Women on Wall Street Face Steep Climb to the Top
By Cynthia Littleton
April 6, 2016
More than ever, Wall Street and Hollywood have much in common.
Both are dynamic business sectors where high-risk and high-reward ventures are intrinsic. Both are magnets for innovative thinkers, big dreamers and those who yearn for fame and fortune. And both share another characteristic as persistent as it is exasperating: a gender gap in senior management roles wider than Long Island Sound.
Seema Hingorani, a Wall Street veteran who last year founded the nonprofit organization Girls Who Invest, says the urgency of the situation was driven home during the four years she served as chief investment officer of New York City’s $160 billion pension fund. In that job, she fielded pitches from every money manager in the world.
“As CIO, I would sit across the table from the men who run these large investment firms, and when I went to their organizational charts in their presentations I was shocked. I’d say to them, ‘Where are all the women on your investment teams?’ ”
Just like in entertainment, there are anecdotal examples in the financial arena of women reaching new heights of leadership and entrepreneurial activity, notably among those who concentrate on investing in media and technology. In other words, Wall Street has its versions of Megan Ellison, Shonda Rhimes, Kathryn Bigelow, Dana Walden and Donna Langley. But the underlying industry statistics still paint a grim picture for the average female employee.
Among the most sobering: In financial services, it’s less than half as likely for a woman than a man to advance from a middle-level to senior-level position, according to U.S. Equal Employment Opportunity Commission data for 2013, the most recent numbers available. That’s a far lower relative probability ratio than in entertainment, technology, IT or even manufacturing.
Women make up more than half the workforce in the S&P 500’s financial services firms, but only 2% are CEOs. And while hedge funds have multiplied like rabbits during the past 25 years, women accounted for only 9.4% of the roughly 7,700 fund managers in the U.S. in 2015, according to Morningstar research.
The biggest barrier to advancement, according to interviews with 10 prominent women across the buy-and-sell side of the Street, is simply the nature of the work.
Success generally requires long hours, tons of travel, a 24/7 dedication to serving the needs of clients, and an inordinate amount of energy devoted to keeping up with the movements of global markets and analyzing what it all means. That adds up to an excruciating time commitment, which is hard on women who want children and a family life. But it’s also a huge part of the appeal.
“It’s a great combination, covering media and being on Wall Street,” says Jessica Reif Cohen, senior media and entertainment analyst for Bank of America Merrill Lynch, one of Wall Street’s most prominent voices in the showbiz sector. “It’s dynamic, and every day is different. You’re always learning. If you stand still, it’s over.”
Reif Cohen speaks for many of her colleagues when emphasizing that the travel demands are non-negotiable. When her children were younger, there were “heartbreaking” times when they’d grab her around the leg and beg her not to leave — a visceral example of the sacrifice she had to make.
“I wouldn’t put money with a money manager who didn’t kick the tires. It’s very important for us to visit companies and their competition,” Reif Cohen says. “It’s really important to understand the countries that are important to your companies. You have to visit China and Germany and India if you really want to understand what’s happening there.”
Alexia Quadrani, managing director and senior equity analyst for media at J.P. Morgan, maintains that investors’ urgency for well-considered interpretation is even more acute, given the upheaval across the media and entertainment business.
“We’re needed more than ever now,” Quadrani says of analysts in the media and technology sectors. “So many folks are questioning every assumption (about media) in determining if they should be investing long or short in the space.”
Karen Firestone, founder and CEO of Aureus Asset Management, oversees a fund of about $1.6 billion, mostly for individual clients. But she watches the markets as closely as she did during her years as a large-cap fund manager at Fidelity Investments.
“The pace of change is so fast it makes it difficult to value traditional assets; they seem to be depreciating in value,” Firestone says. “If you consider the way people are consuming entertainment, every year seems to be radically different than the year before.”
Media and entertainment shares have taken hits in recent months because they had been on a bull run in 2013 and 2014, she adds. Fund managers can’t be timid about making changes in the portfolio. Aureus’ holdings include a clutch of about 35 stocks at any given time. “I think Disney is a fantastic company,” Firestone says. “But I couldn’t make the case that it was undervalued today.”
Offering guidance on questions swirling around the market is more pressing at a time when prominent investors are becoming more vocal — and influential — with their criticism of media giants. For weeks, Gabelli Funds’ Mario Gabelli and others publicly called on Viacom to sell all or part of Paramount Pictures to help revive the value of the studio before CEO Philippe Dauman announced that Paramount would pursue a strategic minority investor.
“When there is a more uncertain future, you see activists come up and say, ‘Wait a second. You need to remember that you are accountable as a public company one way or another,’ ” says Quadrani. “Sometimes it’s a distraction that takes away management focus on running the business if it has to be focused on the short-term volatility of the stock. But some of it is warranted. In select cases, (investors) do need to remind the management team that it is accountable.”
A volatile market, as any Wall Streeter can attest, creates plenty of opportunity for the brave.
There are numerous examples of women who worked their way up through big blue-chip firms before departing for smaller, entrepreneurial ventures.
Deborah Mei joined Raine Group in 2009 after nearly 15 years with Morgan Stanley. Aureus’ Firestone left Fidelity, where she ran funds focused on entertainment and other sectors, after 22 years to launch her Boston-based shingle in 2005. Goldman Sachs and Paulson & Co. alum Samantha Greenberg, whose areas of focus have included cable operators and programmers, left Paulson in January, reportedly with plans to launch her own hedge fund. (Greenberg declined comment, as her venture is in its formative stage.)
Firestone was a key figure at a financial titan with 30,000 employees; she now heads a startup with about 13. She made the switch as the last of her four children was heading to college. Running her own firm keeps her in constant motion.
