Results from the 2021 PAM Diversity & Inclusion survey indicate the private wealth industry became much more aware of its lack of racial diversity over the last year.
Ninety-five percent of respondents agreed or strongly agreed the private wealth industry was lacking diversity in terms of ethnicity, compared with 68 percent who felt this way in 2020.
This possibly reflects an increased focus on racial inequality over the last year, in the wake of the Black Lives Matter (BLM) movement. Several respondent mentioned their firms had taken action in response to BLM.
Meanwhile, 82 percent agreed or strongly agreed the industry lacked diversity in terms of socioeconomic background – a similar proportion as last year.
Gender remained an issue, but arguably to a lesser extent. Around half of respondents said they agreed gender diversity was lacking across the private wealth sector.
One person, working for a UK wealth manager with 200 to 500 employees, said while diversity was a “hot topic”, most firms responded to the issue solely by adding more women.
“These are usually heterosexual middle-class white women, so if the person you choose to answer the diversity question with just looks like the wife of the person who has always in charge, this needs to be looked at. Every single [ethnic minority] person in my place of work is at the lowest level of seniority,” they said.
Others observed that internal diversity programmes were sometimes thrust onto minority employees, creating extra unpaid work for them and possibly exacerbating the problem.
Ninety-five percent said they believed that having a diverse workforce benefited the client experience in private wealth, though some said they believed client prejudice also influenced hiring practices in some instances.
The survey also included questions around general attitudes to diversity as an area of focus – with the framing of some of these criticised by respondents.
In one instance, respondents were asked the extent to which they agree with the statement ‘Diversity issues are being pushed on companies by the government and/or regulators’. Forty-five percent said they agreed or strongly agreed, with 21 percent unsure, and the remainder disagreeing.
One person described the framing of the question as “depressing”: “If anyone thinks that [diversity and inclusion] is being ‘pushed’ onto us by regulators and government is missing the point and really doesn't understand the commercial imperative for change in this industry”.
Another said, “Issues are being raised and rightfully so. The statement above implies this is a negative thing”.
But other responses did indicate that not everyone is on board with the D&I cause in its current form, with around a third saying they felt alienated by their firm’s stance on diversity. Many people spoke of frustration around quotas and “box ticking”.
One person said they felt the D&I “agenda” had taken precedence over common sense.
“If you are a white, British, 50+, straight, married, father seeking a new role, the world is not a very welcoming place, no matter how talented, as that is a spectacularly unhelpful demographic,” the respondent said.
“D&I should be about ensuring everyone has an opportunity and that the best candidates apply and are engaged. It is becoming about quota driven targets instead.”
Another person, working for a mid-sized wealth manager, described their firm’s response as “loud in publicity but much quieter, in practice”.
“For example, prior to the pandemic it provided work experience for students from disadvantaged backgrounds through a competitive process, whilst work experience was doled out freely to children of clients.”
The barriers
There was strong agreement (85 percent) that more flexible working practices helped recruit and retain a diverse workforce, though a smaller contingent seemed to think such practices put more strain on women and those who were less well-off.
“Covid has made the situation worse, as many who were carers for children or family didn't get the support they required, so will consider leaving the industry, potentially leaving those who were more privileged,” one respondent said.
Overall, respondents felt there were myriad issues which needed to be addressed in order for a diverse workforce to thrive.
A lack of role models, past industry inaction, and a ‘lack of awareness of industry among students/young people from poorer backgrounds’ were cited as the major reasons for the sector’s lack of diversity. A lack of existing contacts and networks – through school and family – was also seen as an issue, with 76 percent agreeing or strongly agreeing this was a contributing factor.
A lack of qualified applicants from diverse backgrounds, drop-out rates (often due to parenting or caring), and ‘an unappealing or exclusionary culture’ were also cited – though to a lesser extent.
One person observed the prevalence of what they described as the “good fit phenomenon”.
“Instead of saying is this person a ‘good fit’, try saying is this person like me? Then all of a sudden you become acutely aware of how biased that statement is and how much it doesn't make sense.
“In the work place you should never be aspiring to group think, you should want someone who approaches things differently, you should want someone who has walked a different path otherwise you are just guaranteed to stay on the same road. There is too much evidence that proves this.”
About the survey
The survey was filled out by representatives from 38 firms in April and May 2021. Respondents comprised wealth managers (22 respondents), private banks (4), private client law, trust, and accountancy firms (6), wealth management-focused fintechs (2), and other (4).
Due to the small sample size, and an element of self-selection bias, it should mainly be considered a qualitative exercise. Sixty percent of respondents were women; 71 percent were white, and 16 percent identified as LGBT+.