Women in Finance

You have to figure out what you’re good at and what you like, and chase that as hard as you can regardless of who else is in the field. (Suzann Cabling)

There’s a long history of discrimination against women, but you wouldn’t realize it by speaking to Mary Beth Kreissler, Suzann Cabling, and Marguerite Moyet. These remarkable finance executives gently acknowledged historical injustices, but they stood firm in their belief that by working hard and refusing to play the victim, they had risen above one of the most entrenched prejudices in the United States: sexism. While these exceptional women considered themselves lucky for not being held back by their gender, a look at U.S. history and the current demographics of finance shows how far we are from achieving parity.

Ms. Kreissler, for example, pointed out that before the 1978 Pregnancy Discrimination Act (PDA), women could be fired simply for being pregnant. She added that prior to the 1974 Equal Credit Opportunity Act (ECOA), women typically needed the permission of their husbands or fathers to get credit cards. Echoes of these laws and many others still affect women’s professional aspirations. For example, the PDA reminds us that U.S. corporate culture has never been family-friendly. Even today, the U.S. is one of three countries in the world without paid maternity leave, joined by Papua New Guinea and Lesotho. Also, the ECOA severely restricted women’s ability to control their own finances, let alone to pursue careers in financial leadership. The legacy of the concentration of wealth and privileges in the hands of “old boys’ clubs” is reflected in the current demographics of finance.

Here on the west coast, I think there are more women at my same level, but we’re a national bank. Throughout the country, I think there are only three women out of 35 people in the role. (Marguerite Moyet)

All three interviewees acknowledged that they worked with predominantly men, which is not surprising given the data about women in finance. For example, Morningstar (June 2015) reported that only 10 percent of all U.S. fund managers were women, and men exclusively run 74 percent of the industry’s assets. The report pointed out a “leaky pipeline” issue, where women earn only 37 percent of MBAs, compared to 60 percent of all bachelor’s and master’s degrees. Notably, Ms. Kreissler, Ms. Cabling, and Ms. Moyet all hold MBAs.

Women’s underrepresentation in finance is especially acute in leadership positions. Ms. Kreissler pointed out, “I don’t think I’ve ever worked for a female CFO my entire career. My past supervisors were never female, whether they were my accounting manager, my director of finance, my VP, my CFO—they were all men.” This observation is corroborated by the data. Catalyst (Sept. 2019 update), a nonprofit organization seeking to make workplaces more gender-inclusive, found that among S&P 500 companies, women made up only 5.4 percent of CEOs and 26.5 percent of executives and senior managers. Similarly, Korn Ferry (Aug. 2016) analyzed the top 1,000 U.S. companies by revenue and found that only 12 percent of the CFOs were women. Overall, women occupied less than one-quarter of the most prominent positions in the C-Suite (e.g., CEO, CFO, CIO) across these companies.

Even more disconcerting is the glaring pay gap in financial occupations. Drawing from data from the Bureau of Labor Statistics (BLS), the Institute For Women’s Policy Research (IWPR April 2017) found that the profession with the largest gender wage gap was ‘personal financial advisor,’ where women earned only 55.6 percent of the median weekly earnings of men in the same position. In other words, the gender wage gap in that occupation is a stunning 44.4 percent. The IWPR added that in general, the top-paying occupations had the largest gender gaps; also, fields dominated by men (e.g., engineering, finance) tended to pay more than fields dominated by women at similar skill levels (e.g., education). The BLS (March 2017) reported the following glaring wage gaps in finance and sales:

• Insurance sales agents: 58 percent (women’s earnings relative to men’s, 2016)
• Real estate brokers and sales agents: 64 percent
• Securities, commodities, and financial services sales agents: 65 percent
• Marketing and sales managers: 65 percent
• Sales representatives (services): 69 percent
• Financial services: 69 percent

According to another account of the gender pay gap in finance, a Glassdoor study (March 2017) found that men in finance made 6.4 percent more than women, an “adjusted wage gap” holding constant experience, education, job title, and other factors.

Perhaps even more alarming than the pay disparities is a March 2017 paper from business professors at Stanford and the Universities of Chicago and Minnesota; titled When Harry Fired Sally: The Double Standard in Punishing Misconduct, this research showed that while male financial advisors were three times as likely to be involved in professional misconduct; are twice as likely to be repeat offenders; and commit misdeeds which cost 20 percent more than women’s, women were more severely punished. Specifically, women were 20 percent more likely to lose their jobs following following misconduct, and 30 percent less likely to find new jobs compared to their male colleagues. The authors euphemistically stated that these differences were due to “taste-based discrimination.” Given that men make up three-quarters of the profession and it has the highest gender wage gap of any U.S. job, it’s fair to call this blatant sexism.