“There are not many women in my field,” says Firestone, who writes about management and anxiety issues for Harvard Business Review. She’s also the author of the upcoming book “Even the Odds: Sensible Risk-Taking in Business, Investing and Life” and is a frequent speaker at industry conferences and on CNBC and other outlets. She constantly offers advice to woman who aspire to prominence on Wall Street: “You have to find what’s going to be comfortable to you,” she explains. “Sometimes that means less work; sometimes that means trying to hire a really good nanny and having your husband learn to cook. These are not simple processes.”
Raine’s Mei found her niche by focusing on growth markets in Asia. She spent 10 years in Hong Kong and the past 11 years in Beijing and Shanghai, working as a managing director of investment banking for Morgan Stanley. She joined Raine to run its China operation shortly after the merchant bank was formed.
Raine does advisory work on M&As as well as placing its own investments in private companies such as Imagine Entertainment. Most recently, Mei was an adviser to Legendary Entertainment on its $3.5 billion sale to Dalian Wanda Group, and to Warner Bros. on the creation of the Flagship Entertainment joint venture with China Media Capital.
The environment for women working in finance and investment is notably different in China, Mei says. “In most parts of Asia, you don’t feel any form of sexism at all,” she says. “You don’t have the same historical barriers to women working. They’ve always worked.”
Moreover, the cultural norm of multigenerational families living under the same roof makes it routine for grandparents to help with child care. And household help is more affordable in Hong Kong and Beijing than it is in New York and Los Angeles, even for women of means, Mei says. Nonetheless, the pressure to make choices still exists.
“Different women have different priorities,” Mei notes. “It’s part of the work. The amount of travel you do, the number of deals you work on and the hours you put in — these are badges of honor, things you’re proud of. But it makes it tough to have balance.”
In the U.S., the sentiment has grown that the gender imbalance is a fundamental crisis for Wall Street.
Last year, Chief Investment Officer magazine devoted the first day of its annual three-day conference to exploring the theme of “The Missing Women of Asset Management.”
The conference materials plainly noted that demographic data suggests asset management “may be the single most male-dominated profession in America.”
PricewaterhouseCoopers issued a call to action in 2013 with a detailed study titled “Mending the Gender Gap: Advancing Tomorrow’s Women Leaders in Financial Services.”
“The numbers are pretty appalling when you look at both women’s representation in the (financial) industry and the labor force, and increasing influence as consumers and investors,” says Deborah Gillis, president-CEO of the New York-based nonprofit Catalyst, which focuses on advancing women throughout all sectors of the labor force. “There needs to be a coherent strategy to say, ‘This is not going to happen on its own.’ ”
Mentors and role models are vital for encouraging young women to pursue careers in finance and investment, Gillis adds. “You can’t be what you can’t see,” she says.
Wall Street-centric organizations aiming to help fill that void include 100 Women in Hedge Funds, which will mark its 15th anniversary in December, and Girls Who Invest.
Amanda Pullinger, CEO of 100 Women in Hedge Funds, stresses the importance of successful women becoming mentors and role models for others. But taking on such responsibilities can be hard in a career that is already incredibly demanding. “We’re dealing with the realities of finding ways to encourage more women who are in the industry to become more visible,” she says. “But that visibility comes at a personal cost.”
The 2012 launch of Girls Who Code, a nonprofit org designed to attack the gender gap in the tech world, inspired Hingorani to create Girls Who Invest.
One of the struggles particular to Wall Street is that the industry itself remains fairly narrow, which can reinforce a clubby mentality in hiring and promotions. According to the U.S. Dept. of Labor, about 920,000 people were employed across the securities and investment sector in 2015. The latest labor statistics for New York state show that about 194,000 people are employed in securities, finance and investment activities, and another 47,000 in investment banking.
“It’s a tiny space,” says Laura Martin, a media analyst with Needham & Co. “Five people can run a $5 billion fund.”
Girls Who Invest has set the ambitious goal of boosting the level of women in the asset management arena to 30% by 2030. The org’s first major initiative is the launch in May of a pilot program at Penn State University to encourage female sophomores and juniors to take part in an intensive four-week summer program on finance.
The goal is to raise awareness of the potential of finance and investment as a career choice, and to steer more undergraduate women into business school. The program is targeting 30 students this year. At the end of the session, participants will receive certifications (designed to get the attention of future employers) and be placed in paid internships with Girls Who Invest partner companies.
“I would always hear, ‘We don’t get the resumes’ and ‘We have a pipeline problem’ when I’d ask about women moving to senior-level jobs,” Hingorani says. “This is not about judging and blaming, but fixing. We need to partner together with the men in our business to transform our industry for the better.”
There’s a clear business case to be made for increasing the level of diversity on Wall Street at firms large and small. Study after study, as cited by PricewaterhouseCoopers and Morningstar, have shown that investment teams with a better gender balance typically deliver better results. “I wouldn’t want a team of all women, and I wouldn’t want a team of all men,” Hingorani says.
Her hope is that the Penn State program will attract liberal arts majors and other women who don’t even have Wall Street on their radar. “I feel so lucky to have bumped into this industry,” she says. “There’s a lack of awareness that this is a stimulating, rewarding, impactful industry.”
Not surprisingly, some prominent women on Wall Street take a return-on-investment perspective when considering the toll the job inevitably takes on their personal lives.
“Having three children — migrating through that balance is never easy,” says J.P. Morgan’s Quadrani. “There are always sacrifices made along the way. On the flip side of it, I have a great career that I love. It’s all been worth it.”