St James’s Place’s latest gender pay gap report paints a stark disparity between male and female remuneration as it rounds off a year in which it faced scrutiny over its aggressive and macho sales culture.
ESG Clarity‘s sister publication Portfolio Adviser examined the median gender pay gap and bonus pay gap for the 29 asset and wealth management firms that fronted up and disclosed their number for 2019. Companies with 250 employees or more were supposed to have submitted their gender pay gap figures by last Sunday on 5 April 2020 but due to the coronavirus outbreak the government suspended the reporting requirements.
Portfolio Adviser looked at the median figure in its assessment of the gender pay gap as this tends to provide a more realistic snapshot of average pay at a firm as the mean tends to be skewed by the highest-paid staffers who earn significantly more than the lowest paid workers.
SJP had the fourth highest gender pay gap last year, with women earning 56p for every £1 that men earned when comparing median hourly wages. Its pay gap of 43.5% was down slightly from 2018 when median female wages were 45.8% lower than male earnings.
No magic formula
SJP has been stepping up efforts to modernise its brand after a barrage of bad press last year in which it was accused of having an aggressive and macho sales culture.
In addition to scrapping its controversial cufflinks and cruises perks system, the FTSE 100 manager recruited ex-Legal & General Investment Management personal investing boss Helena Morrissey (pictured) to its board at the start of the year along with two other senior women. In March, the Investment Association had written to the wealth management giant requesting it address its male-dominated board.
But City Hive founder Bev Shah says the fact SJP has made some high profile female hires is not enough to close its gender pay gap.
“They may be trying to change but the magic formula to improving your gender pay gap numbers is not as simple as hiring more women, adding a woman to your board and paying women equally to men,” Shah says.
“If you do not have the right culture throughout your organisation to attract and retain that talent then your numbers will not move.
“We saw this at Lloyd’s of London where their own CEO Inge Beale (now ex CEO) said there was little she could do to change the culture of misogyny. It was just ingrained.”
Gender bonus gap is telling
While there was a negligible 0.1% separating SJP’s mean and median gender pay gap figures, the difference between its mean and median gender bonus gap of 38.1% was the highest of all the firms that Portfolio Adviser examined.
Asset and wealth managers with the largest difference between mean and median bonus gap
|Employer||Mean bonus (%)||Median bonus (%)||Mean/Median difference|
|Schroder & Co||71.0||52||30|
|Merian Global Investors||90.0||61||29|
Source: Gender pay gap service/gov.uk
SJP’s median gender bonus gap remained unchanged from 2018 to 2019 at 46.6%, while the mean gender bonus gap rose year-on-year from 80.3% to 84.5%.
Given that fewer women received bonuses in 2019 than men (85.2% versus 87.0%) and fewer women are in senior roles this indicates that a handful of men at the top walked away with considerably higher pay-outs.
‘Pushing a boulder uphill’
CWC Research managing director Clive Waller says SJP like the industry at large is “still a club for middle, aged, white, public schoolboys”.
Waller thinks if anyone can successfully change SJP’s culture from the inside it’s the “formidable” Morrissey. “However, she is pushing a boulder uphill as the industry struggles to change its antediluvian culture,” he adds.
“SJP has a long way to go to address its cultural challenges and create an environment more welcoming to women,” agrees Martin Bamford, director of client education at Informed Choice.
Bamford thinks financial services still has a “shockingly large gender pay gap” because of its sales culture mentality.
“A sales culture is likely to be a significant contributor to this pay disparity, with financial rewards in the sector driven less by experience and more by a capability to sell products or services,” says Bamford.
More women in senior roles by 2023
SJP told Portfolio Adviser its current bonus gap reflects the higher performance-related remuneration offered to senior roles, which are predominantly occupied by men. “As we have more women moving into senior roles, we expect to see this gap reduce,” an SJP spokesperson said.
The spokesperson said the firm is “tracking positively” on its target to increase the number of women in senior roles to at least 30% by 2023, following on from its commitment to bring the number of women on its board to 33% by 2020.
