Gender Diversity in Asset Management – Does it Make Business Sense?

July 01, 2019
| Financial Services Quarterly Report

The Irish Government recently commissioned a report on gender balance in Irish businesses (Report), prepared by the review group Balance for Better Business. The Report found that in a country where, in 2019, just one in nine chief executives (12%) of enterprises with at least 250 employees is a woman, the percentage of women on the boards of Irish-listed companies remains significantly lower than in other EU Member States. The Report’s recommendations are a shot across the bow for Irish-listed companies. Stopping short of calling for gender quotas, the Report instead puts forward the following robust targets for Irish companies:

  • No company traded on the Euronext Dublin Stock Exchange should have an all-male board by the end of 2019;
  • 33% female representation on boards of ISEQ 20 companies by 2023; and
  • 25% for other listed companies by 2023.

While the current focus is on listed companies, the Report indicates that Balance for Better Business will extend its review and recommendations to private companies and multi-national companies operating in Ireland.

Why Care about Gender Diversity in the Asset Management Sector?

Gender balance on boards and in senior management has been found to encourage better leadership and governance. The drive for diversity within organisations is not simply satisfying a sense of social justice, but is based on studies (further described below) demonstrating that organisations perform better when there is diversity at the top. Firms now realise that having diversity at all levels gives them a competitive edge when it comes to both recruitment for talent and business development.

In the asset management space, research shows that gender diversity in senior positions leads to positive returns. For example, according to a study released by International Finance Corporation earlier this year3, women are significantly underrepresented in portfolio management roles. In its research covering the private equity and venture capital industry, the International Finance Corporation found that the performance of gender-balanced investment teams is correlated with higher returns. The research further found that gender gaps in the representation of female allocators of capital put at risk the access to capital by female entrepreneurs. The data showed that female deal partners invested in almost twice as many female-led businesses as did male deal partners.

Regulatory Focus

Regulators are increasingly focused on this issue – in Ireland, the Central Bank has been very vocal on the topic, warning about the dangers of having a lack of diversity in the firms it regulates. The Central Bank views this as a leading indicator of heightened behavioural and cultural risks. It believes that “groupthink”, which was widely prevalent in Irish banking institutions, contributed to the scale of the financial crisis. Greater diversity, in the opinion of the Central Bank, would reduce overconfidence in decision-making and increase the level of internal challenge.

For the past three years, the Central Bank has measured and published the gender breakdown of Fitness and Probity applications for Pre-approval Controlled Functions. It recently published the results of its 2018 analysis4, finding that despite a 50% increase in applications from the previous year as a result of Brexit, the percentage of female applications only increased from 22% to 24%. Interestingly but not unexpectedly, female applications remained higher for risk (28%) and compliance (41%) roles than the average, and higher than in those roles responsible for driving revenue and businesses (i.e., CEO, Head of Sales). The Central Bank then broke down the numbers per sector5, finding that in the asset management sectors, only 24% of board applications were female and 70% of management applications were male.

The Central Bank expressed a desire to see a change in these numbers, and indicated that to effect change firms need to do more than have policies that merely pay lip service to this issue. The regulator intends to keep pressure on firms to ensure diversity and to encourage firms to build better pipelines of talent. As diversity and culture are inextricably linked, the Central Bank recognises that rules are only a partial solution to ensure the strength and resilience of the firms it regulates. The Central Bank also maintains that, as a regulator, it can supervise diversity by reviewing policies and analysing data to assess outcomes. In addition, the Central Bank has not ruled out putting specific requirements in place if it does not see improvements in diversity at senior levels on a voluntary basis. These measures would include updating governance codes and requirements to be more explicit in terms of expectations regarding diversity policies. The Central Bank also has spoken about its ability to include diversity considerations in governance inspections6, and can hold boards and executives to account to ensure that they are delivering as many have committed to do.

What is the Industry Doing about This?

The industry is trying to address this gender imbalance in a variety of ways, including (among others): through increasing the visibility of female role models; encouraging a future pipeline of talent; and responding to investor demands.

