Two years ago, the City of London Corporation launched a socio-economic diversity taskforce to address the representation gap in financial services. This was off the back of research that found that around 90 percent of senior roles in financial services were held by people from a higher socio-economic – or “professional” – background.

Major investors including Aviva, Fidelity International, Man Group and Schroders are behind the initiative. The goal is ambitious: to achieve by 2030 a 50 percent representation for senior leaders from non-professional backgrounds – which includes intermediate roles such as clerical work, and lower socio-economic roles including manual and technical occupations.

While some firms have taken steps to reduce barriers to entry, such as removing a minimum university grade requirement for new job openings, it is clear that more needs to be done. People from lower socio-economic backgrounds take 25 percent longer to progress in financial services, according to the taskforce’s research.

Last autumn, membership body Progress Together – with the taskforce investors as founding members, alongside organisations including Allen & Overy, PwC and Santander – was born out of the initiative to keep the industry accountable and track progress.

Some notable progress has been made – for example, 80 percent of Progress Together members have named an internal accountable executive on social mobility, and efforts are underway to improve data collection on social mobility among members.

Separately, several of the taskforce’s founding investor members were ranked among the top 75 employers in last year’s UK social mobility employer index. The assessment and benchmarking tool is compiled by the Social Mobility Foundation, a UK charity that aims to make a practical improvement in social mobility for young people.

Data struggles

In order to meet the taskforce’s 2030 goal, however, the main challenge – as with many diversity issues – is data.

Sarah Kaiser, head of employee experience at Fidelity International, tells Responsible Investor: “We’ve struggled to collect data because our HR system doesn’t currently include a social mobility question. Without this, it’s challenging for us to follow the other points in the taskforce’s action plan. We can’t set targets until we know that we can report on them.”

Michael Turner, CEO of hedge fund manager Man FRM and investment advisory Man Solutions, agrees. “The statistics around progression are not available,” he says. “That’s partly because the data is not there, as this strand of diversity has only come to the fore in the last couple of years.”

There is also a concern that financial institutions will struggle even more to collect data from other jurisdictions.

“Social mobility has gained a lot of currency in the UK,” says Kaiser, “but it’s an unknown term in many of our other locations.”

In the UK, the Social Mobility Commission – a public advisory body to the UK Cabinet Office – has launched a toolkit to measure someone’s background. The key question is: what was the occupation of your main household earner when you were aged 14?

Other indicators include asking which type of school someone attended between the ages of 11 and 16 and whether they were eligible for free school meals at any point during school years.

Schroders tells RI that, as of December 2022, around 50 percent of its UK employees and 60 percent of senior management had responded to the question on main earner occupation.

Once again, there is a question around how to scale the data collection exercise. Kaiser explains that, while the question on a parent’s job at age 14 is relevant globally, the other questions provided by the commission are not.

Beyond entry-level

The taskforce’s efforts comes amid a wider push in the UK to improve social mobility. Its head, Catherine McGuiness, says that while there is no single catalyst for tackling the issue, research conducted by The Bridge Group, a UK non-profit promoting social equality, showed that industry action should be accelerated.

“It needed a boost in the same way that the women in finance charter pushed the industry into action on gender,” she says. “We felt this was a critical issue, which needed attention, which is why we have set a sector-wide target that will be reviewed to ensure it is continuously challenging firms and shifting the dial.”

Importantly, Sophie Hulm, CEO of Progress Together, says the initiative has encouraged investors to assess career progression rather than focusing solely on access to the industry.

“Firms are now looking at progression because they’ve realised that increasing entry-level diversity alone isn’t making much of a difference,” she says. “Employees from working-class backgrounds aren’t moving up the ladder, despite evidence telling us this has zero link to job performance.”

Turner, who is a non-executive at Progress Together, says the initiative is one of the most significant developments the sector has seen for supporting social mobility.

“When I speak to people across the industry, they don’t know how to approach socio-economic diversity,” he says. “They don’t know how to measure it, how to talk about it, or whether they should be addressing it. The aim of the organisation is to act as a catalyst and push the progress agenda on social mobility within financial services in the UK.”

And while data is posing challenges, Kaiser is confident that Fidelity will have the necessary information to report on social mobility by the 2030 deadline set by the taskforce.

Hulm agrees, adding: “Our members commit to sharing their anonymous data with us so we can better understand the financial services sector and make improvements where needed. If we encourage employers to collect data, we can compare the employee workforce against national benchmarks, which helps set good standards.”

Barriers and solutions

McGuiness says the taskforce was conscious that workers face myriad barriers to progression within the financial industry, including the attitude to accents among employers, recruitment processes, or industry perception and reputation.

“We heard that some people from lower socio-economic backgrounds assumed Fidelity wouldn’t be a place where they could build a career, because they didn’t see people like themselves in senior positions,” Kaiser says.

Turner adds that people consistently mention lacking confidence in their careers due to a lack of visible role models in the industry. “I’ve heard stories about people changing their accents to assimilate into the industry, or feeling that it holds them back. It has an impact on how people are perceived by the sector.”

Perhaps unsurprisingly, the suggested solutions to these problems are not so different from those recommended in RI’s Women in Finance survey published last month.

“There needs to be a combination of cultural changes around languages and work activities,” says McGuiness, “as well as changing processes around mentorship, senior sponsorship, promotion practices, transparency and fairer work allocation.”

Both Fidelity and Man Group flagged internal storytelling as an additional tool. “Our social mobility stories series shattered myths and gave colleagues more confidence that they could progress in their careers here,” says Kaiser.

Turner explains that Man Group has organised mentoring circles, career clinics and group sessions for people to share their background, stories and experiences within the industry.

“Class is invisible, it’s hidden, and it’s hard to measure,” he says. “But the genie is out of the bottle and people want to talk about it now that a safe space has been created.”

Investor engagement

As investors ramp up efforts on social mobility internally, engaging with portfolio companies on the issue could be an obvious next step. Indeed, Progress Together is encouraging regulators to collect data on workforce socio-economic backgrounds, and for investors to add this to their ESG engagements.

However, Turner thinks it is too early for investors to be engaging with portfolio companies on the issue – although he says it may start to happen in a few years.

“At Man Group, we’re really focusing on social mobility as part of our diversity agenda,” he says. “We want to do more to make it a recognised form of DE&I, not just within our firm but also in the industry. We may put in place some more specific training and options to help everyone have an equal opportunity to progress.”

Hulm adds that focusing on social mobility often goes hand in hand with supporting progress on other forms of diversity, including gender and race.

“Socio-economic background is often referred to as the golden thread. If companies get it right, it will help their gender and ethnicity initiatives because it will increase transparency around promotion and processes at work.”