Equal gender representation in the financial services industry remains elusive, as unconscious bias, the gender pay gap, and rigid working conditions prevent women from breaking through the glass ceiling, Malavika Santhebennur writes.
There is no dearth of female talent in the financial services industry. Over half of all employees in the financial and insurance services industries are female. Yet when the composition of genders at the top of the ladder are examined, one would still find a gaping hole in the gender composition at board and executive level.
What makes this issue complex is that it is difficult to point to concrete impediments and barriers that prevent women from being appointed at board and executive levels. The barriers are not black and white.
According to the Workplace Gender Equality Agency (WGEA) 2016 data, 55.7 per cent of the financial and insurance services industries was female while only 5.7 per cent of chief executives were female, 27 per cent are at the level of key management personnel, while 26.1 per cent reached the other executives/general manager level.
According to financial planning industry experts, 20 per cent of financial planners in Australia are female.
StatePlus head of advice, Dr Suzanne Doyle, said financial planning as a career lent itself to increased female participation as it allowed for flexibility. Financial planners could work part-time or they could potentially work for part of the day if they wished.
Yet she noted the industry was predominantly male who had practiced as financial planners, and the majority of those at management level were also male.
“So it’s kind of been a male industry in terms of that organisational structure and I think, it’s been the last 10 years or so that there’s been a real push to change the face of financial planning both from a head office, back office perspective as well as actually actively going out and saying how do we make this an attractive profession and career for females?” she said.
TAL general manager of retail distribution, Niall McConville, said while there were no concrete barriers for women to enter financial planning, he acknowledged that the fact that it had been a male-dominated industry may have repelled women from entering the industry.
“Maybe there’s been a little bit of ‘oh I’m not sure if I want to go into that industry because I’m sort of maybe going to be on my own in a lot of situations from a gender point of view’,” McConville said.
“But I don’t think there are any real barriers to entry, and I think we’re starting to see that as the per centage [of female participation] lifts up.”
McConville observed that when he entered the industry around 15 years’ ago, the ratio of male to female participation may have been 95:5.
“The reality is, you’re not going to change, say a 95:5 gender split, overnight. It’s going to take generational change and we’re going through that at the moment,” he said.
McConville said TAL was encouraging more women to enter the financial planning industry through initiatives such as the Female Excellence in Advice Awards, in conjunction with the Association of Financial Advisers.
“What we need to do is we need to encourage more women to become financial advisers. At the end of the day the population is roughly 50-50 and the percentage of advisers who are female in the market is probably around 20 per cent.
“Secondly, and more importantly, we need to encourage more females to become financial advisers because the reality is that females are generally unrepresented when it comes to seeking financial advice and potentially one of the reasons for that is that they would like to speak to a female and they struggle to find one,” he said.
There may not be recognisable barriers to entering the financial planning industry for women but, FINSIA head of professional standards and education, Kylie Blundell, argued inflexible work arrangements, remuneration gaps between genders, career breaks, and unconscious bias were all factors that prevented women from choosing financial planning as a profession, or impeded their growth in companies.
Blundell also quoted WGEA’s pay gap analysis, which found the financial and insurance services industry had the largest industry gender pay gap at 33.5 per cent, while it was 26 per cent for base pay. Blundell said this difference was reflecting the high levels of bonus and discretionary remuneration, which she said was common in the industry.
Blundell also said female participation in financial services would increase if firms prioritised flexible work arrangements. Interestingly, however, while male financial planners agreed, they were less supportive of flexible work arrangements.
It is this difference in perception of barriers between genders which is also problematic. FINSIA’s ‘Gender Equity in Financial Services Survey 2016’ showed that male and female financial planners differed on the factors that impeded women’s career advancements.
FINSIA surveyed 118 people from financial planning: 58 were women while 60 were men. It found that 51 per cent of female planners agreed or strongly agreed that less attention was given to the career advancement of women because of the expectation that they would depart the workforce to have children, while only 23 per cent of male respondents agreed with this.
The survey also showed that 63 per cent of respondents thought their employer prioritised gender equity in principle but only 50 per cent agreed it was a priority in practice.
“Then when you go down to the next level and you start to then segment that by male and female respondents, male respondents thought that there was very little difference between what happens in principle and practice, whereas women, the difference between what they think happens in principle and practice was far more sizeable,” Blundell said.
