Why Should Gender Diversity Come to the Fore in Asset Management?

Mar 21, 2024

by:
Julia Khandoshko, CEO at the broker Mind Money (ex Zerich Securities).

 

Even with the optimistic perspective on the post-COVID economy, the financial management sector continues to fight with a persistent gender bias. The percentage of female asset managers is stuck at 12% since 2022. This seems like a massive gap considering women make up more than 50% of the world’s population, earn more than $20 trillion every year globally, and control over one-third of total household wealth.

So it becomes imperative to make the financial sector more diverse and address this disparity. Why?

 

Advantages of women’s increased participation

Companies led by women demonstrate stronger performance in terms of managing credit risk, particularly during periods of widespread economic instability. Moreover, in contrast to conventional beliefs, women are less prone to impulsive, emotionally-driven decisions when it comes to investing in the stock market.

Men typically engage in higher trading activity, often leading to overconfidence and unnecessary risks resulting in losses. As for women, they adopt a more cautious approach to risk, conducting thorough research and prioritizing long-term investments over seeking unpredictable speculative gains.

The premise that women are weaker and softer is negative rather outdated, but women were able to turn even this bias in their favor. Statistics prove that women investors feel 3 times better and more at ease with taking larger risks when they work with a female financial adviser.

Moreover, women are drivers for social change, so it’s not just the profits. Nowadays, integrating ESG (Environmental, Social, and Governance) principles into investment strategies is essential, and women grasp this concept better than others. They highlight the significance of ESG investing and incorporate these principles into their strategies more effectively than men. Researchers show that investment teams in the top quartile of gender diversity outperformed the bottom quartile by 45 basis points yearly in terms of net excess returns.

Summing up, to any company, including asset allocation ones, women contribute different values and new perspectives. They also bring new skills and approaches, and in many cases it results in advancement of overall performance. Variety fosters creativity and innovation, which ultimately leads to increased profitability.

 

How can we make asset management more diverse?

To narrow the gender gap in the asset management industry, women CEOs can curate programs that emphasize inclusive leadership skills. Creating women role models by actively hiring more qualified women in this sector will also motivate younger female professionals to join the asset management sector. The sector business heads should pay particular attention to the representation of both women and men in various roles and strive for gender balance among them.

I believe that initiatives focusing on training should be also implemented, as it is not enough to solve this problem only in theory, the biases and stereotypes associated with gender should be eliminated in practice as well. To achieve this goal, the business atmosphere must be comfortable. It means that no discrimination or gender premises has to occur. Leaders have to cultivate an understanding within the team that job roles are unrelated to any particular gender.