COVID-19 has fundamentally changed the global paradigm, and its impact is evident in virtually every aspect of our lives. There is growing interest in social risk and human capital management, and enthusiasm for ESG and socially responsible investing is growing around the world.
In 2023, the majority of assets under management in Europe (about 7 trillion euros out of a total of 12 trillion euros) will be allocated to sustainability-focused ESG funds and strategies.
When it comes to asset management in this field, various research studies have shown that women are even better investors and have the ability to bring in more profits than their male colleagues. With this in mind, it is essential to take a deeper look at women in asset management and the gender disparity that exists in this industry.
Positive outcomes of women's participation in wealth management
First of all, women show higher efficiency in all allocations of funds. They perform well as investors and prefer a “buy-and-hold” strategy. In contrast to men, women tend to make less impulsive and emotional decisions in the stock market and place more emphasis on thoughtful decision-making.
More importantly, the surge in ESG-driven investing stems from women's initiatives, which have been one of the key drivers of change. Research conducted by Goldman Sachs reveals that in 2020, for the first time, European funds run by women or mixed-gender teams outperformed funds led solely by men. This incident may provide further evidence of the positive influence of women in the asset management industry. The asset management industry stands out for increasing gender diversity in the industry. In this way, the presence of women in this industry brings about big changes not only in profits but also in society.
Nevertheless, despite the ESG investment sector being on the rise and the importance of women in the field confirmed, women continue to be underrepresented among investors and asset managers. Mostly male dominated. And even now in 2023, the problem of gender disparity in this profession continues. Data from 2023 confirms that in Spain and Italy, only 20% of portfolio managers are women and only 5% of women hold senior management positions. The statistics for the UK and US are even worse, with 11.8% and 11% of workers in this sector respectively being women.
Why does the gender gap still exist?
According to the lessons of history, in the beginning any work was characterized by the overwhelming number of men engaged in all kinds of activities. The financial and asset management industries that emerged later were no exception. Indeed, the number of women involved in this field is increasing every year. Nevertheless, more time is needed to smooth out this imbalance.
Additionally, the idea that investing is more of a “men's job” still exists in society and is even very widespread around the world. On the other hand, this problem has deep roots. Since ancient times, it has been considered right for women to do housework and take care of the whole family. This bias creates another barrier to having a full-time job outside the home.
This belief prevents some women from starting a career or climbing the career ladder in certain economic environments, despite their superior abilities. Even when women find employment in companies involved in finance, investment and wealth management, they can still feel vulnerable due to unequal representation and lack of women in senior management and executive positions. Additionally, it's important, especially for newcomers, to feel supported in a company and have role models to look up to, but this is often complicated when there is no or little female representation on the team.
How to tackle issues of inequality
A report on wealth management reveals the shocking fact that an estimated 60% of wealth in the UK will be managed by women by 2025. Given this fact, it is becoming increasingly clear why we need to address the persistent gender gap issue.
Actions to address this point must be very specific. Wealth management companies must proactively implement measures such as allowing more women managers to oversee high-net-worth families, individuals, and foundations. A great example of this is Diversity Project Europe (DPE). One of its fundamental goals is to build a more inclusive wealth management industry across the region. Additionally, the project will help companies achieve a more gender-balanced workforce and promote social mobility for all genders. Our society needs more illustrations like this to pave the way for women in the financial industry.
Therefore, the main solution to this vexing problem is diversification, which is essential in the area of investment and wealth management. To embrace this, it will be essential to foster increased participation of women in asset management careers, ensure equal opportunities for advancement, and foster an inclusive environment. Following the example of DPE, in the long term we hope to see increased visibility for women and the structural barriers of gender imbalance will be eliminated. This means introducing training programs to address gender-related bias and stereotypes in hiring, promotion and decision-making processes, as well as supporting women to pursue careers in finance and asset allocation.
These important measures are critical to promoting gender equality within the industry. Women are not only an advantage for the sector, they are also crucial in strengthening and strengthening the resilience of asset management frameworks, especially ESG-related investments. The earlier leading companies recognize the importance of expanding their female workforce, the better for their long-term profitability.