Visibility of Female Role Models

In order to ensure that young women in the asset management industry remain on their career paths, they need to have senior women as identifiable and relevant role models. As the Central Bank’s report demonstrates, although women hold senior compliance and risk roles, there are far fewer female fund managers than their male counterparts, and female CIOs are a rarity altogether7. Reasons cited for this include: low turnover in these types of roles; break in performance due to maternity leave absences or sabbaticals; and the lack of visibility of female fund managers. 100 Women in Finance (100WF), a global association of over 15,000 members8, has launched an initiative to highlight the existence of female fund managers so that young women in the industry can see what can be achieved and know that senior investment roles are accessible. 100WF currently works with conference organisers to identify under-the-radar female investment talent to sit on conference panels and provide keynote speeches and thought leadership. Further, the organisation has created a directory of female portfolio managers that can be accessed on the 100WF website.

The Next Generation

In addition to encouraging women to remain in the asset management industry, it is important to ensure a pipeline of talent continues to enter the industry. The Irish Government recently published its strategy for the financial services sector (Strategy)9, in which the development of grassroots talent is an area of focus. The Irish asset management and financial services sector has grown exponentially over the past 30 years – with 44,000 employees, this sector is a significant contributor to the Irish exchequer. Ireland wants to continue to be regarded as one of the world’s leading global financial services centres. The Strategy recognises the need to be forward-thinking and to engage with educational institutions, both at the university (under-graduate) and high school levels. One initiative outlined in the Strategy is the “Heroes in IFS Programme”, which is targeted at girls in high school and young women at the under-graduate university level. The programme will invite high-profile women in the financial services sector to talk about their careers and the opportunities available for those who seek to pursue a career in the sector.

The Investor’s Perspective

Some argue that the real way to see the gender balance improve is for investors to demand this. Diversity is beginning to influence managerial selection, and queries regarding diversity increasingly feature in RFPs. Investment consultants are seeing greater demand for the inclusion of diversity criteria10.Further, a growing number of investors are seeking to invest in funds and companies that include and promote women. An increasing number of funds in the market focus on companies with the highest percentage of women in senior management roles and on their boards. So-called “gender lens” investing is focussed not just on investee companies that treat women well, but is also based on investment performance. Some funds seek to allocate capital to companies that have achieved higher levels of diversity in order to empower investors to make a difference. Such “impact investing” is growing in popularity and can form part of a broader ESG strategy.

Responses in Light of Detractors

It is important to be aware that the diversity agenda has faced criticism, with some people fearful that the focus on promoting women will result in men being passed over and discriminated against. Some asset managers are moving away from employee diversity networks on the basis that they end up making some employees feel excluded. Mandatory gender pay gap reporting has put pressure on organisations to alter their hiring practices.

Gender diversity policies within firms should focus on supporting people equally, and the industry needs male colleagues to be key drivers of the change. Both male and female senior leaders in organisations need to buy in and support the diversity drive.


It is clear that the diversity agenda is not abating. There is strong will among governments, regulators, managers and investors to create a more gender-balanced industry. We are starting to see progress, as there is a clear business case for supporting and promoting diversity of thought, taking steps to ensure the widest possible talent pools, and reaping the benefits of enhanced financial performance.  


1) Balance for Better Business First Report (May 2019).
2) Balance for Better Business is an independent business-led review group established by the Irish Government to make recommendations as to how more women can be involved in decision-making at the top levels of business in Ireland.
3) International Finance Corporation, Moving toward gender balance in private equity and venture capital (March 2019).
4) Central Bank of Ireland, Demographic analysis – Applications for Pre-Approval Controlled Functions (PCF) roles in regulated firms – 2018 (March 2019).
5) The sectors in the Central Bank's breakdown were: banking; credit unions; insurance; consumer protection; securities and markets; and asset management.
6) The Importance of Diversity, speech by Central Bank of Ireland Deputy Governor Ed Sibley (15 Nov. 2017).
7) Indeed, Ignites Europe recently reported that out of the top 20 asset managers in Europe, only three have female CIOs. Female CIOs still a rarity, Dawn Cowie (8 March 2019).
8) The author of this article is the current chair of the Dublin location for 100WF.
9) International Financial Services Strategy 2025 – Ireland for Finance.
10) For example, Willis Towers Watson, a researcher on managers, has included the availability of parental leave at asset managers as part of its assessment, seeing this as an essential attribute of positive inclusive culture that leads to long-term success.

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