Diversity—Let’s Get Real

Some of those waving the flag for equality in financial services are doing little more than paying lip service, argues Gina Miller of wealth manager SCM Direct.

CIO216-Gina-MillerGina Miller, founder, SCM DirectUK Prime Minister David Cameron’s announcement last year that he wished to “end the gender pay gap in a generation” sounded like a giant step forward for womankind.

Companies with more than 250 employees will have to publish the difference between the average pay of their male and female employees, the prime minister stated.

There was supposedly good news, also, when elder industry statesman Lord Mervyn Davies announced in October that FTSE 100-listed companies had reached his stated target to have women in 25% of board positions.

This move on gender diversity ought to have won my enthusiastic applause as a woman of color who has worked in financial services since 1992, founded a wealth management company in 2009 as a reaction to the financial crisis, campaigned for transparency and ethics in the City, was a working single mom for more than nine years, and is now the mother of three.

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But my handclapping is slow. 

The prime minister and media focus on a few supposed shining examples of female success in the City. What Cameron (who once told a female politician in the House of Commons to “calm down, dear”) does not see or acknowledge is the institutionalized prejudice and barriers that still exist in the City and the corporate world.

In March 2015, Eurostat published data ahead of International Women’s Day that showed the UK has the sixth-largest pay gap between men and women out of 30 countries in the European Union. UK women earned an average of 19.7% less than men, compared to a 15.2% gap in France and 14.4% in Ireland. One reason for this is that the ‘old boys’ network’ is still in place.   

In my view, some of the great standard-bearers for diversity in the City—so beloved by the media and Cameron—are hindering the debate, not helping. Nor are they succeeding in inspiring other women to enter the corporate world and also progress up the ladder.

They may wear dresses but they come from the same gene pool as the men that dominate and, as such, are not the exceptions to the rule—they are the rule. Prejudice and money are paramount in the financial sector and companies are still limiting the thinking, reforms, and structural changes needed to attract and retain female talent.  

The aim to get more women on boards may have succeeded, but just bringing in women and giving them non-executive director roles does not mean they are being recognized and promoted internally. I cannot help but think those non-execs are making up the numbers, not making the decisions.

“Some of the great standard-bearers for diversity in the City are hindering the debate, not helping.”There are examples of other successful women who have blamed any failures on sexism—this does the sisterhood absolutely no favors at all. These women risk damaging the prospects of talented females as well as people from diverse backgrounds that we so desperately need.

I am always more interested in action than words: Where is the succession planning? Where is the mentoring, and the will to put in place the structural and cultural machinery so desperately needed to close persistent diversity gaps? Where are all the incredibly bright young women going when they leave school and university? 

By narrowing the debate to just women, we distract attention away from the lack of diversity in ethnic minorities and social backgrounds. Data for 2014 show that the percentage of people from ethnic minorities in the City went down from 6% to just 4%.

After 23 years in business, I still despair when I attend conferences or speak on panels, debates, or roundtables. I find that I am often one of only a handful of women, and frequently the only ethnic minority person. 

Inequality is a real issue and is hindering competitiveness. While there is much that needs changing, a good place to start is recruitment. Recruitment has to be a fair and more transparent process, one that cuts out unconscious bias. It could mean using diverse selection panels and, more importantly, tapping into more diverse talent pools.

Without a pipeline, there will be too few people from diverse backgrounds to promote to positions of influence and management.

The evidence is clear: Diverse teams make better decisions and deliver better results. Clearer employee data, improved recruitment processes, and a reinvigorated focus on business culture will all pay dividends—whatever the size of your company.

These changes should benefit all employees, including women—and employers, too. We need to have real debates, real solutions, real reform, and real role models.

Gina Miller is founder of SCM Direct, MoneyShe, True and Fair Campaign, and the True and Fair Foundation.

Asset Managers Declare: No Recession

Indicators point to a rough year ahead, but investors shouldn’t expect the end of the world, according to a number of asset managers.

