responsibility of those in leadership positions to listen to the real-life experience of young Black, diverse and women investment management professionals who resort to opting out of the industry altogether as the only way to cope with the oppressive reality and environment they may experience.
Our industry has long avoided discussing such issues in the workplace. That is a mistake. We must talk about them in order to share the responsibility for creating change.
Addressing these issues is deeply personal. We have to face our own biases, histories and sensitivities in a new light in order to establish solutions.
It is also a business imperative. Through our Experimental Partner Program, we’ve been working with 42 leading asset management firms on the inclusion strategies that clearly work. We found that leadership ownership is key, combined with a willingness to review candidly and reframe when necessary.
A commitment to work for inclusion and against racism is a lifetime one, but companies must face these realities at a systemic level.
I challenge all of us to consider the role we play in creating the radical change we need to see in order to improve diversity, inclusion, and belonging not only in the investment industry, but the world at large.
As the first female president and CEO in CFA Institute’s 74-year history, I know progress is possible.
Marg Franklin is CEO and president of the CFA Institute.
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