In her latest blog for IFA Magazine, Linda Johnstone, Novia Global’s Head of Investment Proposition, tells us why she believes that progress is long overdue to tackle the lack of diversity – and diversity of thought – across the financial services profession. As Linda succinctly explains, without it, our ability to connect effectively with the world – and clients – continues to be a barrier to good outcomes.
Financial services has long been a male-dominated arena. While significant progress towards a more level playing field has been made in recent decades, the picture is still far from perfect.
Published earlier this year, the Treasury Committee’s Sexism in the City report revealed how women in our industry are still at risk of being “held back” by harassment, bullying, abuse and misogyny. It went on to condemn the glacial pace of efforts to at last eradicate this damaging culture .
The gender pay gap remains another serious concern, while many women also feel they continue to be discriminated against in recruitment processes . Closer to home, there is still a critical dearth of women advisers .
A huge body of research has produced various explanations for these enduring deficiencies. They include deep-seated assumptions about women’s professional competence and outdated attitudes towards how motherhood shapes a career.
It is important to note, of course, that these problems are by no means confined to the sphere of financial services. Depressingly, they can be found in a wide range of professional settings.
Yet our industry’s failure to mirror the gender balance in the real world is especially striking. Why? Because this happens to be a male-dominated arena whose target market is increasingly dominated by women.
A failure to respond
It is almost two decades since the Centre for Economic and Business Research suggested women would hold 60% of the UK’s wealth by 2025. They held just 48% at the time of the prediction .
This headline-grabbing forecast has been wheeled out on numerous occasions over the years. Today, on the brink of 2025, there is general acknowledgement that women do now hold the lion’s share – or should that be the lioness’s? – of the nation’s personal assets.
In the US, meanwhile, more than $30 trillion will be transferred to women during the next decade. As a result, as the Bank of America Institute has observed, women will soon “control more money than ever before” .
Why are these seismic shifts happening? Simply put: women tend to live longer than men, which means they are likely to inherit more of the wealth passed down by older generations.
What we have here, then, is a demographic trajectory that is potentially game-changing and even era-defining. So how is our industry reacting to it?
In my opinion, the response in many quarters has been thoroughly inadequate. In far too many instances, incredibly, our approach is still rooted in an age-old and forever-mistaken conviction that every single stakeholder in the provision of financial services is a man.
Promoting diversity of thought
At this point, some readers might fear this article is poised to descend into an all-out male-bashing exercise. Rest easy on that score. Merely regarding men as “the enemy” is both unjust and counterproductive.
There are countless men working in financial services – not to mention in many other industries – who do all they can to assist women. Men are not uniquely responsible for this situation, just as they are not uniquely responsible for creating something better.
The fact is that the issue does not lie in a surplus of men. It lies in a lack of diversity. Specifically, it lies in a lack of diversity of thought.
The fundamental aim of diversity of thought is to take account of as many perspectives as possible. Inclusion and open-mindedness should lead to the best ideas and the most fully informed decisions.
At the opposite end of the spectrum is a phenomenon known as groupthink. This is a collective state of mind that prevails when everyone possesses much the same attitudes and attributes and when knee-jerk consensus is favoured over critical scrutiny.
Diversity of thought can be seen as a powerful enabler in any industry or organisation. By contrast, groupthink can be seen as a source of inertia and a barrier to good outcomes.
Listening and learning
The academic and business literature on diversity of thought is vast. It stretches back around 70 years and includes some of the most celebrated studies in fields such as psychology and behavioural science.
At its heart, though, is a straightforward message: we need to listen. For us, as an international platform, this means paying close attention to all stakeholders, fully grasping what they want and providing them with products and services that genuinely meet their needs.
Listening can help us develop a better understanding of women’s financial journeys. It can help us comprehend the far-reaching impacts of the gender pay gap and other forms of discrimination. It can help us appreciate why women are usually more financially responsible than men .
It can also help us recognise why many women might prefer to deal with female advisers. In tandem, it can help us see the huge role these advisers can play in closing the advice gap.
I happen to work for a company where women are well represented and where diversity is not dismissed as a box-ticking exercise. Yet I am consistently embarrassed – if not enraged – by how the realm of financial services as a whole routinely underperforms in these respects.
Ultimately, our collective challenge is to reflect reality – not just in terms of gender balance but across multiple demographics and dynamics. We have to ensure there is no disconnect between our industry and the world around us. It is no easy task, but truly impressive progress is now long overdue.
Linda Johnstone is Novia Global’s Head of Investment Proposition.
