How diverse is the UK investment management industry?
Pardon the Interruption
This article is just an example of the content available to mallowstreet members.
On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.
All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.
The investment management industry continues to lack gender and ethnic diversity but is making progress, a new report on equity, diversity and inclusion by the Investment Association and WTW’s Thinking Ahead Institute has found.
The findings of the ‘EDI Data Survey’ are based on questionnaire responses from 52 UK investment and fund management firms which collectively employ 75% of the roughly 46,200 people in the UK investment management industry. The report also uses data provided to the IA by member firms for other EDI-related workstreams, interviews with senior staff from IA member firms and data sourced from third-party organisations.
Age, gender and ethnicity are the most widely collected attributes among firms, the report shows, and receive the highest response rates from employees, while other characteristics face relatively lower collection and response rates. This can be down to methodological challenges, data privacy concerns or complexities around diagnosis, according to the report.
Just under a third of the industry’s workforce is aged between 18 and 34, compared to 43% of the UK’s working population, according to the IA and Thinking Ahead Institute. They found 63% of industry employees fall in the 35 to 64 age group, close to the 62% in the UK’s working population, but just 1% are 65 years old or older, against 4% across UK workers.
“This suggests a relatively younger composition of the investment management workforce, which is contrary to historical perceptions of an industry with an older employee demographic,” the report notes.
The industry is however still male-dominated. Although the gender balance has improved over recent years, 55% of industry employees are male and 39% female, with 7% not disclosed.
Investment management as a sector is also predominantly White, with 60% White employees, 10% Asian and 2% Black; this is not representative of the population of London, where the industry is predominantly based, with 54%, 21% and 14% respectively.
“It’s crucial that the investment management industry reflects the people that we serve and the society we operate in. Our EDI Data Survey offers a comprehensive look at the state of diversity and inclusion in our industry. Creating a culture of diversity presents a clear business case, and organisations with an inclusive workforce offer better returns, drive innovation, retain talent, and ultimately, provide a better service to our clients,” said Karis Stander, director of culture, talent and inclusion at the IA.
She said data is the backbone of creating and implementing an effective EDI strategy. Efforts to collect more data are being made, with a third of firms (33%) indicating they plan to start collecting data on socio-economic background, caring responsibilities and neurodiversity.
Measuring more will help progress on EDI, agreed Marisa Hall, head of the Thinking Ahead Institute, but more is needed.
“Transformational change requires more than just data measurement – it involves deeper thinking on issues necessary to build a sound infrastructure for equity, diversity and inclusion plans,” she said. “This study serves as a gateway to change, being the first-ever unveiling of UK-specific EDI statistics, and I hope it establishes the pulse monitor for progress in the UK investment industry.”
Employers in the UK investment industry collect diversity data mainly because of internal factors, to better understand their workforce demographics (65%), foster inclusivity (60%) and inform their EDI initiatives (48%), the survey shows.
However, more than half of firms (55%) said HR system limitations pose a challenge to collecting diversity data. Privacy concerns (76%) and apathy (47%) were also cited as barriers to collecting data.
The Financial Conduct Authority is currently consulting on diversity and inclusion reporting for large firms. The consultation closes on 18 December.
While there is “strong industry commitment” to developing a diverse talent pipeline through various initiatives and partnerships, the industry’s focus on below senior level recruitment and the typically low turnover rates have contributed to a persisting lack of diversity in the industry, according to the report.
Most member firms assign ultimate accountability for EDI initiatives to their top leadership (69%), with 86% identifying CEOs, board directors and executive leadership as ultimately accountable for EDI in their organisations, while responsibility for implementation is spread across the organisation.
Is data collection always necessary for a firm to take positive action?