Gender Diversity in Finance – We Still Have a Long Road Ahead of Us

Equality, and having legitimate representation in the working world is a challenge that spreads across industries. But, gender diversity in finance is proving particularly tricky to get on top of.

Finance, from accounting through to hedge fund management, has a notorious gender equality issue. Men tend to outnumber women many times over the financial sectors, while also outearning them.

The reasoning behind this is complicated to understand, and even harder to resolve. But, generally, it’s believed that a lack of role models, work-life balance concerns, limited support, and an overall glass ceiling may be holding women back across the landscape[1].

Numerous efforts have been made to encourage women into finance, albeit with mixed results. Arguably, there has never been a better time for women to make their mark in the world of finance. But, improvements are still needed.

The Current Global Situation

Across the world, women are under-represented at all levels in the financial services sector(s)[2]. Also, gender diversity in finance is lacking at both the consumer, and workforce level.

Globally, women represent 23% of positions on boards in financial services firms. Up from 11% in 2013, but still clearly not as high as it could be.

Underrepresentation is holding us all back. If financial institutions better served women, it could add around $700[3] billion to global revenue.

What’s more, an estimated $3.22 trillion of additional investment capital globally could be unlocked if women invested at the same rate as men. Chances are, women would outperform their male counterparts given the chance too.

When given the opportunity, women investors outperform men by 1.8% annually. We could all benefit from these returns too. Women are more likely to incorporate ESG factors into their investing and as their income rises, they tend to contribute greatly to philanthropic causes.

There are few downsides to having a more diverse workforce. Academic research shows diverse teams make better decisions, are more innovative, and take fewer “dumb” risks[4]. Also, the more women a Fortune 500 company has on its board, the higher its average returns on equity, sales and invested capital.

Unfortunately, this clear data does not seem to be filtering through to the market. Morgan Stanley, for the last few years, has been monitoring and grading companies on their gender equality. Last year – 2023 – was the second-worst year for gender equality since 2011, according to its analysis.

Gender Diversity in Finance in the UK

For the UK specifically, we have a mixed bag. Gender diversity on UK financial services boards has risen in recent years, according to Statista[5]. In 2023, gender diversity on these boards hit 37%[6], with some of our largest banks performing particularly well. The 10 biggest banks in the UK averaged a board diversity of 39.7% in January 2024. Also, women are taking up more senior leadership positions in companies such as HSBC and Lloyds Banking Group.

But, pay-wise, women still lag behind men in finance. Despite assurances that they’d hire more women for higher-paying roles, some of our top financial firms pay women 28.8% less on average than their male counterparts[7].

In looking at the economy as a whole and not just the financial sector, the Financial Times did find that the UK’s gender pay gap has fallen to its lowest recorded level[8]. But, at the current rate, it will take decades until the earnings disparity between men and women is completely eliminated.

How Do We Improve Gender Diversity in Finance?

This is the challenge. There is more than enough space in the financial world to accommodate and welcome more women into the fold. At Market Financial Solutions, we believe prioritising the following actions should lead to better results:

• Female role models

It’s vital that women in any organisation can see female representation within senior management positions, ideally right to the top. Employers that want to create a more diverse team must ensure this translates into their policies when hiring and promoting at all levels.

• A positive culture

Language in the workplace is extremely important. Clumsy, provocative or harmful language can quickly alienate people from different backgrounds. So employers must not tolerate any such incidents. To create more balanced teams of men and women, business in the finance industry must carefully consider what their culture is like and whether it is supportive, friendly and welcoming to all.

• Flexibility

Having some flexibility in how, where and when people work can also prove valuable. For example, parents may need to work slightly different hours to account for their child(ren) being in nursery or school. Allowing for this will ensure mothers – and fathers – do not have to choose between their professional and personal lives.

• Recruitment processes

Lots can be done in the hiring process alone to improve gender diversity in finance. From anonymous CVs to diverse interviewing panels and setting up multiple interview stages with different types of tasks. These are all ways in which employers can prevent recruitment efforts from becoming skewed towards – or away from – a particular demographic.

Diversity at Market Financial Solutions

We like to think we practice what we preach here at Market Financial Solutions, and set a solid precedent for the specialist finance market. As it stands, around 50% of our workforce are women, while our senior management positions are evenly split between men and women.

Also, an internal survey from 2023 revealed that (at the time):

• Just under two fifths (38%) of the Market Financial Solutions team describe themselves as English, Welsh, Scottish, Northern Irish or British. A further 18% are Indian, with a wide range of other nationalities and ethnicities – from Chinese to Pakistani, Lithuanian to Polish – making up the remaining 44%
• Six different religions are followed across the Market Financial Solutions workforce. Almost half (48%) say they are an atheist
• Market Financial Solutions’ employees speak more than 20 languages between them, including French, Latvian, Portuguese, Greek, Tamil, Hindi, Malayalam, Romanian, Polish, Russian, Spanish, Farsi, Urdu, Gujarati, Marathi and German. The majority (52%) of the Market Financial Solutions team speaks multiple languages

Even with our championing of diversity so far though, we know there is always room for improvement. So long as gender diversity in finance remains an issue, we will play our part in creating a more even playing field.