Greater diversity of thought results in better decision making, improved corporate governance, risk management, and reduces risk among homogeneous groups to consider issues only within a certain paradigm or ‘groupthink’ (Janis, 1982). With one in five financial planners women- not reflecting the rapidly changing customer base where women control $12 trillion of the $18.4 trillion in consumer discretionary spending- intentionally disrupting business processes that perpetuates gender inequity requires a disruptive bias interrupter approach.
The Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry this year turned it’s attention toward the Financial Planning industry of 25,000 financial planners. More than 2 million Australians pay a combined $4.6 billion a year for financial advice – with half that revenue going to bank-owned financial advice businesses. Leveraging different perspectives to understand clients diverse needs, as well as guarding against groupthink, is critical for the Australian Financial Planning Industry to redefine inclusive pathways in and through financial planning, in addition to greater accountability, transparency, and better standards and licensing of advisers.
Inclusion & Diversity [I&D] values all differences – not just a focus on gender diversity- note that gender diversity is the focus of this article.
Fundamental to bold pragmatic action requires understanding where bias occurs, measuring progress, and focus to disrupt it. An I & D audit assesses the current state of bias in structural, cultural, interpersonal and personal dimensions. An I&D audit identifies the values and norms in the organisation’s culture as well as uncovering bias and perceptions of bias held by both employees and managers such as the bias of men and leadership, and women and nurturing (despite the majority of neuroscientific studies finding minimal difference in how men & women think and behave). Most gender differences arise within social, cultural and personal environments (Fine, 2013). Gender inequity is insidious because it is embedded into the structure of organisations, such as hiring, where affinity bias occurs when we gravitate to people ‘just like us’ resulting in hiring managers recruiting the image of themselves (Reskin & McBrier, 2000; Tharenou, 1999). There is an over- reliance of personal networks in hiring financial planners; almost 30 percent of all hires are through personal networks impacting organisational cultures with the potential to perpetuate affinity bias, and groupthink (Johnson, et. al., 2016).
‘Diversity is not a form of political correctness, but an insurance policy against internally generated blindness that leaves institutions exposed and out of touch’ (Heffernan, 2011).
Once baseline data is collected and analysed, bias interrupters can be implemented to create change; and critically measure progress. Bias interrupters, or inclusion nudges, nudge individuals to more inclusive decision-making processes, generating better outcomes, and greater alignment with business objectives versus a focus on I&D awareness raising events events. Recent research by Leith Mitchell, published in the upcoming Australian Financial Planning Research Journal, provides six practical bias interrupters from organisations and government, including reviewing job descriptions for gendered language. A scan of seek.com.au using search terms ‘financial planner’ results in gendered wording such as ‘role for a hungry financial planner’ and ‘role for a hunter’ as examples of gendered language.
Call to Action
PwC identifies I&D as a litmus test for wider transparency and trust for financial institutions. In light of the current Financial Services Royal Commission, the imperative to make impactful structural, cultural, interpersonal and personal change in the Australian financial planning industry requiring a framework of bias interrupters to move the gender equity status quo is critical for the industry overhaul.