Due to the growth of assets and increase in mergers over the past 10 years, the asset management industry in the UK now has more clout than ever in the financial services sector. However, it will be more difficult to retain this good position due to macro pressures, a break from the EU, and growing regulatory changes. To lead initiatives connected to diversity, an organization’s policies and supporting human resources are necessary for an effective diversity and inclusion plan. According to research, only 44% of asset managers have a diversity and inclusion policy in place that outlines the firm’s strategy for promoting diversity in asset management.
That is why the industry will need to focus on attracting and keeping talent if it wants to develop in the future. Businesses must make sure they are hiring from a diverse talent pool in addition to creating teams with a wide range of abilities and skills in high-growth fields. Currently, the industry still finds it difficult to reflect the diversity of the clients it serves. Even if there has been considerable improvement in recent years, a fundamental change in how people address the problem is still required.
Diversity in asset management – current conditions
The Financial Conduct Authority acknowledged the major – and escalating – issue for racial and ethnic minorities in the sector in 2021. Sadly, asset management has deteriorated in the previous 12 months, failing to make progress on diversity, equity, and inclusion (DEI), according to Reboot’s most recent Race to Equality Index, which measures how inclusive the industry is. Given the progress in other industries, these numbers are quite stark. Therefore, if efforts are not increased, progress could halt or even go backward.
How to improve diversity in asset management
Commercial and socially aware motivations have both fueled industry initiatives to improve diversity. Numerous studies have found that diverse workforces increase revenue, productivity, and innovation while also enhancing decision-making and risk-taking outcomes. Even yet, there is still work that has to be done. Particularly, there are still no role models from racial or ethnic minorities in senior industry positions. Despite well-intentioned measures to increase diversity at the entry level, execution still has to be improved.
However, several separate organizations, Reboot, the Race and Ethnicity Workstream of The Diversity Project, and Talk About Black, have joined together to create a plan of action and address these obstacles.
Gender pay disparity
First and foremost, it’s critical to promote data transparency. A similar strategy is required for the UK’s many ethnic groups, much as the gender pay gap has identified areas where companies need to address wage disparities between female and male staff employees. To avoid masking genuine difficulties with a mandated method like the gender pay gap reporting method, the ethnicity pay gap calculation method needs to be properly devised.
The problem of data collection and disclosure, which arises because businesses are currently not required to collect ethnicity data, is one obstacle to such reporting. While some businesses gather this information, the rates of completion vary, and the majority of businesses have disclosure rates that are around 60%. In order to make this a reality, there is a need of close cooperation with the sector. In our opinion, enterprises should aim for 90% ethnicity data disclosure.
Second, the ongoing underrepresentation of racial and ethnic minorities is disturbing. It should go without saying that this has negative impacts on people of all levels, from recent graduates to seasoned professionals. The network of organization has demonstrated the value of role models and mentors in offering crucial support at all stages of professional growth across all three of our organizations, dispelling the myth that financial services are the domain of elite segments of UK society.
The importance of sharing successful stories
Therefore, success stories of people who have succeeded in the financial services business must be shared if the sector is to address its diversity issue and draw in the best talent in the country. Reboot’s main goal is to present the best talent in the industry, while Talk About Black works to develop a pipeline of black leaders through a combination of mentoring, education, thought leadership, and public speaking.
Similar attention is paid to making sure that people of various races, ethnicities, and religions have the chance to realize their career potential and advance to senior positions by the Race and Ethnicity Workstream.
Taking charge
Even though the efforts and those made voluntarily by underrepresented groups themselves can help turn the dial, this is clearly insufficient. Corporate and partners must take ownership of DEI initiatives if everybody wants to see genuine progress in diversity in asset management. DEI is a problem that affects everyone. Reboot, for instance, uses its network of business friends and ambassadors to advance change in the field and advance the dialogue on racial inclusion.
The ally ship leaflet from Talk About Black and the Diversity Project emphasizes what allies may do to help bring about change. Additionally, senior leaders are consulted by the Race and Ethnicity Workstream on how to facilitate change and develop an inclusive sector. Allies must stand up for underrepresented groups, educate themselves on the difficulties they experience, sponsor and support minorities, and actively address workplace misconduct.
But, all of these measures won’t provide a quick resolution. Workplace inequality will always be a structural issue. However, it is clear that cooperative action like this can begin to question it.
