Women in investing

When Morningstar published a paper in 2015 revealing that less than 10 percent of U.S. portfolio managers were women1, it raised eyebrows. Their findings confirmed that female representation in investment roles is very low. Even in the broader wealth management industry, only 16 percent of investment professionals are women (this increases to 26 percent when including entry-level associates)¹.

Three years later, a follow-up Morningstar study3 delivered more bad news: as the fund industry expanded, women entered the field at the same rate they exited, meaning their representation diminished even as the industry overall has thrived.

When McKinsey published Why Diversity Matters4, a powerful report showing that greater workforce diversity drives better business outcomes, it was a wakeup call for many industries, including asset management and wealth management. With competition at an all-time high for winning the hearts, minds and wallet-share of an increasingly diverse client base, many firms have begun to recognize that it is in their best interests to embrace diversity, recruit more women and provide opportunities for women to advance. However, while some firms are beginning to focus on attracting more diverse talent into their organizations and onto their investment teams, these efforts are nascent and far from universal.

Our research, which is based on a survey of 348 investment professionals in asset management, financial advisory, and related firms, aims to uncover why the gender gap in investment roles persists.

We know the industry has a long way to go, but we were pleased to find that undeniable progress is being made. A few bright spots stand out: more women than men have been promoted in the past two years (22 percent of women compared to 15 percent of men), and likewise, more women expect to be promoted in the next two years (26 percent of women compared to 19 percent of men).

Additionally, firms’ mentorship and professional development initiatives are bearing fruit. Women are more likely than men to cite “having a mentor” (25 percent of women compared to 10 percent of men) and “leaders at my firm are focused on my individual professional development” (44 percent of women compared to 30 percent of men) as strengths that can propel them beyond their current positions.
The following report highlights the findings of our survey, and includes recommendations for advancing women in investment roles and bringing more women to the profession.

The current landscape

While in-depth data is not widely available, InvestmentNews’ historical benchmarking data and Adviser Compensation & Staffing studies provide a glimpse into the roles that women play on investment teams in wealth management firms. This data shows that while women are represented in portfolio manager and analyst positions, they are much less likely to hold the most senior roles.
Figure 1 shows the breakdown of positions held by women within the investment department at a wealth management firms.

The data shows the underrepresentation of women at most levels in investment roles. However, what’s most striking is the representation of women in junior roles compared to women at senior levels. This suggests that there is an opportunity for women who are currently in analyst or portfolio management roles to ascend into more senior positions – provided that their progress is prioritized and supported. So, what stands in their way?

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