Diversity In Asset Management—Waiting For Godot?

Diversity in much of the financial services industry has proven elusive.

When I started as a freshly-minted MBA on the Bear Stearns fixed income trading floor in the mid-1980’s, I could count on one hand the number of female traders. Let’s just say it was a great experience working on a world-class trading floor, coupled with the scary reality of feeling like I had to don body armor before stepping onto the floor each day. By the early 1990’s, I had switched to asset management—where I saw a few women ahead of me and many more coming up the ranks behind me—my female colleagues and I were excited to be part of the expanding financial services sector. Then around year 2000, we realized few women were promoting into middle management, and alarmingly, when I took part in our annual college and MBA recruiting, women were questioning the allure of joining the financial services sector at all.

Unfortunately, not much has changed in the last twenty years.

In their October 2021 article, “Closing the gender and race gaps in North American financial services”, McKinsey notes that women have a tough time getting a foothold on the corporate ladder in financial services overall, but particularly in the asset management sector. In their industry-specific analysis of data first released in September 2021 from the Women in the Workplace report done in collaboration with LeanIn.Org, McKinsey finds that despite starting at roughly 50 percent women in entry level positions in the asset management sector, the representation of women declines at every position after entry level—resulting in the lowest amount of representation in the C-suite of any financial services sector. This slide is especially steep for women of color (Black, Latina, Asian)—from entry level to the C-suite, the representation of women of color falls by 80 percent. (Please see table below from the McKinsey October 2021 article.)

Companies targeting diverse workforces and inclusionary behavior know the importance of collecting data—both as a baseline and then as a metric mapping effectiveness of various initiatives. One example of targeted metrics within the asset management industry—the “broken rung” that many women experience at the first step from entry level to manager—where they are significantly less likely than men to be promoted. In fact, related research has provided a large body of evidence pointing to unconscious bias embedded in hiring and promotion policies as detrimental to women’s advancement in the workplace. Thus, supported with their own “broken rung” metrics, asset management organizations are sponsoring company-wide initiatives to help eradicate unconscious bias as one step towards meeting their diversity challenge. In particular, managers are increasing their awareness to how actions are seen by increasingly diverse groups of people.