Room at the top: Why are there so few women in leading financial roles?

Gender shouldn’t be an issue if you get the right people for the job

The pin-stripe suits, computer screens and sleek offices of financial services may have little in common with high-vis vests and cranes, but just like mining and construction, many jobs in the financial sector remain remarkably male-dominated.

Financial professionals work in an arena that wields significant power internationally and offers big pay packets, with hefty bonuses when decisions go the right way.

But the mantra of diversification seems to apply to investment decisions and not to the people employed to make them, as a 2016 global report from the Chartered Financial Analyst (CFA) Institute – ‘Gender Diversity in Investment Management’ – points out.

The report used research by Renée Adams, a professor of finance at UNSW Business School, along with professors Brad Barber, from UC Davis, and Terrance Odean, from UC Berkeley, which looked at survey results from about 5000 CFA members and compared it with additional data sets to identify some of the factors that contribute to the huge gender gap.

Women make up far fewer than one-half of the investment profession in every country and less than the percentage of all women in the workforce in most countries, with just 18% women out of 135,000 CFA members in 151 countries.

Only 10% of key leadership positions of CEO, chief investment officer, and chief financial officer in the sector are held by women.

They were more likely to be employed as performance analysts, compliance analysts/officers, and relationship manager/account managers, but even in these occupations, women make up fewer than one in three workers.

‘Traditional duties’

According to the research, female CFA members are less tradition and conformity oriented and more achievement oriented than both male CFA members and women in the general population.

This suggests that gender-specific barriers discourage women from entering the profession and one possible factor is the long hours that are demanded and rewarded in many of these jobs.

“It turns out to be a profession where there are long hours and it’s not clear why that is necessary,” says Adams.

‘I don’t understand why we have to have 100-hour weeks or why finance is structured that way’

– RENÉE ADAMS

“Women are more likely to work less for less pay in the sector, and one reason is combining work and family. Men are much more likely to have a non-working spouse. So that’s a challenge that is about the structure of the job.”

The average age of men and women CFA members is about 42 years old, and both men and women are well educated. However, family circumstances vary with male CFA members more likely to be married (79%) and have children in the home (53%) than their female counterparts (72% and 44%, respectively).

Despite having stronger values around achievement, when faced with a linear pay structure, the research found, women CFAs will be more likely than men to express a desire to recapture time from work and are more constrained by these “traditional duties”.

Traditional values tend to affect a woman’s, but not a man’s, desire to recapture time from work; and it was particularly true for older women who have a stronger affinity for norms which reinforce women as primary carers and home managers.

Women’s desire to have flexibility could be interpreted as societal pressure or logistics, Adams says, though more information would be needed to establish this.

“Whether they are forced to stay home, or not, it suggests that they are still facing norms.”

Competitiveness and achievement

The other area of research focus was around the values of CFA members.

“You have to be a certain type in the profession,” notes Adams. “People in finance tend to have very specific values which differ from other people in professions. They are very achievement oriented and if on average women are less achievement oriented then we don’t fit the type in the profession.”

Findings from other research yet to be released, shows that finance professionals are much more likely to say competitiveness is important than the general population, says Adams.

“They also do think people should stand on their own feet and markets are efficient. It’s not surprising,” she adds.

‘It’s not that women can’t do maths, because it varies from country to country. In China, they don’t seem to understand what a maths gap is’

– RENÉE ADAMS

There is a gender gap in STEM areas (science, technology, engineering and maths, which includes many finance roles) and one of the possible causes is maths ability.

Adams points out that finance is very maths intensive, so where there is a tendency for people to think women can’t do maths, there are fewer women in finance.

“It’s not that women can’t do maths, because it varies from country to country. In China, for example, they don’t seem to understand what a maths gap is,” she says.

“Countries with a greater gender pay gap in maths scores have few CFA women and that also relates to gender stereotypes.”

Stereotypes play a role in the CFA gender gap at many levels, with another possible barrier due to assumptions about women’s appetite for risk.

Most of the comparisons between the CFA population and the general populace show differences in risk appetite between men and women, Adams says, though female CFAs are much more risk loving than the general population. Yet the idea all women are risk averse is still amazingly strong.

These barriers contribute to very low levels of senior CFA women which can be a deterrent to younger women, too.

“Whether your parents worked in STEM makes a big difference,” Adams says. “A woman is more likely to be a CFA if her mother worked in the area – it’s important to have role models.”

100-hour weeks

Among the CFA report’s recommendations are: pursuing university outreach to let women know about investing as a career, though building maths and technical skills must begin even earlier; making potential entrants to the field aware of the present flexibility options; and educating firms on the importance of work structure and flexibility in attracting a gender diverse workforce.

But Adams says there also needs to be more attention to areas such as job design which tend to dictate how many hours are required in a role.

“I don’t understand why we have to have 100-hour weeks or why finance is structured that way. There are many professions where you have long hours. If you are an undergraduate, you often have no idea – when I was starting out I didn’t know how many hours I would be working. I think the choices occur earlier; the barriers start earlier,” she notes.

“While 100 hours could be the reason why women exit, it’s not why they don’t enter.”

And automatically trying to introduce flexibility without considering the broader dynamics of the finance workplace may not help.

“I’m not sure all this flex time does women a favour. I have another paper, where I argue that if women want to advance they have to work full time. If you want them to be in leadership, then flex doesn’t help them,” Adams says. “The way jobs are structured, you can’t do too much with flex time.”

Bridging the maths gap would help boost numbers at all levels.

“I’ve worked on another paper looking at the maths gap and women sitting on boards. Where there is a bigger gender maths gap, you have fewer women on boards in the finance sector.

“Board diversity in the STEM sector is much lower than in other firms. People haven’t looked at this before: it suggests that the barriers people talk about for women in STEM has an impact on leadership.”

The research makes clear that women who pursue careers in finance must cope with gender stereotypes that men simply do not face.

But if you get the right people for the job, says Adams, then gender shouldn’t matter.