Investment banking jobs are less likely to be filled by bright youngsters from less advantaged backgrounds and more likely to be given to those who went to elite universities and fit in with the culture, a report says. It appears that even wearing the wrong shoes can be a disadvantage.
While some investment banks are improving social mobility in front office roles, current programmes remain small-scale, says new research by the Social Mobility Commission.
The watchdog says people from more privileged backgrounds are over-represented in front office roles in investment banking, compared to the population as a whole.
The report says too many investment banks judge job applicants more on whether they fit with the traditional image of an investment banker than on their skills and qualifications. Wearing brown shoes with a business suit, for example, is deemed unacceptable by some senior investment bankers.
Chairman Alan Milburn says: “Bright working-class kids are being systematically locked out of top jobs in investment banking because they may not attend a small handful of elite universities or understand arcane culture rules.”
The research, which is based on in-depth interviews, finds many investment banks fill client-facing jobs with candidates who fit the traditional image and “display polish,” placing as much importance on how they dress, behave, and speak, as on their skills and qualifications.
“It is shocking, for example,” says Milburn, “that some investment bank managers still judge candidates on whether they wear brown shoes with a suit, rather on than their skills and potential.”
Another potential barrier the report mentions is not having the right informal network that could help you get a job in investment banking via the work experience route – a requirement for youngsters aspiring to senior investment banking jobs.
The report’s main points include:
– most investment banks favour middle- and higher-income job applicants who attended a small number of the UK’s elite universities
– job applicants may be more likely to back out if they feel they would not fit in, or if the prospective employer does not appear to welcome candidates from diverse social backgrounds
– in the UK, 82 percent of youngsters are educated in non-selective state schools, 14 percent in selective state schools, and 7 percent in fee-paying schools
– In comparison, a 2014 report from the Sutton Trust showed that 34 percent of new investment bankers had gone to a fee-paying school
‘More needs to be done’
Dr. Louise Ashley from Royal Holloway University of London, who led the research on investment banking, says it is extremely competitive, for all candidates, trying to get a front-office job in investment banking. However, they found that no matter how talented they were, applicants from less privileged backgrounds were less likely to succeed.
“Banks are making good progress addressing these issues through outreach and work experience,” she notes, “but more needs to be done to understand the barriers to entry. This needs to be accompanied by changes to the way that candidates are recruited and selected.”
The Social Mobility Commission report concludes that less advantaged applicants also faced barriers in applying for jobs in the life sciences sector, where there is a tendency to take on graduates from particularly well-known or prestigious courses or institutions.
Also, in the life sciences sectors, non-privileged students face greater barriers in trying to gain practical skills, for instance via placements and internships. Yet, as in investment banking, the sector often focuses on candidates who have acquired practical experience through these routes, in addition to their academic qualifications.
The researchers suggest that employers in both the life sciences and investment banking sectors are not doing enough to monitor the backgrounds of new and existing employees and so lack the data to understand and tackle the problem.
Joanne Moore of the ARC Network, who led the research on life sciences, urges both sectors to do more “to ensure fair and equal access to jobs. This is important, not just for our economy and society, but for individuals.”