Leaky pipelines, broken rungs and glass ceilings: Why the investment industry still has work to do

The South African asset management industry, like many of its global counterparts, continues to fall short of achieving gender parity. Women are every bit as capable and qualified as their male colleagues, yet they remain underrepresented across the industry, particularly in senior investment roles.

An oft-cited reason why female portfolio managers and investment professionals abandon the industry, is that the burden of household caregiving falls disproportionately on their shoulders. This may be true, particularly in South Africa. Female-headed households account for roughly 43% of South African households, versus a global average of 33%.

Only a privileged few can afford to employ caregivers for their dependents; be they minors or “majors” (aka parents or grandparents). Conventional wisdom has it that a more flexible working environment, which allows for better work-life balance, will improve retention of female talent. While true, this is only part of the picture. The more nuanced picture is that the path to the top needs to be clearer and that there needs to be a reasonable expectation of getting there.

The leaky pipeline

We face three home-improvement problems: a leaky pipeline, a ladder with broken rungs, and a glass ceiling. The leaky pipeline is often used to refer to the fact that many female graduates and investment professionals leave the industry. This so-called leaky pipeline seems to imply that the paucity of female representation is primarily driven from the ground floor or the “bottom up” (to use portfolio construction terms). It is, however, more likely the result of the dynamics on the first and top floors.

Climbing up the career ladder is more challenging for women than for men: A 2024 study found that women in finance were 24% less likely to be promoted than men. Pop culture often portrays the industry as a “man’s world”, one in which aggression, dominance, a dispassionate viewpoint and risky behaviour lead to better investment outcomes. Despite numerous studies illustrating that no inherent gender characteristic leads to better outcomes, women more often need to prove themselves. Proving yourself is quite impossible if you can’t even get your foot on the first rung.

Broken rungs on the career ladder

Counterintuitively, and as a pernicious side-effect of the perception that aggression and cut-throat behaviour are required to succeed, women admit that they can feel equally oppressed when their sister-professionals are in positions of authority. When power has been hard-fought-for, people may feel that their successors should walk the same difficult and rocky road. Instead of giving a hand up and helping to fix the broken rung, they pull the ladder up behind them.

For example, when our parents would say: “I walked to school barefoot”. While these women may be visible, they remain behind a glass ceiling. That being said, the glass is murky at best. Even at the top floor, gender disparities persist, particularly when it comes to pay-gaps. The lack of transparency regarding, and sometimes outright dismissal of the existence of the gender wage-gap, creates uncertainty as to reasonable expectations at all levels, not only at the ground floor. In addition, transparency regarding prospects for career progression is often lacking.

A Women in Finance survey (Responsible Investor 2024) found that only 25% of women felt they had clear line of sight of development opportunities and what skills were required to get to the top floor. We cannot contribute to the conversation if we have never been invited to join it. As a result, those who are issuing the invitations and designing the house need to drive the changes in the industry.

Building a better industry

One of the things that can be done, is to foster “sponsorship” relationships across genders. As difficult as it is to acknowledge, women (like men) do not always have each other’s backs. Sponsorship, importantly, goes beyond being a mentor. A mentor is likely to simply advise and advice without help in execution is worth next-to-nothing, just like a ladder with a broken rung. Acknowledging the currently still-male-dominated state of the industry, men remain more likely to be able to boost a protégé’s career prospects.

Transparency and clarity at the outset regarding what career progression can look like and what it requires, is also likely to lead to fewer female investment professionals becoming disenchanted and leaving the industry.

The industry also needs to openly acknowledge gender-imbalances, including the wage-gap and how remuneration policies need to change. Let’s be frank, legislation cannot fix these imbalances. As has been clear in other areas, window-dressing can disguise a lack of true transformation. Cracks which are simply painted over for cosmetic and/or compliance purposes, will continuously reappear.

The concerted effort from the top requires men and women to become allies, truly buying into the fact that a more diverse team can deliver better results, and that merit is what earns a place at the table. But don’t discard the idea that women on the top floor need to make their voices heard, their roles visible and their presence felt. Being able to identify with leadership, and feeling represented, is a powerful motivator.