The Big Five

June 24, 2009 posted by Kyla Bender-Baird

This morning was the culmination of years of hard work, sweat, and I’m sure a few tears: the National Council for Research on Women launched its newest paper, Women in Fund Management: A Road Map to Achieving Critical Mass—And Why it Matters.  (Check out the report’s website here). A crowd of nearly 300 gathered at Bloomberg to get first dibs on this timely report and its critical insights into today’s economy. I was lucky enough to live blog* the panel (nothing like a front row view!):

Melinda Wolfe, Head of Professional Development at Bloomberg and Chair of NCRW’s Corporate Circle  offers some welcoming remarks:

Throughout her career, Melinda has focused on bringing together women in corporations. She was attracted to the Council for its coverage of practical issues that affect women and girls.  “The Council,” she says,” provides research that impacts the agenda in many ways and you will see that in action today.” Bloomberg is all about transparency which levels the playing field. And when you level the playing field, women are able to emerge.  Today we are talking about the importance of advancing women in the field of finance and the corporate world in general. This vital issue is too easily lost as we face a difficult economy, a difficult time.

Next up, Melinda introduces “Wonder women, influencer of women:” Jacki Zehner (Founding Partner of the Circle Financial Group):

Jacki’s journey began 25 years ago when she entered Goldman Sachs.  At age 26, she was one of the only female traders in the mortgage industry and the only one at her desk. She became the first female trader to come partner at Goldman Sachs and worked hard to bring more women onto the trading floor.  She also worked to create a more inclusive culture. Despite these efforts, the overall numbers remain incredibly small. At age 38 in 2002, Jacki retired from Goldman. She had made a considerable amount of money, had two young children at home she wanted to spend more time with, the work was time consuming and stressful, and she wanted to use her skills and resources to change the world.  Also, like many women in the financial sector, she was tired of being one of the only women in the world of finance.  “We live in a world where money is power,” said Jacki. “So why do so few women hold positions of power?”

• 15% Board seats at Fortune 500 companies are held by women.
• 59% have no women board members.
• Women represent less than 10% mutual fund managers. Hedge managers even smaller.

And yet, women are increasingly becoming holders of wealth in our society. So why this disconnect?  This is the question Women in Fund Management tackles. This paper gives us all the research, evidence and arguments to cast aside the believe that women are largely absent from influential roles in society because they aren’t good enough or don’t have the skills and experience required for them to be there. As the report demonstrates, the presence of sufficient numbers of women leads to better decision making and enhanced return on equity. So little has changed in the past decade. “But in this moment, in this world, I have so much hope,” said Jacki. “Imagine women and likeminded men using their economic clout, investment clout to change the world.”

Linda Basch, President of the National Council for Research on Women, steps up to the podium next to give some history of the report.

A few years ago, Jacki approached Linda, saying, “You know Linda, someone should really look into this, and she gave me a meaningful look and I said great idea as did our entire board.  It has been illuminating and exciting, particularly as we see how vital it is to the functioning of our entire economy.” The report addresses two fundamental questions: why are there so few women in charge of investment funds and what can we do about this situation? Research shows that women and men have different investment approaches and styles, each bringing something value to the table. It is disconcerting that hose monitoring economy now are from the same demographic background as those who got us into this mess. “Women constitute just 10 percent of all traditional mutual fund managers and are even more under-represented in alternative investments,” Linda shared. “ In early 2008, women managed a mere 3 percent of the approximately $1.9 trillion invested in hedge funds. There’s something very wrong with this picture.” The report found several reasons why there aren’t more women at the top of the financial sector:

• Lack of capital : less invested in women managed funds than men managed funds even when have similar results
• Narrow career pipeline: women drop out in every step along career path when lack supporters and sponsors
• Negative stereotyping and hostile high pressure working environments.
• Lack of access to networking, role models, and formal/informal support systems

Women are taking steps to address these barriers by forming networks and support systems (ex. NCRW Corporate Circle). Women recognize the potential and power of money. But we need more than action by women themselves. We need comprehensive structural change in the financial system and government regulations as a whole.  NCRW proposes the adoption of the critical mass principle to ensure the presence of significant numbers of women at all levels of leadership.  Women of diverse backgrounds bring their  different experiences and approaches that are needed to play active role in shaping the kind of world we want to live in and pass on to our children and their children.

After Linda’s remarks, we launched into a panel discussion moderated by Katherine Burton of Bloomberg News.

First up is Deborah Spar, President of Barnard College.

The pipeline is critical. After all, women at 28 don’t all of a sudden develop skills and interest in math and science and the kind of things that get people involved in the financial sector. We need to go all the way back to even K-2 education.  We need to examine what it takes to give girls the skills AND interest to get them all the way through to the other end. Cultivating interest is even more important than teaching skills. Research has time and time again proven that girls are just as good as boys with the necessary skills.  However, girls lose interest in picking up math.  Deborah points out that girls are applied thinkers, much more so than boys.  But in high school math classes, it’s hard to see the application. “What am I going to do with this?” Therefore we need to think about how we teach math and make changes to core curricula to show why it is in her interest for a bright 18 year old girl to stick with math.  We also need more female math professors. A study released in May by the US Air Force found that women students are more likely to stick with math when they have a female math professor in college. We must take this research and endow a chair in math and put a woman in that chair. We must get into colleges and show them that hedge fund management and finance is an exciting thing to do. Women want something that’s interesting to them: want to change the world, have an impact. Show them they can make an impact and have a fun life by going into a field like finance.

