Investing in Women is Critical to Financial Services Companies Success

The research is clear: the financial services industry needs to do better when it comes to recruiting, retaining and advancing women in the workplace. In fact, it may be critical to their success.

Last year I wrote an article called “Dear Financial Services CEO Where are the Women?” in which I included data from the 2016 World Economic Forum Global Gender Gap Report that revealed it will take 170 years before we reach gender parity in the global workplace.  Then, the 2017 World Economic Forum Global Gender Gap Report came and it is predicted it will take us 217 to reach parity.  (2018 report due out shortly - stay tuned.) And in financial services, I’m afraid it could be significantly longer. In fact, at the current pace of progress, women won’t even reach 30 percent of executive committee members in financial services companies until 2048.

A year later, as we near the end of 2018, not much has changed. Women and minorities in financial services are still woefully underrepresented. “In North America, women account for over half of the entry-level workforce in financial services,” according to a recent report by McKinsey. “They have reached the highest levels within companies, and their numbers at the top continue to grow, albeit slowly. Despite this progress, women still represent fewer than one in five positions in the financial-services C-suite. There is much work to be done to achieve gender parity in the financial-services sector.”

The good news is that the topic of gender diversity and gender equality has never been more at the forefront.   And that’s important for several reasons: companies with more women in leadership have higher returns on capital, greater innovation, increased productivity, and higher employee retention and satisfaction. Equally important is the fact that women are gradually taking hold of a greater share of our nation’s wealth, and I think women are increasingly wanting to grow their wealth and use it to make social change happen.  

Why Gender Equality Matters in Financial Services

According to research by Mercer, women in financial services help their firms accomplish 4 keys goals:

1. Positively impact culture, conduct and risk
2. Enhance customer connection
3. Embrace new competencies leading to future growth; and
4. Access a broader talent pool

Having been in this industry for over 28 years, it seems like every year this is what firms say they are pursuing, but yet gender diversity is rarely a business imperative for these organizations.  Unfortunately, as Mercer concluded in it’s When Women Thrive report, “Organizations are failing to build future female talent pipelines. Current female hiring, promotion and retention rates are insufficient to create gender equality over the next decade.”  

Lack of Support, Sponsorship Contribute to Underrepresentation of Women in Leadership

The reasons for the lack of women in leadership roles are many. For one, women are less likely than men to have managers who act as their advocates to help them identify advancement opportunities.   Similarly, women lack access to sponsorship and support infrastructure, which can not only help them advance their career but boost them up when they hit an inevitable down cycle over the course of their career.  In 2017, McKinsey reported that “women who receive advice from managers and senior leaders on career advancement are more likely to be promoted, and yet earlier-tenure women receive less encouragement and support from managers and senior leaders in advancing their careers than do their male peers.” Of course, it is important to keep in mind that if we are going by the numbers, the majority of these senior leaders are male.  

Interestingly, this may be due, in part, to the networks women cultivate early on in their careers. “The vast majority—81 percent—of entry-level women in financial services cultivate networks that are largely female or evenly split between males and females,” explained McKinsey. “ In contrast, 94 percent of entry-level men cultivate networks that are largely male or evenly split between males and females. The fact that entry-level women skew toward women in their networks can affect their opportunities down the line.”  Ultimately, with little support it is hard for women to advance — or for that matter to even imagine themselves advancing to a leadership position.

How We Can Work Together to Advance Women

It is in the interest of both financial services firms and women looking to build careers in the industry, that we find ways to address the many factors contributing to gender inequality in the workplace, including the support and guidance we provide women who are looking to grow their careers in financial services. If we are to realize the equality we seek, and at least address the issue of support and mentorship, it is imperative that men and women work together to ensure that women have equal access and support in line with their male colleagues. One of the key findings in Mercer’s When Women Thrive study was that men and middle managers must be engaged in driving change: “Our research shows that the active involvement of management and men in D&I is a critical success factor when it comes to ensuring that women thrive in the organization.”   

To be clear, issues of  gender disparity within financial services are complex. The current state of inequality  is not due solely to the lack of support women receive as they look to build and advance their careers. There are, for sure, many more factors at play that are contributing to the current lack of female CEOs and board members. But the role that men and top level executives can play in helping to correct the disparity should not be overlooked.  Of course, it is not just men or those in at the top that can create change. For change to occur it will take everyone, from the top level employees to the customers and shareholders. To correct the gender parity, all stakeholders must put their capital and investments into companies that are delivering the diversity dividend.

It will not happen overnight. However, as the wealth in this country continues to transfer to women and as the client base for financial firms continues to diversify, businesses that hope to thrive must recognize the shifting landscape and adapt. Just as men have their place in helping to alleviate the inequality, as the holders of a significant portion of today — and tomorrow’s wealth — women have a tremendous power to change the gender parity as well.  And I know I want to play an important role in helping women put their wealth to work and be part of the solution.