Finance offers women a place to stand out from the crowd
In business, the best place to seek opportunity is where you see a gap. You can take advantage of that gap to leverage it and create new business and new futures for yourself and your company. There are tremendous gaps in the makeup and gender of the financial world. Women are largely excluded for a variety of reasons. It follows that there is a tremendous opportunity for women to excel in that space. Here’s why.Women Bring a Different Skill Set to the Table
First, let’s clear up some common misconceptions about women in finance. I’ve written extensively about women in finance and how important it is to include women of diverse backgrounds in the financial world.
There’s no question about it: Women have been and continue to be underrepresented in finance, yet they have the skills and talent to truly excel in the space. For one, women bring to the table expertise that fundamentally differs from that of men. While women face stereotyping, gender bias, and doubt from their male counterparts, and they are often expected to be “another one of the guys”—women can and do bring unique traits to the trading floor or the financial office.
Women have been proven to be better investors than men. A 2018 study out of Warwick in England shows that female investors outperform their male counterparts by 1.8%. The study shows that this difference stemmed from what the women in the study invested in, rather than how frequently they traded. This is what made their returns better than those of the men in the study. The study also shows that women tend to trade less often and are less subject to panic moves.
A 2018 story published by the World Economic Forum states that including more women in the end-to-end financial system—from depositor to firm—would also bring more stability to the global financial system on multiple levels. The study was conducted by the International Monetary Fund, or IMF, and looked at depositors’ makeup. A separate study done in 2015 by the IMF also looked at the makeup of people in top-level banking positions around the world. It found that “women [account] for less than 2 percent of financial institutions’ chief executive officers and less than 20 percent of executive board members. The proportion of women on the boards of banking-supervision agencies was also low—just 17 percent on average in 2015.” The study notes that banks with more women on their boards are more stress-resistant: They have higher capital buffers and lower nonperforming loans. The IMF also found a positive relationship between bank stability and the presence of women on bank regulatory boards.
The study theorizes that the reasons for increased bank stability and stress resistance in banks with women on their boards might come down to four factors:
- Women might be better risk managers than men.
- Because it’s generally more challenging to stay in finance as a woman, thanks to a number of both subtle and overt discriminatory practices, the women who do make it to the top have been more heavily vetted than their male counterparts as a result.
- Diversity on a board=diversity of thought and decisions=better decisions.
- The better an institution is managed, the more likely it is that they have sought out and recruited skilled and talented women.
While some significant factors certainly influenced the IMF study’s results—like the finding that just 2% of bank executives are women—the IMF says that there are some other reasons to consider for these findings. For one, very few women remain in finance long enough to hold a corner office; two, in general, the pool of women starting in finance is generally tiny; and three, some discriminatory hiring practices are likely still taking place across the board in finance.Women Don’t Have to Fit the Mold
If you always thought you have to be a middle-aged white man to be successful in finance, you might be looking at the challenge the wrong way. You don’t have to be one of the old boys to succeed in the space—you simply have the opportunity to blaze your own path in the business and see another path to success.
Yes, it’s true. The issue of underrepresentation isn’t just present at the very highest echelons of finance—the corner office or vice president level—but rather, according to a 2014 study done by the recruiting firm Vettery, it exists at the entry level, too. Part of that might stem from the fact that women have fewer connections in and to the finance business. Like most businesses, finance can tend to be about who you know. As Forbes puts it, most men get into the business because their golf buddies, dads, or brothers are already in the business. Yet trying to be one of the old boys doesn’t necessarily suit women, nor does it necessarily work for a woman’s career. The value in being different is that you bring a unique voice, approach, analysis, and thought process to the table—something that all the men in the room simply don’t have.
Women can and should bring their unique ideas and entire selves to the table to succeed. As the IMF study suggests, their success means that banks and banking systems thrive, and women bring new and innovative approaches to financial problems that can make the world a better place.Finance Is About More Than Just Money
This is a common misconception about the financial business: It’s all about money and numbers. While at its heart, that is what financial professionals deal with daily—it’s about far more than that. It’s about human psychology, personal relationships, and making the world a better place.
Consider this: Every single financial person out there is trying to figure out a way to read the market, see around corners, and predict the future. Really, what they are trying to glean is mass human psychology. There’s an aspect of finance called behavioral finance that tries to apply the learnings from psychology to the financial world to predict it and make sense of it. We are emotional creatures and subject to the whims of fear and exuberance, and it shows in how we invest, spend, and trade.
Finance is also about how we interact with each other, and it forms a key portion of the backbone of society. It goes without saying that finance is a tool of acquisition, but it is also a tool of communication and interaction. When you purchase something, it often is the beginning of a relationship with a business owner or another person; thus, finance is about human connection.
Additionally, finance is about more than just money because it can be used to help those in the most need. Working in finance gives you the opportunity to educate everyday people about how to improve their lives through better financial management, better financial decisions, and better relationships both with themselves and their loved ones. Being able to give the gift of financial education and financial assistance to people who need it is one of the most empowering things you can do as a financial professional. Teaching people to take good care of their financial health can give them a new tool for self-care.Women Bring Social Consciousness to the Table
Women, hear me out: If you want to make a real difference in the world, go into finance. Socially conscious businesses are on the rise, and in today’s changing and volatile economic and social world, it’s more important than ever to become socially aware of how business impacts the good of the world. Women are at the forefront of this groundswell of change.
In May, CNBC reported that one in every four assets managed in the U.S. today is a socially responsible investment (SRI). SRIs make up more than $12 trillion of the market. Guess who makes a majority of those kinds of investment decisions? Women. In fact, according to a study by U.S. Trust from 2017, 73% of women (and millennials) are more likely to invest in socially responsible products and goods than men are. That means women want to see their money do good in the world, and as they gain a voice in the market and a place at the table, their impact will continue to grow.
There are plenty of places for women to apply their knowledge, creativity, ambition, and desire to change the world, but the world of finance in particular, is begging to be shaken up. For all of the reasons above, now is the best time for women to truly excel in the world of finance.