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Changing careers and education - what’s holding women back in the finance sector?

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22 Feb 2016

This is the fourth in our series of blog posts on the topic of Women in Finance. View our third blog post, a look at five prominent women in finance, here.

The constantly-evolving finance industry has the ability to change within an instant, impacted by goings on in the banking sector and wider economy. However, when it comes to the individuals who are hired within the sector, it would be safe to say that the industry remains predominantly male - but is this likely to change?

In our earlier blog posts looking at the state of play for women in the finance industry, we identified several reasons why the most senior positions continue to be held by men, and why females often continue to be overlooked when it comes to promotions in the workplace. But is enough being done earlier on in life to ensure that females have the confidence and nurturing they need to apply for these roles? And are schools and universities giving women the tools they require for a successful career in finance? This blog post will investigate…

Early encouragement

While there is a common belief the problem of fewer women in more senior finance roles lies within the male-dominated businesses themselves, one argument that should not be ignored is the notion that schools, colleges and universities are failing to encourage females away from traditional subjects in favour of finance-related studies.

A study published by the consultancy London Economics earlier this year made for interesting reading. According to the data, girls who take maths and science at A-level will go on to earn a third more in wages than those who opt for the arts and humanities. The findings revealed that girls who take just one STEM subject at A-level will see their wages rise by as much as £4,500 a year on average, while those who sit two maths or science subjects can expect a pay increase of 33.1 per cent.

Notably, speaking at last year’s Wealth Management Association conference about equality problems in the City, Sarah Soar - head of front office at investment management company JM Finn - claimed getting women on to the career ladder in the first place was the “biggest fundamental problem” faced by the industry. Speaking alongside Elissa Bayer, senior investment director at Investec Wealth & Investment, and Fiona Hathorn, executive director of Women on Boards UK, said that while the industry has changed considerably over the past four decades, the issue of diversification is still as relevant as ever.

Of the UK graduates who applied to large international finance firms in 2014, just 12 per cent were women. Further data cited by the speakers at the event revealed that while the issue continues to cause concern, progress is being made, with sectors such as law and accounting experiencing increases in recent years and women now accounting for more than 50 per cent of the intake of these professions. However, when it comes to career progression and getting females into the more senior roles, the problem is ever present.

In fact, it has been suggested that schools and careers services often do not include finance as an option for young women - something that could be significantly impacting the prospects of many individuals. What’s more, fewer than ten per cent of equity income managers in the UK are women, while just seven per cent of retail investment funds are managed by women. Nicky Morgan, secretary of state for education and minister for women and equalities, said girls do not have enough strong female role models in male-dominated industries and would benefit from being “properly equipped” for the culture of bankers and traders before they are hired into such roles.

Introducing quotas and targets has been identified as one way of ensuring more women are brought into higher paid positions within companies. However, this move has received criticism from many within the industry. Speakers from the Wealth Management Association conference last year agreed that quotas are not the way, and individuals should always be hired on merit, rather than to tick a box.

As an alternative, it has been suggested that the corporate world should focus on transparency, advocacy and mentoring, with more focus placed on identifying the right talent ahead of time, so it can be nurtured in advance of promotions.

A wider issue?

The issue of a disconnect between education and employment is one that has been highlighted in a recent study from PwC. According to the finance company’s first YouthSpeak report, released in partnership with leadership development organisation AIESEC, millennials are becoming increasingly worried about a widening gap between their education and employment prospects.

Suggesting it is not only women in the finance industry who are not equipped with the right tools to go into this profession, the survey found that young people are worried that universities are not connected to their future goals, and employers do not engage with them in a meaningful way. Around the world, a growing number of millennials feel they are lacking the necessary career guidance and support that would help them to understand what they need for their ideal post-graduation career.

A crisis of confidence

The issue of men being more confident than their female counterparts when it comes to business has been widely reported in the past. In 2013, McKinsey’s ‘Moving mindsets of gender diversity’ survey of global managers found that just as many females as males desire top management positions, but only 69 per cent of women compared with 83 per cent of men were confident in believing they would get there. What’s more, a PwC survey of 8,000 women around the world - 600 of whom work in finance - carried out earlier this year revealed that only 35 per cent of 20 - 35-year-old women feel they would be able to get to senior positions within their current organisation.

On top of this, half the women in finance believe promotions are biased towards men, compared to just 20 per cent of their male counterparts - highlighting a less acute perception of gender bias from males. Three quarters of young female financiers said their opportunities were still unequal, despite talk of diversity by their organisation.
Looking ahead

For the number of women going into careers in finance to increase, more needs to be done in order to encourage female pupils on to such paths while they are in education. A combination of nurturing from teachers, to more positive female role models within the industry, could help girls to realise that such a career is not off the cards. However, when the responsibilities of schools and universities end, it is up to employers to ensure women have the confidence necessary to go into higher paid, more senior roles.

This is the fourth in our series of blog posts on the topic of Women in Finance. View our third blog post, a look at five prominent women in finance, here.

View all blog posts in our Women in Finance series:
Women in finance: the state of play today
2. Q&A with Finance Director Nives Feely
Breaking the glass ceiling: five prominent women in finance
4. Changing careers and education - what’s holding women back in the finance sector?
5. Women in finance: Analysis of our 'Gender Diversity in Business' survey

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