“Sure, there’s not much of the Wolf of Wall Street behavior left in the industry,” begins a 25-year-old quant analyst in Boston. “You don’t hear about overt and blatant sexism anymore. That kind of behavior is no longer acceptable, right? People are generally respectful.”
Respectful, maybe. But fair? Certainly not. It’s the unconscious bias against female investors that is “far more insidious and destructive than the conscious form,” according to State Street research. Empirical evidence has already proven that women invest just as well—if not better—than men. But folklore and stereotypes nevertheless continue to build today’s financial system and culture.
And the result? CIO’s own research found that only 10% of senior money managers are women. State Street’s data revealed an even broader gender gap: Only 19% of asset-owning investment analysts, 7% of asset managers, and 34% of consultants are female.
“The effort to bring more diversity and gender equality to asset management is not really working,” says Suzanne Duncan, global head of research for State Street’s Center for Applied Research. “Twenty years ago, we had denial. About 10 years ago, we started seeing awareness of gender imbalance. And it’s only today that we’re beginning to see some appetite for change and action.”
Art by Josh CochranHowever, this ‘action’ may not be enough.
Katherine Chan—partner at Anandar Capital Management, a hedge fund spin-off
from Magnetar Capital—says the problem isn’t lack of visibility for female
managers. The problem is that they barely exist. And to make matters worse,
neither do the research and help required to guide young women up the ladder to
the elite senior echelon.
“I don’t think the traditional mentorship and sponsorship programs are truly successful,” Chan continues. “Two women, with little chemistry together, going to lunch every four months or so can only do so much. Unless you’re lucky enough to find a real sponsor who not only knows your skills, your background, and your goals, but also advocates on your behalf, it’s safe to bet you’re on your own.”
Chan, however, is working towards a possible solution. For the last four and a half years, the hedge fund executive has led an initiative with 100 Women in Hedge Funds—dubbed Next Generation—focusing on women in alternatives with less than 10 years of experience. The goal, she says, is to create a real community—not just for networking, but also to gather industry information and develop skills. “It’s all about the collective mind,” Chan says. “We feel it’s more beneficial for women to connect and share with other women on similar career paths.”
Next Generation is, unfortunately, an anomaly. According to the quant analyst in Boston, little came from speaking to her manager about her career growth. A luncheon for female employees at the firm only happened once, never to be repeated. Another 26-year-old portfolio analyst at the same quant shop confesses it is difficult to bond with senior male investment staff on a deeper level—enough to have conversations about her career path. “I find it easier to form personal relationships with women in non-investment roles, but they’re not necessarily the people I need to be networking with to further my career,” she says.
There’s a translation flaw between the older men who built the financial industry and the younger women who exist in it.So where is the disconnect? What is inhibiting younger female analysts from not only interacting with their superiors, but also finding the opportunities to become portfolio managers and managing directors? The bottom line, Chan says, is that women essentially speak a different language than men. There’s a translation flaw between the older men who built the financial industry and the younger women who exist in it.
“Take ‘teamwork’, for example,” she continues. “To most women, teamwork means helping out for the greater good: fill in for someone who is sick, or buy a birthday cake for the office party. Men, however, tend to believe that doing your best at your own job adds the most value to the team. They wouldn’t take on someone else’s work, like a fantastic hitter doesn’t play shortstop.”
This language barrier extends to the presentation of risk, Chan adds. Simply put, women have trouble presenting risk in a way that is palatable for men. “Being risk-averse is different from managing risk,” she says. “What we do as money managers is put dollars to work while mitigating risk to see the best returns. Showing a fear of risk can mean poor money management skills—it’s not ideal.”
State Street’s Duncan says the gender disparity in today’s asset management industry is no longer a “leaky pipeline” problem. That theory is, in fact, an excuse. Instead of the discrimination and lack of interest that existed decades ago, she says the problem today is in unconscious biases that falsely claim women are inferior investors. The industry needs a disruption of these stereotypes—and the conviction to change the culture.