Diversification is the cornerstone of sound investment management, and yet diversity remains largely absent from the investment industry. Women investment professionals hold a mere 11% of C-suite positions according to the CFA Institute Gender Diversity in Investment Management study. In most financial firms, women are a minority of employees and that’s bad for customers because women make excellent investors. Despite diversity making headlines across industries globally, the Indian financial sector remains stubbornly impervious.
Research indicates that gender diverse companies deliver better returns with lower volatility for investors. Efforts to reduce gender inequality in the workplace are important for another reason – as more women participate in the workforce, the quality of output and decisions improve. More female executives could transform the industry because they will bring new perspectives and turn old investment strategies inside out. Innovative thinking will spark new and unique solutions. Gender diversity will directly impact investor outcomes.
To achieve this transformation, interventions are required at various stages in a career. People tend to decide on a career in investment in early adulthood. More than 80% of CFA Institute members surveyed made their choice before the age of 26. Not enough young women choose finance, and those that do are less likely to hold executive positions. Both pipeline and progression require attention. Young women need mentoring and support to understand how to make finance a lasting career.
CFA Institute has made strides with its Women in Investment Management Initiative that aims to improve investor outcomes by encouraging gender diversity in the investment management profession. The India-first Young Women in Investment initiative is designed to create awareness about, instil interest in, and enable young women to view the investment management industry as a viable long-term career option. A four week boot camp followed by a paid internship with sector leaders is making the industry more accessible to young women. The initiative has been a remarkable success due to the support of many from the investment industry – the institutions, industry leaders, and universities.
“The finance and investment industry is not restricted to finance students and graduates. And, the industry particularly needs women from diverse educational backgrounds,” says Paul Smith, CFA, president and CEO, CFA Institute.
Even when women do choose investment management as a career, cultural factors play a role in restricting female participation. Indian women bear primary responsibility for homemaking and childcare. This unfairly affects their work-life balance. An environment that is not conducive means less women make it to the higher reaches of the industry and that impedes investment firms from achieving their full potential.
Institutions need to join hands to create an enabling environment that allows women to explore their true potential, and this is especially true for a country like India. India’s workforce must be reflective of the diversity that exists within its population. Fast-growing industry segments such as finance are a storehouse of opportunities. Only when women take their place in the economy will the true potential of the country be unleashed.
(This article is sponsored by CFA Institute)