Women currently make up 21% of the top quartile of earners at SJP. The average proportion of women in the top pay bracket across the firms Portfolio Adviser looked at was 21.5%.
The spokesperson added that SJP had made progress on closing its gender pay gap from the 2018/19 reporting period and had introduced several initiatives to attract female talent, including appointing a head of inclusion and diversity last May to deliver on its firm-wide strategy and expanding on its existing range of parental leave policies.
“Attracting a diverse range of female talent from a broad spectrum, including those who may be returning to work after an extended period of leave, is a priority for us and we are working hard to ensure that our processes and practices help us to attract and retain talented women,” they said.
Diversity cannot be side-lined
Last year Quilter Cheviot and Schroders’ wealth management business, Schroder & Co, reported worse gender pay gaps than SJP.
Quilter was among the firms that reported a widening gap between male and female median hourly wages, as was Nomura, Brown Shipley and T.Rowe Price which saw its gender pay gap shoot up by 5.6%. Blackrock Investment Management, which has been trying to shake accusations of greenwashing, also reported a 2% increase in its median pay gap.
Generally speaking, 2019’s biggest laggards on pay parity featured many of the usual suspects from the year before, with Wellington Investment Management and Brewin Dolphin also among the worst offenders.
A notable addition was Numis Securities, which reported for the first time, climbing straight to the top of the worst offenders with a median gender pay gap of 61.5%.
Asset and wealth managers with the largest median pay difference between male and female employees
|Employer||Employer size||% Difference in median hourly rate 2018/19||% Difference in median hourly rate 2019/20||% Proportion of women in top quartile||% Difference in bonus pay (median)|
|Numis Securities||250 to 499||Not required to report||61.5||6.2||92.7|
|Quilter Cheviot||500 to 999||44.0||45.0||12.0||72.0|
|Schroder & Co||250 to 499||46.3||44.0||12.0||78.0|
|St James’s Place Wealth Management||1000 to 4999||45.8||43.5||21.0||46.6|
|Wellington Management International Limited||250 to 499||43.4||40.6||20.0||72.7|
|Brewin Dolphin||1000 to 4999||39.3||39.3||17.0||62.6|
|Nomura International Plc||1000 to 4999||38.4||39.3||10.7||53.3|
|Brown Shipley||250 to 499||34.4||38.3||17.7||75.0|
|Franklin Templeton UK||250 to 499||31.2||35.2||24.0||59.9|
|T.Rowe Price International Limited||500 to 999||28.2||33.8||20.8||63.5|
|Charles Stanley & Co||500 to 999||33.8||33.7||17.7||55.0|
Source: Gender pay gap service/Gov.uk
A number of firms which were spotlighted for having vast gender pay gaps last year, including Rathbones and Close Brothers, did not report this year.
“Looking at the numbers it is disappointing that more companies have chosen to hide behind this crisis and not report their gender pay gap numbers,”says Shah.
“And although we are seeing minimal redundancies, due to the support from the government, along with hiring freezes we would urge that firms do not rush to side-line diversity as a bull market project.”
Some firms making progress
But some firms were able to make a dent on closing their gap from the previous year.
Despite having one of the biggest differences between mean and median bonus pay AJ Bell had the smallest pay gap of the firms Portfolio Adviser looked at for the second year running. In 2019 the median difference in hourly pay between male and female employees at the FTSE 250 platform group was 6.2%, an improvement on its 8.2% median pay gap in 2018.
Shah notes that AJ Bell has been criticised in the past for having a predominantly male senior leadership team but adds they have been making “a concerted effort to build a strong female talent pipeline”.
The next best firm in terms of median pay in 2019 was Vanguard Asset Management (14.2%), which saw its gap decrease by 3.9% year-on-year.
Legal & General Investment Management, Morrissey’ former employer before her exit in October 2019, also managed to shrink its median pay gap, which fell from 22.8% in 2018 to 19.6% in 2019, while Axa Investment Managers reduced its median gap by 2% to 24.9%. LGIM’s pay gap had widened in its previous report from 21.4% in 2017.
Merian Global Investors made one of the biggest improvement on closing its gender pay gap, bringing its median figure down 6% to 25%.