When asked if the promotion and advancement of women into senior roles was a priority in their financial services organisation in principle, 68 per cent of female respondents answered in the affirmative, while 21 per cent disagreed. When asked if this was put into practice, only 41 per cent of female respondents agreed while 40 per cent disagreed.
When male respondents were asked if the advancement and promotion of women into senior roles were a priority in their organisation in principle, 58 per cent of the 464 respondents agreed, while 29 per cent disagreed. When asked if this was put into practice, 58 per cent agreed, while 27 per cent disagreed.
“I think that’s a representative of there’s a lot of things being done at a high level that, for want of a better term, there’s some gender tokenism coming in versus real impact,” Blundell said.
“I think if you have a look at representation of boards, for example, lots of boards are aiming for that 30 per cent level of representation,” she said, adding the next goal should be 50 per cent representation at board level.
Board representation – goal missed
The Australian Council of Superannuation Investors (ACSI) has been communicating with boards of Australian Securities Exchange (ASX) 200 companies for many years about improving gender diversity of their boards, and concluded three years ago the progress on this front was insufficient.
Therefore, the organisation set a target for companies to achieve a 30 per cent target on boards for women by 2017. That goal has not been achieved by everyone.
ACSI chief executive, Louise Davidson, said she wrote letters to 100 companies that had either one or zero women on their boards.
“It was quite extraordinary. I was shocked. What I did in that letter was advise them that if we didn’t see change or at least a plan for change we would be looking at recommending our members’ vote against re-election of directors at their AGM [annual general meeting],” Davidson said.
However, Davidson did note that while there were 33 companies with no female directors on their boards when ACSI began communicating with them, that number was now down to 12. There are 11 companies with female chairs.
Davidson rates unconscious bias and fear of change as a significant barrier, and said companies argued they appointed directors based on merit and they did not find a suitable woman who qualified to sit on the board.
“We all have a desire to work closely with people who are like us, and so the temptation to appoint people who have similar backgrounds and similar attributes is strong,” Davidson said.
“I don’t accept the lack of merit argument. There are lots of really well qualified women who are available to go on boards. The merit argument comes back a bit to the unconscious bias issue because I think often when people talk about merit it’s more to do with similarity.
They appoint people who are similar to them.”
Davidson said, however, that for some listed companies it would be unthinkable not to have a proportionate number of women on their boards. Other companies who had initially not considered having no women on boards a business risk began to do so when investors provided feedback that they thought it was a business risk.
“In some cases, maybe it’s going to be a generation change. In some cases there are boards who just don’t quite get it. Maybe the ideal would be for boards to say, typically, we’ll have at least 40 per cent men and 40 per cent women and then the remaining balance can float back and forth a bit depending on the other needs of the boards,” she said.
Merit, not gender
In terms of the superannuation industry, industry super fund for non-government teachers and school staff, NGS Super currently has an evenly split board: six of the 12 board members are female, and it has been this way for about two to three years.
NGS Super CEO, Anthony Rodwell-Ball said the firm subscribed to ACSI’s position on gender equality on boards but said the board was not compiled on the basis of gender but rather who was the best credentialed person to sit on the board.
Rodwell-Ball said as humans, our primal reaction would be to empathise with those similar to us but said he hoped processes had refined to a point where businesses were more sophisticated in their overall interview approach and focused on skills and competencies.
“The one thing I will say, and I think this is probably true certainly in industry funds, we look for personal qualities of individuals insofar as will they be a good fit culturally? That’s not gender-focused,” Rodwell-Ball said.
“It’s simply, is this person likely to understand the value proposition of an industry fund? Or is the person going to be so rapaciously retail that they’re not going to understand that if we go the extra mile sometimes for a member without being rewarded, we do it because we’re an industry fund and that’s what we are.”
He added that the fact that ACSI has had to launch a campaign to increase the number of women on boards indicated female representation in the industry was an issue but said he personally had not perceived issues.
Rodwell-Ball also observed that female financial planners had the ability to establish strong relationships with the fund’s members, while women also made for astute investors.
“When you get women investing money in terms of their career, you find that they don’t have the testosterone drive in the decision-making, which is so often what men will have. Men are quite often driven by this rather weird testosterone-fuelled ego. They tend to be risk taking to a greater degree than women,” he said.
“I think women ask more empathetic, more insightful personal questions and they build trust quicker as a result of that. It’s an observation rather than anything based on research.”