Gender diversity is a problem in the investment profession. We know that and many have done a huge amount of work on the issue already.
The recently released CFA Institute ‘Gender Diversity in Investment Management’ Survey, makes a valuable contribution to evolving the thinking on the issue by providing a global view in the context of the investment profession. The survey was the largest of its kind to date with over 5,000 participants globally and, as participants were drawn from the CFA membership, it is a good reflection of what is happening within the investment profession.
Some of the key findings of the survey are worth reflecting on. Women hold less than 10 per cent of key leadership positions. There is no country where more than 50 per cent of CFA members are women. In all but a few countries, the percentage of women CFA members is less than the percentage of all women workers in a country.
It was that last point that started me thinking about what our target for the proportion of women CFA charterholders in Australia should be. As with anything you want to improve, targets need to be set, timeframes agreed, and actions identified that will move the needle.
As a starting point, roughly 46 per cent of the Australian workforce are women.
But a target developed with reference to current levels of female representation in the industry and part-time workforce participation is probably more appropriate.
Why 30 per cent is a good target
When you take into account where the industry is at, the time it takes to effect change and the advantages of having realistic goals I believe 30 per cent is a good minimum target for the investments industry.
In Australia 16.8 per cent of CFA Institute members are women, slightly lower than the global average of 18 per cent. Around the world rates of female representation varies greatly, with China at 31 per cent and Japan 9 per cent.
Across the Australian workforce women are over-represented in part-time roles. Only 36.2 per cent of full time employees are female, while women make up 68.1 per cent of part-time employees. Across the workforce 32 per cent of participants are part-time.
I do not have the figure on what percentage of investment professionals work part-time, but anecdotally put it far less than 32 per cent.
So I would argue the 46 per cent figure needs to be adjusted down to enable a more like-for-like comparison.
Increasing the number of part-time roles in financial services, for men and women, is one strategy likely to increase female participation.
There are genuine reasons why diverse societies function not only more harmoniously but also deliver improved concrete outcomes at all levels and constituencies. The principles and outcomes as applied to industry are no different.
The 30% Club was based on research that suggested 30 per cent is the proportion when “critical mass” is reached and “in a group setting, the voices of the minority group become heard in their own right, rather than simply representing the minority”. While The 30% Club was formed to focus on board diversity, the message applies more broadly.
Supporting part-timers key
Of course, there is no point having a target if you can’t find people willing to work in the industry.
There are many factors that can contribute to improving gender diversity. Two that stand out are making the investment industry attractive to women again, and increasing the number of part-time roles across the industry.
The recent CFA survey highlights the need to address this. Only 18 per cent CFA members globally are women, despite female representation among college graduates, CPAs and law students sitting around 50 per cent.
Yes, the number of women sitting the June 2016 CFA exams was 32 per cent, but this is driven by high rates from China and still falls short of the 50 per cent mark.
It has been suggested that the gender gap in mathematics may be a factor, but I think the bigger issue is convincing younger people that a career in finance is a worthy career. You don’t see a lot of heroic investment managers in the movies. We need to get into those universities and tell the story of what our industry does, how it is evolving and, the good it enables – sustainability anyone.
Call to action
As the stewards of community wealth, we want our industry to show leadership in this area. As the industry’s only global standard setter in ethics and best practices, the CFA Institute is asking charterholders and industry partners to join them in addressing the chronic issue of gender disparity in the investment management industry. We are very aware that CFA is also under-represented in terms of female members so we absolutely include our Society as part of the change.
CFA Society of Sydney is already tackling diversity through events, articles, education and social media initiatives. We will do more.
What would it take to increase the percentage of women members from 16.8 per cent to 30 per cent over 10 years? If we assumed 5 per cent overall membership growth, the percentage of new female members would have to increase from the high teens to 50 per cent. No easy feat.
We can all start by looking at our university outreach programs and how we can better support the flexible work patterns and career paths required to increase female participation. More broadly we need to better understand the levers of change on this issue and focus efforts accordingly.
Anthony Serhan is CFA Society of Sydney President. He is also managing director research strategy at Morningstar Asia-Pacific. The views expressed in this article are his own.