I keep my head down; I don’t complain much; I don’t make excuses; and I don’t play the victim…I just work hard. (Mary Beth Kreissler)

Despite the grim realities of women’s underrepresentation, low pay, and tendency to be punished more than men (at least in financial advising), Mary Beth Kreissler, Suzann Cabling, and Marguerite Moyet were undaunted in their careers. Poised and confident, trusted and valued for their expertise, these three women have succeeded in joining the upper echelons of financial management. There were several themes that emerged in conversations with these exceptional professionals.

Despite the wealth of evidence that women are still underpaid and underrepresented in finance—particularly at the upper rungs of companies—it’s important to note that this discrepancy isn’t predetermined; in fact, the demographics of the industry vary widely across the globe.

Bloomberg Reports (March 2017) found that Thailand has a greater share of women in top finance positions than the U.S., many of whom entered the sector by first becoming accountants, similar to the experience of all three interviewees. Thirty-one percent of board and executive committee members in Thailand’s financial industry are women, compared to only 20 percent in the U.S. Overall, women represent 57 percent of Thailand’s insurance and finance workforce.

Several prominent research organizations and think tanks have identified some major impediments to increasing women’s representation in finance. The most widely cited problems include:

• Occupation and industry sorting (i.e., the conscious and unconscious drivers of men and women into different college majors and later, jobs)
• Inadequate family leave policies for mothers and fathers
• Lack of transparency in hiring, promotions, and salary negotiations
• Persistence of the exclusive “old boys club” culture
• Stereotypes about men’s and women’s roles, capabilities, and characteristics
• Relative shortage of powerful role models and mentors for women

(Sources: Bloomberg’s Women in Finance: Where in the World is Gender Equality Gaining Ground? [2017], Oliver Wyman’s Women in Financial Services [2016])

The cultural biases are especially intractable in financial organizations with few female leaders; without women in power, some companies may not feel compelled to implement more inclusive, progressive policies. Furthermore, finance and business in general value traditionally masculine traits such as confidence, dominance, and ambition—qualities for which women can be punished for displaying; also referred to as the “backlash effect for disconfirming stereotypes,” women are sometimes assumed to be too pushy or aggressive when asserting themselves or simply behaving competently. While these effects seem to become diluted as more women enter financial leadership positions, there are still many initiatives and structural measures which can boost gender inclusivity.

Fortunately, governments around the world and various organizations are leading the way for women to take on leadership positions in finance. In 2016, the UK’s Treasury introduced the Women in Finance Charter, which “commits firms to supporting the progression of women into senior roles in the financial services sector by focusing on the executive pipeline and the mid-tier level,” helping various firms diversify their management and set their own targets. Since it was introduced a year ago, 122 firms employing 500,000 people—nearly 50 percent of the financial services industry—have signed on to the charter. Seventy-seven of the companies have committed to having at least 30 percent women in senior positions by 2021; another 23 firms committed to a 50/50 split within the same time period. Most importantly, this charter reflects the UK’s commitment to balance its workforce, projecting benefits not only for women, but also for investors and businesses.

The CFA Institute (Sept. 2016), a worldwide association for investment professionals, seeks to address the gender disparity in investments by providing young women with exposure to the industry; educating investors on the positive impact of gender diversity; and seeking to remedy the work-life balance issue that mainly affects women, especially working mothers. Another group, Girls Who Invest, seeks to make “30 percent of the world’s investable capital managed by women by 2030.” In the benchmark year (2014), less than 10 percent was managed by women.

Finally, 100 Women in Finance (100WF) is a nonprofit comprising more than 15,000 “alternative investors” and finance professionals. With 21 chapters, 100WF has offered over 600 educational events globally and raised over $40 million for women- and family-focused philanthropy.

In sum, while women are still underrepresented and underpaid in finance globally, individuals and organizations are evolving. With women such as Mary Beth Kreissler, Suzann Cabling, and Marguerite Moyet at the helm of leadership in finance, the old tired assumptions are dying out; ultimately, it’s up to governments and companies whether they want to help shape this new, more equitable era. And there’s convincing evidence that it’s economically advantageous to do so. By illustration, PwC (2017) estimated that closing the gender pay gap would add $810 billion in taxable income to the U.S. economy, a 23 percent increase; additionally, if the U.S. were to boost its rates of female employment to match that of Sweden’s (74 percent), it would add $1.8 trillion to the economy, boosting GDP 10 percent. Is the U.S. ready to unlock women’s potential?