Average gap has increased to 31% amid signs of ‘diversity fatigue’, report finds

The fund management sector is facing fresh criticism over its widening gender pay gap, after a new report says there are signs of “resentment” from professionals who have dismissed diversity as a matter of political correctness.

The average gender pay gap for the sector has increased by 0.8% to 31% since mandatory reporting was introduced in the UK two years ago. That is second only to the banking industry, where women earn about 32% less than men on average.

It is the only sector among the five worst performers – which include banking, insurance, property and travel – that failed to narrow the gap, according to the report by PwC and the industry’s Diversity Project group.

Helena Morrissey, the chair of the group and head of personal investing at Legal & General Investment Management, said the pay gap data was “both depressing and galvanising”.

However, she said there was no use in trying to persuade colleagues. “No amount of talk will convince this group – in fact, it is likely to be counterproductive,” Morrissey said.

“Instead, diversity and inclusion needs to be treated just like any other business issue, featured on every strategy day agenda, in every performance review, every hiring, promotion and reward decision, every risk and culture assessment.”

Stalled progress across the industry, which manages investments on behalf of retail customers and bigger clients such as workplace pension funds, is partly the result of there being few women in top roles.

The report found many professionals were still sceptical of evidence showing that diversity improved business performance by boosting innovation and resulting in better returns.

“There are signs of ‘diversity fatigue’ and pushback,” the report says. “Business leaders may be convinced of the need to act, but too many investment professionals perceive the issue to be more about political correctness than a driver of investment performance of the long-term success of their firm.

“There is resentment about special programmes designed to foster diverse talent, even where the motivation is to create the best investment teams.”

The report also turns the spotlight on investment management firms, which are starting to take an active stance on the diversity and sustainability policies of companies they have invested in.

While the PwC report found 54% of the investment management firms tracked in the report recorded a drop in their gender pay gap last year, the margin of improvement was mostly less than 5%.