Purnima Puri, Partner, Highbridge Capital Management

Has taken on a risk taking role throughout her career at Goldman.  She sees, however, more women in sales than trading capacities.  She also notices women dropping out after their associate years.  Ironically, trading is a more manageable career track if you’re concerned about work-life balance.   It’s a more predictable lifestyle.   Sponsorship is critical, whether the sponsor is male or female.

Mindy Posoff, Co-founder, NewMarket Capital Partners, LLC

When she read the Women in Fund Management report, she thought, “ this is the last 20 years of my life.”  With this report, we now have something we can point to: we’re not whining. To truly make change, however, we need to make the business case.   Mentoring is fine but sponsorship of how to find success—“I always felt it was like a scavenger hunt. Getting to the top is like a secret society.”

Katherine poses a question to the panel about women being stereotypes as being difficult

Purnima: People get branded very easily regardless of demographic. Equal behavior brands you as being emotional or difficult to work with even though you are no more emotional than your male counterpart. Sponsorship needs to teach people how to navigate this difficult terrain. Women need to be more active in searching out right the person but she believes they are there and can open up that path.

Jacki: We’re not victims. Let’s put that to bed.  We accept there are barriers and ceilings: now let’s plow through them.  I want to talk about the future, not the problems. We need to harness our economic power as investors to move forward in that change. My focus is on taking power we know we have collectively (not just women) to drive change especially around the critical mass principle.

Deborah (jumps in): Critical mass is so important. When there are 25% women in class, women feel as if they are perceived as the women’s POV when they speak.  Same with other visible minorities.  Once you hit around 45%, a woman talks, she’s just herself not women’s POV. People behave differently when not preserved as representing a minority.

Mindy: But going back to K-12, you need boys and girls to talk to each other. We don’t know how to communicate with each other which hurts sponsorship.  We need to educate people to have minority voices early on. Not just crash into the corporations and say “here I am!”

Deborah: See good news in financial crisis. Help make business case for gender diversity: not just a nice thing—it’s important for the sector [financial] and economy which depends on this sector. Women make financial decisions different from men: different, not better or worse.  Best performance over long run: both gender perceptions represented among the decision makers. More women in the sector is vital for the economy.

Katherine opens the discussion to the audience. First question from the audience: How many folks in this room have women managing their money?

Jacki: We don’t trust women with money which is ironic. Household budgets and consumer decisions are left to women. Investment decisions: men. What’s up with that?! Women need to cut women a break b/c we second guess. We put philanthropic dollars in women and girls—why not investment dollars? We need to ask mutual funds what percentage of fund managers are women at their firms and to make this fact obvious on their websites.

Ann Kaplan from Circle Financial Group poses the next question: gender stereotyping has not changed as much as I thought it would change. Only 5% women felt responsible for their own money.  Do we trust our own selves and have confidence in our ability to organize our financial lives?

Katherine turns to Dune Thorne from Silver Bridge Advisors

Dune: We need to not just let this report be great research but to have it stimulate change.  This is the time and it’s just the beginning. Women want to take control of their financial life. Women stepping up and take control again in economic climate. Wealth management industry lost the trust of women clients due to the lack of transparency and layers of fees.  We need to work to get that back.  Women in industry must lead to rebuild the trust. Women want sophisticated but simple solutions.

Katherine asks to Maria Chrin with Circle Wealth Management about the differences between men and women in money management.

Maria: What are the main differences in money management business? Confidence: simple answer.  Women are just as confident but also doubting whether they were good enough. Pipeline is the major issue that will propel change. Women value bottom up as much as top down and are very detail oriented which can be quite complimentary to male managers. First, though, women have to find the confidence that they are good and be more aggressive in marketing themselves.

An audience member asks about some recent headlines about increasing debt

Jacki: Our financial system is broken.  I don’t just mean at the grassroots. You could see the train wreck coming. We as a country, a global financial system are in trouble. The same people who were in charge when the ship went down are being put on the new ship. Want to see new faces. Not just getting through the crisis: what the future looks like.

Linda: Critical mass. Women on front lines who have spoken up but not getting much support.  More diversity raising questions at the top, challenging to change the mindset.

Meryl Keynard points to the recent debates around Sotomayor’s nomination: no critical mass, try being the only woman on the Supreme Court. How do we do this work within the legal construct?

Linda: Not calling for quotas: broad change. Ground up effort we all participate in across sectors. Women don’t have environment that enable them to rise to the top.

Question from audience: What is “the crucial mass” and might that needle be moving?  In the Army report, the critical mass was 18-20%.  Also today she has heard 30% and now 45%. Is there a consensus on what critical mass is in what industries?  Let’s get a good number.

Jacki closes the panel
This is just the beginning of a real conversation about women and money, and women and money rolls. Stay tuned for follow-up conversations at leading firms in the fall.

*wasn’t able to technically liveblog due to internet troubles…next time!