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A study by EY (formerly Ernst & Young) of nearly 22 000 companies across the world in 2016 revealed that business under the leadership of women (30%) experienced 15% more profit on average. Yet, despite this evidence, that gender diversity delivers better business results, Elize Botha, Managing Director of Old Mutual Unit Trusts says that women in the financial services industry remain underrepresented.
“With rapid technological advancements and the continued opening of new markets, innovation is playing an increasingly important role in value creation,” says Botha. “With the growing body of evidence supporting the benefits of gender diversity in the workplace, there is no excuse for an industry to lag transformation in this respect. A more culturally representative demographic of corporate women leaders would not only be beneficial in driving growth led by innovation, but would also likely have a positive impact on a business’ bottom line.”
A research study conducted by Oliver Wyman: Women in Financial Services 2016 corroborates these findings, suggesting that transformation in the sector, globally is slow. “In 2016, Oliver Wyman reports that currently only one in four top-level management positions in the financial services sector is held by a woman. At the current rate, the sector will only reach the minimum target of 30% representation on the executive committee (Exco) by 2048.”
Botha believes that at the current rate of innovation, this is too long to wait. “Companies need to recognise, celebrate and seize the ideas that are created through gender diversity in order to meet current challenges. If companies fail to diversify, boards run the risk of falling victim to “groupthink” – a phenomenon whereby engaging only with those who share a similar view of the world blocks out other perspectives. The trouble with this is that these companies are left behind and don’t see change coming,” says Botha.
She believes that the rise of the female economy is one such opportunity currently overlooked by the South African financial services sector. “According to Forbes magazine, in 2017 women will control about $18 trillion in annual consumer spending. Yet, according to an international survey by the Boston Consulting Group of 12 000 women from 21 countries, 73% of respondents said they were unhappy with the level of service offered by their financial provider, and 71% were unhappy with the product offering,” says Botha.
“While the 2017 Old Mutual Saving and Investment Monitor (Monitor) – a survey designed to measure the saving and investment behaviour of South Africans in Metropolitan areas – didn’t measure South African women’s current level of satisfaction with local providers, research shows that women continue to doubt their own ability to transact with their bank or financial adviser on equal terms.”
This dissatisfaction with financial services and subdued confidence should be a concern for the financial services industry. “Women’s role in managing finances is on the rise due to the combined impact of growing gender parity in education, work opportunities, and spending power. The financial services sector needs to reconsider their approach to addressing the needs of women,” says Botha.
However, this issue is much bigger than introducing a new product or a service tailored for women. “Businesses will need to stop and reflect, with brutal honesty, on the good and bad points of their current service model to women,” says Botha. “The majority of women surveyed in the Boston Consulting Group believed that their gender was a key factor in the way they were treated, citing experiencing disrespect, condescension and a “one-size-fits-all” approach, among other issues,” says Botha.
“For a financial services company to authentically connect with their market, it needs to reflect the diversity of the country internally. All management functions of top financial services companies – not only the marketing executives communicating to customers – need to buy into and commit to transformation.”
While Botha is optimistic that in 2016 just over 30% of the total number of Certified Financial Planners CFP® professionals in South Africa were women she concludes that the issue needs to be addressed holistically. “To tap into the female economy, the financial services sector needs to attract and retain more female talent in senior management roles. This will help them to authentically meet the financial needs of South African women.”