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Money Management

Pay disparity widens for some U.K. asset managers

Colette Comerford said at LGIM pay tends to be higher for investment personnel, but traditionally those positions have been mostly held by men.

The U.K. government's review of compensation data, in its second year, showed some money managers reported an increase in average remuneration disparity between male and female employees.

Companies with at least 250 employees based in the U.K. now have to annually report on the average hourly pay difference between male and female employees. The reports also include insight into gender representation in pay quartiles and bonus payments.

The median gender pay gap worsened in the 12 months ended April 4 for 40% of the U.K.'s largest money managers based on their assets under management, according to data prepared by Pensions & Investments. And the group of managers — Allianz Global Investors, AXA Investment Managers, BlackRock (BLK), Fidelity Investment Management, Goldman Sachs International, J.P. Morgan Asset Management (JPM), Legal & General Investment Management, State Street Global Advisors, Vanguard Asset Services and Wellington Management International — continue to struggle with female representation in more senior positions, which typically unlock higher pay grades for female employees.

State Street in the U.K. reported the largest increase in median pay gap, to 17.7% in 2019 from 11.8% a year earlier.

Females are underrepresented in the employee population and that "had a meaningful impact on our pay gap," said Cuan Coulter, executive vice president and head of Europe, the Middle East and Africa at State Street Global Advisors in London, in a telephone interview. The pay gap got wider over the year as the small number of senior level roles that became available were filled by males, skewing the gap, he added.

Mixed results on U.K. pay equity
Despite efforts by the U.K. government to eliminate pay imbalance at U.K. corporations, some global money managers operating in the U.K. fared worse in the 12 months ended April 4.
Median pay
gap
Median bonus gap% of men receiving bonus% of women receiving bonusProportion of women in top pay quartile
Manager2019201820192018201920182019201820192018
Allianz Global Investors27.8%31.0%51.8%54.0%95.9%92.0%91.9%88.0%27.1%22.0%
AXA Investment Mgrs.26.9%27.2%62.5%63.2%87.8%89.4%90.6%88.3%22.4%25.2%
BlackRock (BLK)20.0%23.0%30.0%41.0%93.0%94.0%92.0%93.0%28.0%25.0%
Fidelity Investment Mgmt.27.2%25.4%52.0%54.7%88.6%87.4%85.4%87.8%24.8%24.8%
Goldman Sachs Int'l35.5%36.4%68.9%67.7%93.9%96.7%94.6%96.0%18.1%17.0%
J.P. Morgan Asset Mgmt.24.4%22.0%61.7%51.0%96.0%94.6%94.4%93.7%22.4%23.0%
Legal & General Inv. Mgmt.22.8%21.4%58.3%55.2%93.0%93.4%87.8%89.8%21.2%20.0%
State Street Global Adv.17.7%11.8%32.8%24.0%96.0%93.0%93.0%88.0%33.0%37.0%
Vanguard Asset Services18.1%23.9%50.4%53.4%94.0%91.2%92.6%89.8%28.4%23.6%
Wellington Mgmt. Int'l43.4%44.7%85.7%84.6%92.0%95.0%94.0%92.0%21.0%19.0%
Source: Government report

SSGA vice presidents

At SSGA, currently 67.1% of the total workforce is made up of assistant vice presidents or vice presidents, positions that typically lead to a higher pay grade. However, only 38.4% of the vice presidents were female.

But Mr. Coulter said the firm is working on overcoming "legacy demographics."

"We moved away from a traditional job description. We are spending more time on understanding the profile of a senior role rather than just focusing on technical aspects of the role," he said.

Goldman Sachs International and Wellington Management International had the largest median pay gaps overall at 35.5% and 43.4%, albeit marginally improving their gender statistics in the year from 36.4% and 44.7%, respectively.

Goldman Sachs International CEO Richard Gnodde said in a memorandum to the firm's employees March 25 that the firm will "expand our aspirational goals to increase the diversity of the new talent we hire into the firm at all levels." He also referred to an email from high-level executives at the firm that said "the potential pipeline to assess representation across all communities" will be reviewed before the formal process for 2019 managing director promotions begins.

A Wellington spokeswoman said in an email: "While we acknowledge that our gender pay numbers are not where we would like them to be, we are committed to making progress. Over the past year, we have expanded and intensified our gender-related initiatives, and we are starting to see evidence of impact across our female population and, importantly, at senior levels. We recognize that this is a journey and are confident that our efforts will translate into steady results over time."

Other money managers had similar experiences in the course of the past 12 months. The median pay gap, understood as a difference in hourly pay, increased in the past year for Fidelity to 27.2% from 25.4%, J.P. Morgan Asset Management (JPM) to 24.4% from 22% and LGIM to 22.8% from 21.4%.

2 factors at work

Colette Comerford, head of inclusion and culture at Legal & General Investment Management in London, said: "In LGIM, there are two factors underlying our gender pay gap data. Roles in the investment side of the business tend to see higher remuneration rates, and men have traditionally held more of these roles than women."

In 2018, LGIM achieved a 42% female shortlist and 47% female hires across all levels, Ms. Comerford said, in efforts to counter the gap.

Ms. Comerford also added that the firm had "49% (of female hires) at junior levels, which helps to improve the overall balance of female representation; but this could increase the pay gap with more women in roles with lower salaries."

A Fidelity spokesman said: "We are disappointed that the gap at Fidelity International has marginally increased since the publication of our 2016 (and) 2017 data," adding the largest proportion of the firm's new employees have been junior-level women, as the firm intends to build a "pipeline of female talent for the future."

"In the short term, it does mean that the proportion of women in the lower earnings quartile has increased, affecting the pay gap. (But) as this pipeline of talent moves into more senior roles and as we also continue our efforts to increase the representation of women at a more senior level, we expect the gap to reduce," the spokesman said.

By comparison, Vanguard showed the greatest improvement in median pay gap to 18.1% from 23.9% a year earlier among the largest money managers.

Commenting on the result, a Vanguard spokesman said: "The gap closed because our representation of females across all levels has moved closer to the overall proportional representation. The progress over the last 12 months reflects the work we've done since joining the Women in Finance Charter last year." Women in Finance Charter is a pledge by Her Majesty's Treasury and financial services firms to achieve gender balance across the industry by supporting progression of women into senior roles.

Vanguard also publicly committed to 30% female representation at senior levels by 2020. "We will continue to set aggressive goals for ourselves going forward," the spokesman said.

In April, Vanguard also held its third annual U.K. Take Your Daughter To Work Day, which encourages employees to familiarize girls aged between 8 and 17 with investment management through classroom learnings, panel discussions and tours of the trading desks.

BlackRock improvement

Also, BlackRock (BLK) Investment Management (U.K.) Ltd. improved its median remuneration gap to 20% from 23% a year earlier. " BlackRock's gender pay gap figures show that we are making some progress on representation. However, we cannot yet say we are proud of the impact that our actions have had. We need to continue to focus on improving the distribution of women in higher-paying roles," the firm said in its gender report.

Another criterion set by the U.K. government was to require managers to report the median bonus gap, which increased for Goldman Sachs, J.P. Morgan, LGIM, SSGA and Wellington.

"We know we have more work to do, not only to increase women's representation at all levels, but to advance more women into management and leadership positions across the firm," a J.P. Morgan Asset Management (JPM) spokeswoman said in response to the figures.

The proportion of women in the top pay quartile decreased for AXA IM, J.P. Morgan and SSGA compared to the previous year. However, the percentage of women receiving a bonus decreased for BlackRock, Fidelity, Goldman Sachs and LGIM.