The predictions game is a dangerous one, but it’s one many asset management groups find hard to resist.

So far this year, China’s slowing economic expansion has come to the forefront again. Markets have not responded well to the US Federal Reserve’s December interest rate hike. Meanwhile, the Eurozone remains problematic despite the introduction of quantitative easing last year, and consumer debt levels across developed markets are as high as ever. Central banks are rapidly running out of ideas to stimulate their economies, with some even employing negative interest rates.

All this has led to a flood of commentaries into CIO’s inbox from asset managers all determined to have their say on a perplexing start to the year.

Is 2016 the year of the next recession?

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“Our pessimism on the global economy does not go so far as to anticipate a recession.”“I don’t think so,” wrote Mark Burgess, CIO and global head of equities at Columbia Threadneedle in his latest market commentary. “The first few weeks of this year show us something that we have known all along but perhaps conveniently forgotten: that we are and will remain in a low growth, low inflation and low interest rate environment for some time.”

While admitting that China’s slow transition from industrial expansion to a consumer-led economy has been—and will continue to be—painful for many areas of the world, Burgess argued that a lower oil price would soon feed through to the wallets of developed market consumers.

“With consumption comprising 60% to 70% of Western GDP, this is a real boost to potential economic activity,” Burgess said. “The early signs are that much of this boost is being saved, but at some stage consumers will start to spend their gains.”

Luca Paolini, chief strategist at Pictet Asset Management, said yields on sub-investment grade had risen “to levels more typically seen during recessions.” However, “such a weakening is improba­ble,” he predicted, “considering the US economy re­mains on course to expand, fueled by a pick-up in consumer spending.”

Sander Bus, a high-yield bond fund manager at Dutch investment group Robeco, agreed with Paolini’s assessment of his market, but declared that “it is very difficult to predict if there will be a US recession or not, so we’re not going to try to do that.” However, he was not quite able to resist the temptation, adding that “only an ‘armageddon situation’ has not been priced in—but that’s not what we expect.”

“Our US economics team estimates the probability of a US recession at 15% to 20%.”In a recent update from AXA Investment Managers’ research and investment strategy team, the mood was darker. The group cut its forecast (there’s that prediction addiction again) for global economic growth in 2016 from 3.1% to 2.7%. In the US, a “weak external environment” has hit economic activity, the researchers added. They have cut their growth forecast from 2.1% to 1.7% accordingly.

“Our pessimism on the global economy does not go so far as to anticipate a recession,” the researchers stated. “It is fundamentally based on the diagnosis of a global deficit of aggregate demand, not growing fast enough to match global supply, even though the potential growth of the global economy is itself incrementally slowing for lack of investments.”

Goldman Sachs’ commodities research team noted a spike in the price of gold during January, following record inflows for some gold exchange-traded funds. The investment bank’s report was quick to play down the significance of this trade, however.

“Banks have ample liquidity to maintain funding against higher capitalization, the negative macro impacts from low oil prices have likely already played out and are not systemic, while the spillovers from China are limited and the US is far from recession,” it stated.

Annual GDP Growth Rate. Source: World Bank“Our US economics team estimates the probability of a US recession at 15% to 20%,” Goldman’s note continued. Continued strength in the labor market should result in “a gradual pick up” in wage and price inflation, meaning that “only a large slowdown” in the employment market would deter the Federal Reserve from its current path of interest rate rises.

Columbia Threadneedle’s Burgess concluded by reminding investors of the “extraordinary” measures employed by central banks to inject some life into various economies following the crisis of 2008 and 2009.

“We are in a low-growth, low-inflation, low-interest-rate world for years to come,” he said.

There is one caveat to this consensus of calls for calm: In-depth research by the Economic Predictions Research Project in the aftermath of the 2008 crisis uncovered just four reputable financial professionals who accurately warned of the impending crash.

None of them were fund managers.

Related: The Psychology of a Selloff & Volatility Is at ‘Normal’ Levels, Says CalSTRS

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