Lack of Ethnic Diversity A Drawback, Say UK Fund Firms

More than 20% of UK fund managers surveyed say that a lack of diversity has held back winning new clients and business

Christopher Johnson 17 April, 2024 | 12:11PM
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New research shows that a lack of ethnic diversity is hampering UK fund managers in the pursuit of new business.

As conversations about diversity and inclusion in the workforce have become more prominent, the UK financial services industry has grappled with the hiring and retention of under-represented communities.  

But according to a survey of 402 investment professionals across Europe by the diversity working group, Reboot, more than one in five (21%) UK fund managers say that a lack of ethnic diversity in their workforce has stifled their ability to win over new clients.

The survey also found that 38.3% of institutional investors would decline to work with a fund manager due to its lack of diversity. 

More than two thirds of respondents (67.7%) said that employing more people from ethnic minority backgrounds when selecting funds or awarding mandates will become more important for investment firms over the next five years.  

Diversity Needs to Focus on Company Culture

Justin Onuekwusi, chief investment officer at St James’s Place and co-founder of #TalkAboutBlack said more needs to be done despite the positive data.

“The conversation and subsequently resources are overly focussed on the recruitment rather than creating the right cultures to retain and progress talent regardless of background.”  

“Our data also shows that nearly one third (32.4%) of UK-based fund managers say that investors are not putting any pressure on them to be transparent and share the breakdown of their employees by ethnicity. This is where additional support from regulators and government will make a significant difference.” 

However, previous research by the group shows the asset management industry continues to lag behind on diversity.

In Reboot’s Race to Equality: UK Financial Services report released last year, it found that progress on diversity and inclusion within financial services was going backwards. The average score for Reboot’s Race to Equality Index had fallen year on year, from 67 in 2022 to 65, out of a maximum possible score of 100.  

The asset management sector showed the largest decline over a three-year period, although the overall underperformance was driven by a lack of commitment to tackling racism from senior leaders, the report found.

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Christopher Johnson  is data journalist at Morningstar

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