Building a more equitable profession

In November 2022, CFA UK’s Diversity, Equity and Inclusion (DEI) network hosted a knowledge sharing and networking event which examined the importance of equity in the investment profession.

The event brought together a series of practitioners and experts to talk about their experiences of improving equity in the industry.

Shaheen Verjee, CFA, Director of Outreach at CFA UK, introduced the discussion, highlighting the fact that DEI was still seen as the ‘right thing to do, as opposed to something which really affects the bottom line.’ She talked about the importance of understanding equity within the context of DEI. “Equity levels the playing field, which means addressing discrepancies and insuring all employees have what they need to succeed, and we all have very different needs,” she said.

The event was chaired and moderated by Victoria Thompson, CFA, Co-Vice Chair of the CFA UK DEI Network, who began by inviting Sarah Maynard, ASIP, Global Senior Head, Diversity, Equity & Inclusion, CFA Institute, to talk about the development of CFA Institute’s DEI Code, which calls for signatory organisations to commit to six metrics-based principles around DEI, with equity as a core concept.

“The impulse to create it really came from the industry. So, this is something that’s been created by investment professionals for the industry, and I think that makes quite a considerable difference,” said Maynard.  When discussing the equity component of the code, Maynard said the group were conscious of the fact that it was an underdeveloped area for the industry. “We are all very much more than one thing, and organisations need to be able to adjust for that to enable that talent and that equality piece to become relevant. At different points in people’s lives, whether in caring responsibilities or ill health or other things that can happen, ultimately equity allows you to stop and think, do you fully understand the people in your organisation, how are you supporting them in the areas that they need to grow and develop, what does that look like, and how do you then create from there on, a level  playing field?”

Erinn King, CFA, Managing Director, Payden & Rygel, who was part of the group that compiled the code, said there had been a number of robust discussions around equity. “The code is something that’s going to take us into the future and create what I like to think of as virtuous circles. We really need the equity piece in there,” she said. King pointed out that the code had to be aspirational, in order for investment firms to stretch themselves, but accessible enough for there to be a critical mass to bring organisations together.

Young Women in Investment

The conversation then shifted to CFA UK’s pilot  Young Women in Investment Program, which ran earlier this year. UK. The program is an initiative designed to create awareness about and instil an interest in the route of entry for women into the investment management industry. Because it is open to all female graduates, regardless of finance background, it attracted a diverse pool of talent this year. Many of the young women who took part have now gone on to begin internships in the investment industry.

Charlie Fisher, Senior Human Resources Manager, LGT Wealth Management, talked about the firm’s experiences with the program, as a company who has offered internships to some of the women. “From our perspective it’s about investing in the long term, and what the internship program does is it combines the educational piece on the investment side plus the practical experience of working in an investment-based business,” she said.

It helped that the program worked with Fitch Learning to offer a four week ‘bootcamp’ to participants. “It took all of the legwork away from the organisations, because it does take a lot of work to build up the training,” said Fisher.

She highlighted the challenges of bringing women into the business. “We are very typical as a wealth management firm; we do have a differing ratio between men and women in investment-based positions. It’s about 20% females in investment-based positions and even when we look at trainees in those roles, only about 26% of our trainees are currently women. So, we’ve got a big gap.” The firm began an internship program across the summer, a degree apprenticeship program, and a structured graduate program with blind recruitment. “But we still struggled to attract a lot of women to apply for the roles in the first place,” she said.

Fisher called for better data in the industry. “My key takeaway is always get data, and then get better data, and then do something about that. For us we know what our gender ratios are across the business, that’s pretty easy to measure. We’re starting to measure our ethnic minority ratios; we’re starting to measure our socio-economic diversity. We haven’t got all the data yet, but it’s one thing having those stats and [another] actually knowing what’s going on, and we’re even seeing that women at the moment in trainee roles aren’t progressing aren’t getting their exams, aren’t getting their qualifications as quickly as their male peers. At least now from an equity piece we can start asking those questions,” she said.

Adopting A Portfolio Management Approach to DEI

The panel then discussed a new thought leadership piece which will look at taking a portfolio approach to DEI. Didier Lambert, Managing Director, GFICC, JP Morgan Asset Management, talked about embedding DEI into a business as more than just an ‘add on’. “For the past couple of years, a number of senior sponsors under the umbrella of CFA UK have been meeting and having discussions on what they are doing, sharing best practice. We were also trying to think about how we could improve DEI at the industry level. From those discussions came out this idea to try and draw some parallels between how you run a portfolio in the asset management industry and how some of that could apply to running a successful DEI strategy,” he said.

One parallel was time horizon, he pointed out. “When you run a portfolio and when you decide on an investment, you work on multiple horizons. You have positions in the portfolio which are for the weeks or months to come, and you have positions which are there to have an effect on the portfolio over multiple cycles.”

It means thinking about DEI over the long term, not just on an annual basis, he suggested.  Another concept of the approach was the differentiation between best ideas and good ideas, he said.

“For a very long time there was this concept that portfolios should be the best idea portfolios, very concentrated. It’s probably better to craft a portfolio which is made of good ideas. What was the best thing yesterday was probably not a good thing today. How can that be applied to DEI strategies? There is a parallel that you can draw. On the portfolio management side, we tend to hire for experience, and actually you don’t do that when you build a portfolio, you don’t buy an asset because it’s performed really really well. You buy that asset because it has the potential to do something, it has some attributes which are actually very convenient for the outcome you are trying to achieve,” he said.

Socio-Economic Diversity

Sophie Hulm, CEO, Progress Together, then talked about the importance of building socio-economic diversity, highlighting a study that found 89% of senior leaders within asset managers and regulators come from families who have professional occupations. Within the whole workforce, at all levels of seniority, that figure is nearer 50%.

“Employers are spending huge amounts of money, time, and effort on attracting people into their firms and they are not staying and progressing, and really this is no different to gender and ethnicity. It’s exactly the same issue that we have here, which is the exclusion piece,” she said.

The class pay gap in financial services sector is nearly five times that of technology, she said. “We need the tech skills, but we are not inclusive as a sector, and there are other sectors that are. They might just go and nab those skills that we need.”

Progress Together supports UK financial services firm in a variety of ways, including with benchmarking. “Many firms don’t collect socio-economic background data yet and they really struggle to figure out what to collect and how to collect it. Are our employees going to trust us with that information? Employers are probably about ten years behind gender in terms of collecting data. Firms have just about got a grip on gender reporting and getting there on ethnicity but very slowly, but socio-economic background is a whole different ballgame. Without knowing our starting point, how can we improve?” she said. Details can be found at www.progresstogether.co.uk.

Peter Ewing, Technical Specialist, FCA, closed the discussion by providing a regulatory perspective. “Equity for us is a vital part of the DEI landscape, and equity matters for real inclusion to achieve a level of diversity that firms are aspiring to. For us it’s also a critical factor in ESG. It’s obviously one of the most social issues that we have to deal with as a society and it matters for good governance as well,” he said.