Gender bias distorts performance assessment in financial services

Gender bias distorts the assessment of performance of women in the financial sector, a new analysis from LSE has concluded - after a behavioural experiment showed that participants rated a fictitious “Stephanie” as less competent than a male counterpart “Stephen,” despite identical performance.

The research, Advancing Women in Financial Services: Productivity and Merit, is the culmination of Women in Banking and Finance’s (WIBF) landmark four-year Accelerating Change Together (ACT) research programme, led by Dr Grace Lordan, founding director of The Inclusion Initiative at LSE. In its final reporting year ACT concludes that financial services must take steps to create a meritocracy, and in doing so we will see the advancement of women in the sector.

Dr Lordan said: “Right now women in financial services, on average, still do not have equal opportunities, visibility and voice. Yes, there are occasions when men are worse-off, and our methodology allows firms to identify these occasions. I would love the legacy of ACT to be that we see equal opportunities, visibility and voice for all colleagues in financial services that is determined solely by merit. I am certain if we aim for a meritocracy - given the research has demonstrated so many errors in allocation of opportunities, visibility and voice by gender - that women will end up better off. Over the four years of ACT research, we have provided frameworks and measurement tools to enable firms to achieve this goal.”

Anna Lane, CEO of Women in Banking & Finance, added: “The financial services sector sits at the heart of the UK economy. When it gets inclusion right, the productivity dividend flows far beyond our industry. Meritocracy isn’t just a moral principle, it’s the route to stronger, fairer growth.

“ACT has given us four years of evidence that equality of opportunity, visibility and voice drive better decisions and performance. The question now is whether we have the courage to redesign our systems to make that a reality.”

Rathbones, one of the UK’s leading wealth and asset management firms, were co-sponsors of the report’s launch event. Camilla Stowell, Rathbones’ CEO of Wealth, said, “We are deeply committed to fostering a positive and inclusive culture in which all employees thrive and women, in particular, have the support and encouragement to progress to leadership roles.”

The report also summarises evidence that shows a strong link between gender diversity and firm performance. The report cites new research, co-authored by Dr Lordan, which demonstrates that senior-level gender diversity raises innovation, once representation exceeds approximately 30% in growth sectors. This work advances on previous modelling and undermines critics that say the link between gender diversity and firm performance is spurious.

Among other findings, the report also summarises the evidence on how women are not regarded as equal to men, despite comparable performance. For ACT year 4, the report includes a randomised controlled study, which illustrates the negative bias towards “Stephanie” over “Stephen” for comparable performance by financial professionals. This bias was particularly pronounced among male evaluators.

Concluding the four-year programme, Dr Lordan and WIBF called on the financial services sector to tackle gender bias in four ways:

• Cultivate inclusive leadership by training managers to run effective, inclusive meetings, deliver high-quality feedback, and enable their teams to work autonomously.
• Cultivate inclusive leadership by training managers to run effective, inclusive meetings, deliver high-quality feedback, and enable their teams to work autonomously.
• Tackle the “groupthink” problem by implementing practices that ensure diverse perspectives, for example reducing instances of women being interrupted or “talked over.”
• Invest in networking and advocation by establishing initiatives that connect women with influential women.
• Build robust support for work-life balance through consistent, organisation-wide flexible work and leave policies, ensuring career breaks and caregiving responsibilities do not derail women’s careers.

Gaynor Gillespie, Chief People Officer at Rathbones, said: “These findings, while deeply concerning, will come as no surprise to many of us in the industry. We’ve all seen first-hand how bias – often subtle, but persistent – can shape perceptions of competence and limit women’s progression.

“What’s powerful about this research is that it not only confirms what we’ve long suspected but also shows that tackling these biases isn’t just the right thing to do, it’s a business imperative. Inclusive cultures don’t just level the playing field; they unlock innovation, resilience, and growth.”

Rathbones has been a signatory of the Women in Finance Charter since 2018 and has exceeded a target of 35% female representation in senior leadership by 2027, achieving 36.2% in September 2025. Ms Stowell and Jayne Rogers, Rathbone’s Chief Distribution Officer, were listed in the Financial News FN Top 100 Women 2025 ranking.