Women working in finance are still often overlooked for promotions to management levels and appointments as board directors. Why is the upper echelon of finance still a man's world? A number of studies, and my own decades of experience, suggest that women have a lot to offer the finance industry — differences in perspectives and life experiences that would enrich any firm where they are allowed to rise to the top.
Women can be just as analytical and strategic as men, but we are typically more risk-averse. Instead of looking strictly at the bottom line, we also tend to view things on a human level. We're more tuned in to social and cultural dynamics as economic factors, and are more sensitive to the impact of banking practices on individuals and families — probably something to do with our maternal instincts. To be sure, one shouldn't stereotype and I've known many women who take too many risks, and men who are prudent risk managers. But overall, women tend to be more careful and compassionate — important traits in building long-term sustainable services and customer relationships.
Yet hiring women is still viewed by many male financial leaders as a matter of social obligation, rather than smart business practice, notwithstanding a growing body of research showing that diversity is good for profitability. For instance, a recent report by Morgan Stanley concluded that financial companies with more women in their ranks had superior shareholder returns and lower stock volatility.
In the past, a common excuse for the lack of women being promoted to senior positions was that there simply weren't enough women in finance to promote. When I first entered the industry in the late 1980s working for the New York Stock Exchange, firms could perhaps legitimately argue that it was hard finding women trained in finance. But that is most certainly not the case today. Indeed, 59% of all finance graduates are women, and women now make up 40% of students at top MBA programs. At Washington College, 66% of our finance students are women, including 31% in our Brown Advisory Student-Managed Investment Fund. For financial institutions that are serious about adding more women to their teams, there should be no problem in finding a plethora of qualified candidates.
Women can and should help each other as well. Washington College has graduated a number of women pioneers in finance who are now helping younger students enter the field. For instance, there is Rebecca Corbin Loree, a 2000 graduate who became the youngest vice president of Thomson Reuters and currently manages her own investor relations advisory firm. She mentors and sponsors an internship for women students at Washington, including Audrey Utchen, a star analyst for our student-managed fund. Given the fact that only 10% of all U.S. fund managers are women, running only about 2% of industry assets, asset management firms should be scrambling to hire talented young women like Audrey.
Yet even when women are hired, progress in promoting them has been glacial. A recent report by Oliver Wyman found that at the beginning of 2016, women globally comprised only 20% of financial firms' board members, and only 16% of executive committee members, up from 18% and 14%, respectively, in 2013. At that rate of growth, women on executive committees wouldn't reach 30% for another 30 years.
It's time that financial institutions in America recognize the value that women can bring to the executive suite and boardroom. So to the CEOs who may be reading this column, I can only say:
"Look around you guys (and you are almost exclusively guys). Yours would be a better firm if there were more female faces around your conference table. With greater gender balance, drawing from the best that both men and women have to offer, the finance industry will become a safer, more stable, and compassionate industry. That's good for the country and good for the long-term health and profitability of your business."
Editor's note: This post is part of an ongoing series looking at gender and diversity issues in banking and finance. For more on this subject, see the previous post in the series, from SEC Chair Mary Jo White, here and visit American Banker's Women in Banking page.
Sheila Bair, the former chair of the Federal Deposit Insurance Corp., is now president of Washington College in Chestertown, Md. Banks interested in employing Washington College's many outstanding female (and male) finance students can contact her directly at email@example.com.