The parent trap: ‘Motherhood penalty’ costing women investment careers

This article is part of a week of coverage by Responsible Investor to mark International Women’s Day 2023.

Between the gender pay gap, the motherhood penalty and the cost-of-childcare crisis, women are paying a much higher price than men for choosing to have children.

In RI’s Women in Finance survey, respondents flagged family factors and work/life balance as the biggest barriers to gender parity in finance.

Investment firms have a gender diversity problem at the top, and it is not hard to see at what point things start to go wrong. One in four women working in financial services say that maternity leave impedes their career progression, according to analysis from 2022.

Amundi CEO Valérie Baudson rejects the idea that a “demanding career in finance is incompatible with a busy home life”, adding that she advises women breaking into the industry to be bold with their career decisions.

Yet underemployment, slower career progression post-childbirth, and unequal caregiving responsibilities were all flagged as contributors to the “motherhood penalty” in PwC’s gender pay gap report this year.

The feedback from women in investment is that too often the culture does not support or promote them, but instead makes assumptions based on outdated and sexist gender norms.

Old stereotypes die hard

A recurring theme is the unconscious biases women face regarding plans to have children, take extended maternity leave or no longer focus on their careers once they have children.

“It comes down to not making assumptions about what women want. Just because someone is going on maternity leave, it doesn’t necessarily mean that they want an extended leave of absence,” says Emma Penny, investment management client director at sustainable finance recruitment firm Acre.

“Support systems need to be implemented to allow women to return to work – when and if they choose to do so.”

Return-to-work programmes, “keeping in touch” days, and conversations around flexible working are lacking in the industry, leaving it up to women to be proactive, according to Millisen Malum, who runs a consultancy firm advising companies on how best to support women through maternity.

Naomi Adegoke, vice-president of financial institutions credit coverage at Société Générale CIB, says that although she wanted to continue working after having children, her employer’s lack of understanding forced her to leave.

“I expected them to be more flexible once I had my child, but that wasn’t the case. It should just be part of the system.”

Veteran investor and founder of The 30% Club Helena Morrissey encourages women to be transparent about their career ambitions with their employer when they go on maternity leave.

“Just because you may want to work part-time or flexibly, it doesn’t mean that you can’t still do impactful work and progress your career,” she says. “The misconception is often that this isn’t possible.”

Several senior women in the industry have shown that it is possible to be successful while having a family, although not without challenges along the way.

Morrissey ran Newton Investment Management for 15 years while raising a large family. She recalls facing difficulties when her employer overlooked her when she first became a mother.

“I was the only woman in a team of 16 in my first fund management role and I was overtly passed over for promotion and told it was because there was some doubt over my commitment when I had my first child,” she says.

“Even though this happened a long time ago, I still hear women at other firms say this today, or express worry about being replaced.”

Amélie Derambure, senior multi-asset portfolio manager at Amundi, says the lack of women in her team and management was challenging during her pregnancy.

“There were certain situations where it was difficult to be the only woman on the team. When I was pregnant with my first child, I found it hard to participate in committees and meetings, and I also found it hard to travel since I wasn’t feeling well.”

Nicole Wiley, who worked at Morgan Stanley Alternative Investment Partners for nearly two decades, says it is all about finding a compromise – but to do so, companies need to meet women halfway and be proactive.

“I had a very difficult pregnancy, but I had a male manager who was very supportive. We adapted my schedule to make it work around my work and health – but we both had to be very forthcoming for this to happen.”

She adds that, despite working flexible hours while her child was young, her career continued to progress because her employer was adaptive to this arrangement – proving that, with support, it is possible.

“It was about knowing what my clients needed so that the work was managed well,” she says. “I was promoted to executive director off the back of that role, and I continued to get increasingly complex and senior roles in finance.”

Parental leave

Inevitably, women need to take a leave of absence when they give birth. While there is no getting past this, the way the industry approaches it could be improved.

In RI’s survey, support with maternity and childcare ranked joint first for what firms could do to make the investment industry more inclusive for women.

Investors currently leading on this include abrdn, which offers 40 weeks paid parental leave, and Aviva Investors and M&G, which both offer six months.

Morrissey notes, however, that it is still unusual for investors to offer equal paid parental leave. “The UK government put in place shared parental leave, but it’s often disadvantageous for couples financially, so women still tend take the whole maternity leave,” she says.

Some countries, including the US, still only offer unpaid parental leave. Others have seen encouraging signs of progress on the regulatory side.

“When I started working, there was zero paternity leave for men, now it’s 28 days in France,” says Derambure. “This makes things more equal and changes the mentality of the team.”

Unsurprisingly, the Scandinavian countries are ahead of the curve. Norway, for example, has a three-part system, with six weeks medical leave for the birth, 15 weeks for maternity, 15 weeks for paternity and an additional 15 weeks shared.

“Fathers are taking the three months leave, but they could take a bigger share of the 15 additional weeks,” says Alexandra Morris, CIO of Norwegian fund manager Skagen Fonden. “Men need to take care of their children and be very open about having to go home to set an example for male colleagues.”

As she notes, this system sets a precedent for childcare responsibilities later in the child’s life, meaning that women are less likely to shoulder the majority of the work.

“When the child is sick, both parents should take 50 percent of the time off to look after them,” she says. “We need to ingrain this attitude into society.”

For female fund managers, losing their track record when taking a leave of absence is often perceived as a problem. But Morrissey says this should not be a hurdle, given that manager performance is “completely quantifiable”.

“The role is typically team-based, so you shouldn’t lose your track record because of time out,” she says. “It shouldn’t matter if people judge you for going to collect your child – if the numbers stack up, it’s not a problem.”

Wiley, who now works as chief development officer and COO at non-profit 100 Women in Finance, echoes this idea. “This is a results-orientated business, so one of the key things for progress is setting the right tone at the top and having leaders who reflect this,” she says.

“It was very important for me to mentor men because it helped normalise the idea that a female leader could also have a young family and set that precedent. I think I gained a lot of respect because I didn’t look like the leaders of years past.”

Cost-of-childcare crisis

Another major challenge for working mothers in the UK is the cost of childcare. While this is not specific to the financial sector, analysis from the Trades Union Congress shows that the gender pay gap in finance and insurance is the largest in the UK, at 31 percent.

PwC’s report also cited the choice to have children as the biggest driver of the gender pay gap more broadly.

In the UK, childcare costs currently average £14,000, making it the second most expensive country in the world for childcare.

This is a big factor preventing women from returning to work, as the cost is often viewed as effectively cancelling out a parent’s salary. But Morris says that, since raising children is a joint responsibility, people should not view it this way.

“I’ve openly said that you must be ready to take all your pay and put it towards childcare,” she says. “I was willing to do that. The focus shouldn’t solely be on the woman’s job and salary.”

What is more, while the pandemic introduced a new way of working and greater flexibility for parents, it also acted as a double-edged sword, with women often shouldering the larger share of childcare and education responsibilities.

The Diversity Project – which is chaired by Morrissey – has adopted this as one of its themes for 2023, issuing a warning that the industry risks regressing on DE&I because of its attitude to flexible working.

“If women are opting to stay at home more – because of anything between childcare responsibilities or not enjoying a firm’s culture – there will be a career impact,” she says.

She adds that companies need to offer clear guidance on working from home to ensure that underrepresented groups stay present and visible in the office.