by Liz O’Donnell (Boston)
What if there were more women leaders on Wall Street? This is the question raised by a new report from The National Council for Research on Women, a network of 120 leading U.S. research, policy and advocacy centers. The report, entitled “Women in Fund Management: Achieving Critical Mass and Why It Matters,” takes a close look at the lack of women in leadership roles in fund management.
Today, only 16 percent of executive and board positions in the financial services are held by women and just 10 percent of fund managers are women. In fact, in 2008, women managed only three percent of the approximately $1.9 trillion invested in hedge funds. These low numbers don’t align with the number of women in the workplace, the number of women who own businesses, or the amount of wealth represented by women. Almost half of all workers in the U.S., and one third of all business owners, are women. And women comprise 43 percent of all Americans with gross assets of $1.5 million or more.
The report makes the case that now is the perfect time to bring more women into the management mix on Wall Street, not just to better represent the women working on Wall Street and/or with access to capital, but in order to better meet the shifting dynamics of the U.S. economy. As a result of the economic crisis, the market has shifted from highly leveraged and high risk to demanding reform, greater oversight, and longer-term investing strategies. The report cites several well-documented studies that show women invest differently than men — they hold investments longer, take less risk, and use a more comprehensive decision.
Kimberly Sterling, president and a shareholder of Resource Consulting Group, an Orlando, FL-based investment advisory firm, says what is needed now is an attitude of “harvesting” vs. “beating” the market. “Therefore, a woman’s natural and cultural traits work well,” she says. Women, says Sterling, tend to be “less reactive, focused on a big picture plan, and good at sticking with the long term view.”
But a few women leaders are not enough. A critical mass of at least 30 percent female leadership is required in order for women to affect positive change, according to the authors of the report. A more balanced mix of women and men will provide a broader and complementary skill set needed to restore trust and confidence in the market.
Jacki Zehner, a founding partner of private weath management firm Circle Financial Group, former partner at Goldman Sachs, and Board Member Emerita for the National Council for Research on Women, says that what is most exciting to her about the report is this critical mass argument. “It is the most actionable step (from the report),” she says. Until that critical mass is reached, argues Zehner, we won’t know the impact of women’s leadership. “We know what a woman leader looks like,” explains Zehner, “but we don’t know what women’s leadership looks like.”
“Adopting a critical mass principle” is one of ten solutions proposed in the report. It involves setting quantifiable criteria, benchmarks and guidelines for ensuring adequate representation of women in leadership roles. “Make it an absolute,” says Zehner, “The number of companies without women on their boards is completely unacceptable.”
Kelly Chesney, principal and co-founder of Pluscios Management LLC, a women-owned investment management firm, was previously a Managing Director at JPMorgan Capital Management, where she invested in portfolios of hedge funds and served on the Investment and Management Committees. Chesney agrees the main takeaway of the report is the critical mass principle.
“Women invest different than men,” she says, “I am not saying it is better or worse. It’s different. You need enough diversification to make a difference.”
A full copy of the report is available from National Council for Research on Women here.