The gender pay gap in the UK investment management industry deteriorated from 2017 to 2018 in what was the second worst performance out of 22 business sectors analysed, according to a new study.

The average mean pay gap between the sexes in the industry widened by 0.8% over the first two years of mandatory reporting — second only to the 1% rise in the education sector, according to a report by consultancy PwC and the Diversity Project.

The Diversity Project was formed three years ago to promote an inclusive culture in the investment profession.

The report, which is based on analysis of gender pay disclosures and interviews with people in the investment management sector, shows that of the five sectors with the biggest gender pay gaps in 2018 – banking, investment management, insurance, real estate and travel — only investment management made no overall improvement.

The average mean pay gap for investment management is now 31%, second only to the banking industry’s shortfall of 32%, the report showed.

The main reason for the gap in the investment management industry was the disproportionate number of men in the highest paid roles, the report’s authors said, adding that this reason was common across all financial services sectors.

But investment management was shown to have the lowest percentage of high-paid women, at just 23.2% of the upper quartile, compared to banking at 24.9% and insurance at 31.5%.

Dame Helena Morrissey, chair of the Diversity Project and head of personal investing at Legal & General Investment Management, said: “In recent years there’s been a step change in the level of commitment at the top and a new sense of urgency around the issue.”

But she cited two outstanding problems.

Firstly, she said, young women were discouraged from even considering a career in fund management when they saw the sector’s wide gender pay gaps and found out that just 4% of money managed in the UK was run exclusively by women.

“Secondly, we still have a problem convincing many mainstream fund managers that diversity is a business issue, rather than political correctness,” she said.

Jon Terry, global financial services HR consulting leader at PwC, said 54% of investment managers had reported a year-on-year reduction in their gender pay gap, but that for most of these firms that improvement had been less than 5%.

“The potential for existing staff and potential recruits to be deterred by the slow and even no progress within many parts of the industry is a major stumbling block,” he said.