Blatantly obvious gap
City Hive chief executive and founder Bev Shah thinks there are a couple of issues at work to explain the current pay disparity.
Firstly, some people conflate the gender pay gap for equal pay, she said. All you need to do is to “walk around an investment floor” where you will find more senior men and men full stop in investment teams before the ratio becomes ‘blatantly obvious’.
Shah also suspects that women are keeping silent publicly because they might be seen as trying to “rock the boat”.
“No one wants to be branded as a feminaz’ by commenting on something that’s really obvious, but I think most people now are very passionate about wanting to see more diversity on the investment side and wanting to see more diverse thinking in teams.”
Asset managers of all shapes and sizes struggle with the issue of gender diversity but in the smaller boutiques, it’s even more of an old-boys club, particularly on the investment side.
According to their websites, breakaway firms like Evenlode Investment Management and Terry Smith’s Fundsmith have no females in their admittedly small investment teams. Lindsell Train has one female fund managers’ assistant. Neil Woodford has one female analyst in a team of six, Lucinda Crabtree, who also happens to be the only woman employed by the company.
There are exceptions of course. EdenTree’s Round is one of two senior fund managers at her firm, but she is the only female manager within the investment team. Round says that having another woman on the team “would be great” because “it’s such a good industry for women”.
“With the right people and the right culture that’s supportive there’s no reason we can’t do more to attract talent.”
If diversity is the key to successful asset allocation or alpha generation as many of the larger players have now argued in support of progressive gender policies moving forward, are firms not adopting this policy missing a trick? Could they be improving their performance even more by having investment teams made up of people with diverse backgrounds and views? It is food for thought, especially for an industry that has received such harsh scrutiny for the fees it charges and active managers that are “closet trackers”.
Diverse thinking in teams is a difficult thing to quantify. There are loads of intersectional considerations that come into play – gender, class, race, sexual orientation, etc.
As Shah puts it: “There is no metric that will tell you how diverse in terms of thinking a team is, it’s quite an iterative thing. But having more women in a team is a proxy for diverse thinking.”
The financial services industry has been banging the drum about diversity for some time now, launching important initiatives like the Women in Finance Charter, Investment2020, the Diversity Project and her own firm, City Hive.
Even with the pay gap figures in black and white, Shah only believes change will start to happen when it inevitably impacts a firm’s bottom line and clients start to demand change. It’s similar to firm’s adoption of ESG investing, she says. Ten years ago sustainable and ethical concerns were ignored but then fund buyers and clients started asking questions.
“When your customers start asking you the questions, you then start to do something. When it becomes important to your customers that you are behaving in a certain way, you are looking to increasing diversity of thought, then we will slowly start to have the trickle-down effect within the firms.”
