The biggest advice businesses are being urged to do more to promote gender diversity after 26 financial firms put their names to the Treasury’s women in finance charter.
This came as a welcome boost to the government initiative, which is encouraging firms to prepare their female talent for leadership positions. Among the 26 new signatories were two advice firms.
A handful of advice firms were among the first tranche of firms to sign up in July. These include Edinburgh-based Independent Women and Ealing-based Hannay Investments. There are now 162 firms signed up in total.
A stark gender imbalance still persists in advice and firms are being urged to do more. However, big advice businesses have told New Model Adviser® they already have strong diversity policies in place.
Closing the gap
A freedom of information request made by New Model Adviser® ’s sister title Wealth Manager revealed the percentage of women holding CF30 permissions had fallen in the past two years, from 17.9% to 13.9%.
According to the thinking behind the charter, a lack of diversity leads to lower productivity across the financial sector.
The charter was launched by the Treasury in March 2016 in the wake of the Empowering Productivity report written by Jayne-Anne Gadhia, chief executive of Virgin Money.
The Financial Conduct Authority (FCA) was one of the first financial services organisations to sign up. In a recent speech by Christopher Woolard, FCA executive director of strategy and competition, the regulator used a more prescriptive tone on gender diversity.
‘We need diverse voices around the table. It is central to providing public value,’ he said. ‘The same is true of the firms we regulate. Studies show the inclusion of a diverse range of voices improves performance.’
Forcing the issue
The Treasury also has no desire to let the issue of gender disparity fizzle out. On 1 November the Treasury Committee launched an inquiry to measure the progress of the charter. It wants to identify barriers to women entering and progressing in financial services. It will also ‘examine the value to financial firms of having greater gender balance across all job grades and functions’.
Going even further, the inquiry is looking at how well government and regulators act as role models for good gender diversity practices. The government initiative sets out pledges for companies to achieve a better gender balance and publicly report on their diversity by:
- linking the remuneration packages of their executive teams to gender diversity targets;
- setting internal targets for gender diversity in their senior management;
- publishing progress reports annually against these targets; and
- appointing a senior executive responsible for gender diversity and inclusion.
There is flexibility for the firms that sign up to the charter to decide which senior member becomes responsible for gender diversity and inclusion, and how senior executive pay is linked to the targets, to be set within guidelines.
Platform company Nucleus announced its commitment to the women in advice charter this month. ‘Nucleus happens to be male-biased on the whole now but in the past it has been the other way around,’ said chief executive David Ferguson. ‘There is no issue at aggregate headcount level but the senior management teams tend to be male-dominated. This is something we know we need to work on.’
Ferguson (pictured above) said there was also a ‘personal aspect’ to the charter. ‘I have a five-year old daughter,’ he said. ‘When she grows up and hopefully moves into the workplace, I do not want her to have to deal with all the shit the current generation of women have.’
Manchester-based advice firm Castlefield signed the charter in November. Kate Hewitt, executive investment manager at Castlefield, strongly believes it is a numbers game.
‘Creating a critical mass of women and creating a representation high up will encourage young women. For example, they should feel that if they take maternity leave there will be no negative perceptions about taking that break.’
Beckett Investment Management Group, based in Bury St Edmunds, which also signed up this month, also looked at it from the recruitment perspective.
‘We think it will help us to be an employer of choice,’ said associate director Samantha Owen (pictured below).
‘If people look at our website, they will see we have a commitment to the promotion and retention of women in financial services in senior positions. That might make us more attractive to prospective employees than a firm that has not signed it.’
According to anecdotes from the female advisers we spoke to, some larger advice firms still fall short of being a good place for women to make career progress. One adviser, who left a national to set up her own firm, said many firms still do not have a culture that caters for a diverse workforce.
No national advice firms have yet signed up to the charter. However, some life companies which have advice arms are now signatories, including Old Mutual, Standard Life and Prudential. Charles Stanley, a national wealth management firm with a financial planning arm, has also signed.
St James’s Place (SJP) has two women on its board of nine directors. It said it supported the aims of the charter, but is not a signatory.
‘We are committed to ensuring everyone at SJP has an opportunity to thrive, regardless of gender. And we continue to build a business that has the right culture and working environment for all staff,’ said a spokesman.
Chase de Vere also did not state it was considering signing the women in advice charter. However, it said it had its own policy to ensure diversity and equal opportunities.
‘We are hugely committed to diversity and equal opportunities,’ said head of communications Patrick Connolly (pictured above). ‘We have an equal opportunities policy which is strictly adhered to and which is also published on our employee intranet.’
The policy states: ‘Chase de Vere is committed to promoting equal opportunity in the workforce, regardless of sex, marital status, disability, religion, political opinion, colour, race, nationality, ethnic or national origin, age, sexual orientation or gender reassignment.’
The use of positive discrimination as a method for promoting greater diversity can be divisive.
Some say it is unfair to discount a candidate because they belong to the same ethnic, gender and class group as most of the other people already working at the firm. However, Ferguson said he would have no hesitation addressing diversity issues at Nucleus this way.
‘Let’s say I have two candidates for the job, one male and one female,’ he said. ‘If the female candidate is materially deficient that is another matter. But what if the female is 10% less capable on the face of it?
‘If she is joining a team of 10 people and they all become 1% better because the team is more diverse, you have made up the shortfall. You put a value on the diversity a person brings to the role as much as their immediate direct ability to do the job in front of them,’ Ferguson said.
He said women needed to be net gainers and men net losers over the next 10 years. But, he said, everyone would benefit from companies becoming more successful.