What It Takes to Be a Leader in Financial Services
Financial services is a sector that values leadership. A survey that asked UK workers whether strong leadership was a reason to stay in their jobs saw more positive responses in financial services than in other industries, reports Ruth Jacobs, managing director of Randstad Business Solutions.
Though leaders in the sector may be valued, they are also challenged – with skills gaps, customer demands, regulation, the need for digital transformation and artificial intelligence, the mandate for diversity, and of course, the ongoing recovery from the COVID-19 pandemic.
The arrival of the pandemic found the financial-services industry underprepared in some respects yet well-positioned to “to support the nation’s economic recovery through lending and other means,” says Tracee Jones of PWC. Just 10 percent of financial services companies had the technology infrastructure to support remote working as the pandemic began, reports a study by ServiceNow/ESI ThoughtLab. Yet, the industry pivoted rapidly to the where “financial-services companies are now considered leaders in business agility,” the survey says. This pivot was not without leadership obstacles, however, with the study noting, “more than half of executives [surveyed] cited a lack of leadership in developing agility plans.”
Still, Tom Snoxell and Adam Stringer credit the financial-services sector with “protect workforces, and leverage resilience arrangements and capital reserves while ensuring customers can access the products, services and the advice they need.” Jones predicts a climate of “increased expectations for financial services leaders to add value beyond strong shareholder returns.” (Jones interestingly observes the public’s tendency to compare the pandemic with the 2008 financial crisis, though they are very different, with COVID-19 affecting “virtually all aspects of the economy and put nearly all stakeholders under stress,” while the 2008 crisis primarily affected financial markets.)
Jones notes that the pandemic has “magnified inequalities across income, race and gender.” Perhaps that’s why leadership diversity, especially regarding women, has gained significant attention in the financial-services field, with at least three major reports on the subject published in 2020 alone. One such report, from Catalyst, noted that women comprise nearly or just over half of financial-services employees in many countries, but the higher up the leadership ladder, the fewer women are found. One piece of good news is the report’s finding that “compared to other industries, the financial services industry had the highest number of women CFOs (18) in 2019 in the Fortune 500 and S&P combined.” The bad news is that “current growth projections of 31 percent by 2030 are still far from parity,” along with the persistent pay gap for women across all US financial occupations. A report from Deloitte, Diversifying the path to CEO in financial services, notes that “women tend to have far higher representation in leadership roles that, historically, have not led to promotion to CEO.”
A bachelor’s degree in finance, economics, or a related field is recommended for aspiring financial-services leaders. About 40 percent also have master’s degrees. Roles that are springboards to higher leadership include finance analyst, senior finance analyst, and finance manager.
Financial services leaders need to adapt and develop competencies to confront what Marc Dellaert and Kathryn Kernick described, pre-pandemic, as “a period of unprecedented disruption” influenced by competition, regulation, digital transformation, cyber-security demands, and more. Leadership characteristics recommended for aspiring financial services leaders include the following:
Leadership Styles in the Financial Services Field
Research on leadership styles in this field is scant. UK recruiting director Geoff Fawcett cites a paradigm shift in financial-services leadership. “The classic image of the ‘leader-hero,’ a visionary and charismatic individual capable of single-handedly turning round an entire organization,” he writes, “is being replaced by that of a more collaborative, flexible and open team-player.” Kristen Lampert, also involved in the talent-acquisition field, points to the pandemic’s influence on leadership in the field. Like many experts quoted in this leadership series, Lampert supports a mix of leadership styles, adapted to various situations as needed. She emphatically, however, does not support one style – the authoritarian command-and-control style. “Though historically seen as effective during routine emergencies,” Lampert writes, “the command-and-control leadership style is by far the most damaging to employee engagement and productivity in a COVID-19 world.” Both authors cite emotional intelligence as a growing influence in financial-services leadership.
These resources offer additional insight on leadership in financial services:
- Podcast episode: 2021 Financial Services Priorities: Fairness and Equality
- Diversifying the path to CEO in financial services
- Success Guide for Finance Leaders in Financial Services
- Women in Financial Services 2020
- Driving Performance in Financial Services: Critical Leadership Capabilities Your Organization Needs