The “Diversity Multiplier:” Why We Need More Women in Investment Management

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The asset management industry in the US boasts several high-profile women leaders — Mary Callahan Erdoes, CEO of JPMorgan Asset Management comes to mind. So does Marie Chandoha, president and CEO of Charles Schwab Investment Management, and Kristi Mitchem, president, chief executive officer, and head of Wells Fargo Asset Management.

But as Oliver Wyman’s recent report, “Women in Financial Services,” points out, despite having some women in top positions, “asset management does no better than the rest of the financial services industry when it comes to female representation at the top. And portfolio management, the so-called ‘engine room’ of the asset management industry, does even worse.”

Just 15% of portfolio managers globally were women as of December 2015, compared with 18% on asset management executive committees, according to the report. (Incidentally, Asia has by far the highest representation of women in portfolio management, at 32%.)

While this may not be news to you, the vexing question remains: Why is this still such an intractable issue, especially at a time when there is increasing awareness of the benefits of diversity in the workplace and a seemingly endless stream of articles and research papers on the topic?

One reason that can be scratched off the list right away is that men simply make better portfolio managers.

“[It’s] not because women are worse at portfolio management than men,” the authors say. In fact, “studies show all possible results in terms of portfolio performance, with neither women nor men being systematically better. So the available evidence provides no justification for the low representation of women in portfolio management.”

The sad reality is that we are all losing out because of it.

The report notes there is evidence that women investors are stronger advocates for gender diversity in their portfolio companies. “More women in portfolio management could mean more women in leadership positions across the economy — a diversity multiplier effect.”

So what is deterring women from working in portfolio management? How can the barriers be removed?

The authors say that based on interviews, research, and an online survey, they see three reasons why there are so few women in the “engine room” of asset management:

  • Culture and Image. Most of the interviewees identified the culture and image of asset management as a problem for attracting and retaining female staff. The stark reality: “The industry’s image is largely unattractive to women.”
  • Graduate recruitment. While retaining women is a problem, the bigger problem is attracting them in the first place. “The image of asset management firms may deter qualified women from applying, as may a lack of knowledge about the industry among graduates who have no specific reason to be interested in the topic,” according to the report.
  • (Perceived) barriers to flexible working. The interviewees in the study had differing views on flexible working options. But what seems clear, however, is that “the increasing use of technology in money management is likely to challenge traditional approaches to money management.” The report notes that many leaders within the asset management industry want to see more women working as portfolio managers and are taking steps to effect change.

The report recommends taking some steps that echo some the work we are doing at CFA Institute through our Women in Investment Management initiative and that you can implement at your firm.

For example, here’s something simple you can do today: Help spread the word that the profession is friendly to women and encourage women to pursue an education and career in investment management. If you are a CFA charterholder, talk about the CFA charter as a global passport for career success. Share research, business cases, and stories of how women are making a difference. (You can find more ideas for how to make a difference here.)

The report concludes with a powerful call to action:

“Portfolio management is not what comes to mind when most people think of financial services: less high-profile and glamorous than investment banking, and less familiar to consumers than retail banking and insurance. Portfolio management may not have been a priority among campaigners for greater gender diversity in financial services. But given the influence of portfolio managers in the wider economy through share ownership, and the potential for a diversity multiplier effect, it should be.”

If you’re interested in learning more about the latest research and best practices for improving diversity at investment firms, as well as participating in networking and hands-on workshops to take your firm to the next level, join us in Boston on 14–15 September 2016 for the Alpha and Gender Diversity: The Competitive Edge conference.


Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

Photo credit: ©iStockphoto.com/runeer

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