Tony Hazell  

Gender fund not enough to fix diversity

Tony Hazell

Tony Hazell

As a former editor of mine was prone to say, ‘Has the world gone completely mad?'.

My thought was prompted by the launch of Legal & General Investment Management’s gender diversity fund or, as they have called it, the Future World Gender in Leadership Fund. Really rolls off the tongue does it not?

The idea seems as garbled as the name; it ranks as one of the daftest fund launches I can recall.

Apparently Legal & General will score and rank companies according to four gender diversity measures: women on the board of directors; women executives; women in management; and women in the workforce.

It will track a Legal & General designed index of 350 UK listed companies, with the investments tilted towards companies with a higher diversity score.

Do not get me wrong. I firmly believe there are not enough women in senior levels throughout industry and in the financial industry in particular. I have argued a number of times in this column that the financial advice sector is particularly poor at recruiting, training and promoting women. 

I find this utterly bizarre as it would seem to be an ideal career to encompass breaks and flexible working that many will want at certain career stages. I also suspect that some potential clients would find women easier to talk to and build a relationship with.

But in the financial world, names such as Inga Beale, the CEO at Lloyd’s of London, stand out because they are so few and far between. Back to Legal & General, where we must wonder what the basis is for the gender fund.

Apparently some research suggests companies with a greater proportion of women on their boards of directors tend to deliver better returns for shareholders than those that do not.

But such research was described as “naive” by Professor Alice Eagly of Northwestern University in the United States in an interview with the BBC.

It seems it can fail to take into account other variables. More sophisticated analysis has shown very small positive correlations between female board members and financial success. In fact, in some cases the relationship is negative.

Where there does seem to be a correlation is with more innovative companies that are likely to use talent more effectively regardless of gender. I would need more evidence than that before throwing my money at a fund built on such a precarious pretext.

Also, before launching such a fund, Legal & General might take a closer look at their own record. 

As I scanned down its list of managers past – the Gavins, Andrews, Kevins and Udays – I struggled to find a single woman in charge. But I must admit I lost interest soon after ethical.

Fees could deter customers

It probably will not surprise you that in the spat between Aviva and Standard Life over adviser charging I come down firmly on Aviva’s side.