Next year will mark 100 years since the Representation of the People Act gave some women the chance to vote for the first time in the UK. Yet to this day female financial advisers talk about a ‘macho culture’ holding back their profession and preventing gender diversity.
According to a Freedom of Information (FOI) request published by the Financial Conduct Authority (FCA) in March, at the end of 2016 there were 31,812 registered individuals holding a CF1 director position at regulated firms. Of these, 26,623 were men, 4,896 were women and a further 293 did not disclose their gender.
While the FOI response does not focus solely on advice firms, it hints at the extent to which women are underrepresented in the profession, particularly at higher levels. Why is this the case?
Helen Howcroft (pictured), managing director of London-based Equanimity IFA, said the answer to the gender disparity could be found by attending an advice event.
‘It is one of the most demotivating things walking into an event where you are one of very few women there,’ she said.
‘At an event in London, on the escalator that took you into it, I looked down and saw a sea of black suits. It was the first of these events I was going to not wearing a wedding ring. It felt awful. I have to say I find it really intimidating. I hate it.’
Hayley North (pictured above), managing director of London-based Rose & North, said there was a bias in the advice process itself, which can appear to be targeted at men.
‘Women as a group suffer from the fact that the advice process has been tailored towards men and their typical career trajectories and life expectancies,’ she said. ‘Women should be saving more earlier in their careers and may need to plan for longer retirements. In some cases they need to plan for career breaks and changes in working patterns and income.’
Howcroft and North’s experiences echoed comments made by Anne Richards, chief executive of M&G Investments, in a recent video interview with Citywire.
‘There is still a lot of unconscious bias in our systems and [that manifests itself] when I talk, as I do frequently, to young women, mid-career, who have chosen to leave the front office and leave fund management roles,’ she said.
‘You ask them why and 99% of the time they say: “I couldn’t hack the lad culture anymore.”
‘We have done a lot in our organisations but there is a lot more we have to do,’ said Richards.
So what can be done to change the image of a career that still seems to be dominated by the men in suits?
Charter for women
Advisers such as Vanessa Barnes, principal at London-based Hannay Investments, have had enough and are taking action to redress the balance.
Hannay Investments is one of the small and medium-sized enterprise (SME) signatories to the Women in Finance charter, launched in March 2016. This 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.
Since it was launched, 122 companies have signed up. Part of the aim of the charter is to explain to businesses the benefits of hiring more women.
Hannay Investments, along with the group of SME signatories, is organising a conference to bring women in finance together to share ideas, training and tips, as well as promote the benefits of such a recruitment strategy.
‘There is no question now,’ said Barnes. ‘The evidence shows if you have more women at a higher level the company will do better. We also believe women make for better planners. They listen better and take less of a sales approach. We think it is important that more women are recruited into the industry.’
Howcroft said recruiting more women would help improve the image of the profession.
‘The old commission-hungry salesman image is attached to the men in industry and you do not get that as much as a female,’ she said.
She said it was perhaps unfair to characterise advice in this way, as there are ‘some great male financial advisers’ but the public thought much of the ‘bad selling practices’ of pre-retail distribution review advice were connected to its image as a heavily male-dominated industry.
Steps are also being taken by the Women in Finance charter to address the gender pay gap.
In October last year a Treasury statement on the Women in Finance charter website highlighted the scale of the gap in finance.
‘Financial services is the country’s highest paid sector but has the widest gender pay gap, at 39.5%, compared with 19.2% across the economy,’ it said.
Innes Miller (pictured above), director at consulting firm Scydonia, has been working with companies to help them find ways to address this issue. He said the issue was often misunderstood as meaning women get paid less for performing the same jobs as men, when in fact it was about the number of women in senior, well-paid positions.
‘Equal pay is about ensuring when a man and a woman are performing the same job, they are not being paid different amounts. This is illegal and one of them could challenge their employer in court over the difference,’ he said.
The government has now made it a legal requirement to force companies with more than 250 employees to report by 4 April 2018 on six key metrics, which could expose the lack of women in senior positions.
Will forced reporting make a dent on the gender pay gap in the advice sector? Miller was sceptical.
‘A lot of the firms outside the top 20 will not fall into this as they are primarily small businesses. But many platforms, and life and pensions companies will have more than 250 employees so many of them will have to report,’ he said.
Not going far enough?
Barnes said that, unlike pay gap reporting, targets set in the charter were suited to small advice firms.
‘Many of the SMEs that signed up to the charter have already met their targets but it is easy for us.
‘If you are a firm of five people then hitting a 50% target is not so difficult. That might mean recruiting one more person. But clearly if you have 2,000 employees that will be more difficult.’
However, North said the charter had limited scope.
‘Every effort to draw attention to the imbalance is helpful,’ she said. ‘However, the charter does not, in my view, go far enough.
‘It is unlikely to be suitable for smaller firms. And the use of the phrase “having an intention” to link executive pay to success with gender initiatives, for example, is cautious where it should be bold. This is a serious issue,’ she said.
One issue everyone agrees on is the need to encourage more women to enter finance, and particularly advice, in the first place.
‘There needs to be education of the public about the opportunities that financial services offer women,’ Barnes said.
She has committed to attending careers days at her daughter’s school for exactly this reason: to demonstrate there is an opportunity to succeed in what is still a male-dominated career path.
Yet there is also frustration at the slow pace of change when it comes to hiring women in a profession that has done so much to improve its image in other areas in recent years.
The story of one anonymous adviser is typical of what many feel is an attitude problem in advice. The adviser worked in an office in a financial service firm where one of the management team told an office full of men, plus the one woman in question, they were all going to like the new intern because she had large breasts.
The adviser was stunned when they realised this was not just a tasteless joke but a serious comment among colleagues in a professional environment.
No doubt such bad taste is being banished to the past, but when events are mostly attended by men, and when the number of male directors at regulated firms far outstrips the number of female directors, it is no surprise many feel similar attitudes are ingrained in advice.
Call to action
Initiatives such as those championed by Barnes are undoubtedly helpful in encouraging women to enter the profession.
However, for all the language and behaviour training for women there needs to be a shift in perspective from men in advice too.
The first step is admitting the lad culture still exists, then realising that hiring more women will benefit clients, individual businesses and the profession as whole.