by Sherry Hao, Controller, U.S. Money Reserve
Women and those who identify as female have many uphill battles in a career in finance.
It’s no secret that women are significantly underrepresented in the financial industry. While many big players in the space are setting goals to improve the gender diversity of their workforce (among other issues), there’s no question that the entire financial industry has a long way to go to ensure that women are equally represented within their ranks. The fact is that despite many advancements, women continue to be sorely underrepresented in the financial space all around the world.
For the women who do work in the financial space, this underrepresentation compounds many of the challenges they face. Here are three of the most common challenges women face in the finance industry and a few thoughts on how best to solve them.
A Lack of Representation
Let’s start with a few stats: The number of men and women who enter the financial space is generally equal, according to a recent study by McKinsey. But beyond entry level, the stats begin to worsen. When it comes to promotions, c-suite positions, and even long-term industry participation, women are underrepresented.
According to that study, “In North America, women account for over half of the entry-level workforce in financial services. They have reached the highest levels within companies, and their numbers at the top continue to grow, albeit slowly. Despite this progress, women still represent fewer than one in five positions in the financial-services c-suite. There is much work to be done to achieve gender parity in the financial-services sector.”
Many studies and surveys have tried to illuminate why this drop-off happens. Some have tried to prove that it’s a result of women choosing to opt out of the industry and become mothers or simply leave the business altogether to pursue other things. Still, recent data shows that the story is much more complicated.
According to McKinsey, “The lower representation of women does not appear to be driven by attrition; in fact, company-level attrition among females is either equal to or lower than attrition among males for every financial-services role, except for the most senior positions. And yet, as they advance through their careers, women steadily lose ground to their male peers at every stage. The biggest drop occurs early in their tenure when women are 24 percent less likely to attain their first promotion than their male peers, even though they request promotions at similar rates (Exhibit 2). Women of color are particularly disadvantaged: They are 34 percent less likely to make their first promotion than men in financial services.”
Being passed over for promotion early in a career can have a lasting effect on whether someone decides to remain in the industry or not. Since there is such a significant drop-off early on, fewer women make it to the top offices in finance, which means fewer mentors for younger women to look up to or learn from. In addition, because of a lack of mentors, women often don’t aspire to the top offices, according to McKinsey. The study shows that only 26 percent aim for the corner office or top promotion, as compared with 40 percent of their male peers. McKinsey refers to this as the “ambition gap.”
Lacking female or female-identifying mentors in the space has other consequences, too. It not only means that women have no one like them to look up to, but it also means that they have fewer advocates higher up the food chain. McKinsey notes, “Entry-level women are less likely than men to have managers who act as their advocates and help them identify opportunities to pursue. Nor do they receive senior leaders’ advice on advancement or navigating organizational politics as frequently as do men.”
Sexism Still Exists in Finance.
As employees return to the office, so too does the inherent sexism that comes with being at the office. When we think of the traditional financial space, we often think of golf outings, late nights of drinking, and exchanging texts or messages filled with inappropriate GIFs. According to a story over at Morningstar, while networking (which is really the umbrella all these activities fall under) is a necessary part of working in the financial industry, it poses plenty of opportunities for sexism to rear its ugly head. As the author of that piece notes, every networking opportunity requires women to carefully calculate everything from their own personal safety to how they’ll be perceived. It’s a delicate dance that, as we all return to the office and in-person gatherings, women and those who identify as female must navigate.
That story also highlights some of the less obvious challenges women in all industries face. Everything from weight, age, and the simple reality of the bodies we occupy can be used as weapons against us, and this kind of systemic bias requires constant and careful calculation as we move forward in our careers.
Sexism also goes beyond just the physicality of being or identifying as a woman, too. Numerous terms and words that are used regularly in the financial space are implicitly sexist. Ellevest recently did a story on the topic and called out sexist phrases like “pump and dump” and “the spread.”
The truth is that sexism in the workplace is something we all must continue to work to both become aware of and tear down. It continues to be rampant and pernicious in the financial space, and it will require everyone to dig deep to stamp it out.
That Work-Life Balance
Of course, it goes without saying that the work-life balance in finance can be particularly difficult to navigate. This balance can be equally challenging for both men and women to manage, though in reality, women tend to be the ones who are responsible for caregiving when it comes to managing the home.
The advent of the global COVID-19 pandemic has underscored just how much responsibility and, in many cases, burden of caregiving women face worldwide. In fact, the World Economic Forum recently released a study showing that the pandemic put an extra burden on caregivers. The study also notes that the pandemic presented an opportunity for a transformative shift both at home and at work in terms of how we value caregiving, gender equity, and equality in the workplace and at home.
According to Investopedia, the financial industry can be one of the most unbalanced (in terms of work-life balance) spaces to work in. That’s because success at major financial institutions requires long hours. It’s also intensely competitive. As the story notes, financial analysts routinely work more than 40 hours per week, and “Many (possibly one third) work between 50 and 70 hours per week.” The story also notes that those who work at investment banks spend as many as 70 to 85 or even 100 hours working per week. The cost of all those hours at the office (or online) can be incredibly high and include everything from physical and mental implications to family problems.
While some of the requirements and perceptions around work-life balance (in terms of the number of hours spent working versus with family) have shifted as a result of the pandemic and the prevalence of remote work, there is still evidence that women who request more flexible schedules are more frequently punished for making the request. A 2017 study showed that (at that time) working a flexible schedule hurt women’s promotability more than it hurt men, according to Fortune. A more recent survey by FlexJobs shows that women value remote work more than men do, and according to CNBC, “Research has shown remote employees face greater challenges than those who work in-person, including less opportunity for promotion.”
The truth is that change in this space must come from the top. Sadly, that’s not likely to happen. Financial firms are in the business of making money. The world runs at a 24–7–365 clip, and missed moments because of family obligations or needed time off can impact returns. If you’re passionate about a career in finance, however, it’s important to find a firm that offers a work-life balance that best serves you and your family. Boundaries between work and life are important, and you want to be sure that the company you work for can offer you the support and flexibility you need.
The Bottom Line on Common Challenges That Women Face in the Financial Industry
While the financial industry has made some gains in gender equity and continues to work toward gender and gender-identity parity, there’s unquestionably still a long way to go. The traditional challenges that were present many years ago still persist today, and there’s still much work to be done to break down barriers and make the space more gender-inclusive.
Yet the first step to dismantling sexism and genderism in the financial space is education. By recognizing and learning about many of the challenges women face in the space, we can continue to make strides to improve and perhaps even eliminate the numerous stumbling blocks women and those who identify as women face. Recognizing things like the lack of mentors (and the reasons behind that fact), the implicit sexism that still persists in the industry, and figuring out a way to offer more work-life balance for all employees can improve all financial workers’ lives. Ensuring that we include the best and the brightest in the world in the financial industry, regardless of gender or gender identity, is key to ensuring the long-term success of the space.