Women and Wall Street: Is the Romance Gone?
I've never been a huge fan of movies, primarily because strong female leads are few and far between. Wall Street: Money Never Sleeps is a perfect example of this. The main players are men, as is the target audience. Being a woman who works in finance, I'm left a bit dismayed — and as it turns out, I'm not alone. At least when it comes to the real Wall Street.
Data from the federal Bureau of Labor Statistics recently showed that 2.6% of women in finance left the industry over the past 10 years. In the same time period, the number of men in financial services grew 9.6%. The decline is starker among women aged 20-35 years old, with 16.5% leaving the industry, even with efforts to recruit and retain them increasing.
Explaining the Trend
Economists are trying to understand the shift. The usual explanations of sexism and prioritizing family over work have been tossed around and are probably valid in many cases.
Interestingly, some have said that more women may be leaving Wall Street to take the entrepreneurial route and start their own businesses. I happen to work at a startup that was founded by a young woman who used to work on Wall Street, and she is not alone. Perhaps there will be a movie about those women one day, a la The Social Network (yet another male-dominated film).
Wall Street's Loss
Women leaving Wall Street may add up to greater financial losses than we realize. From 2000 to 2009, hedge funds run by women produced average annual returns of 9%, compared to 5.82% for men, according to a study by Hedge Fund Research. In 2008 specifically, hedge funds managed by women were down 9.6%, while those managed by men lost 19%.
Vanguard analyzed the trading behaviors of their 2.7 million IRA investors between 2007 and 2009. They found that men were more likely than women to make trades during the financial crisis, leading to lower returns overall. Multiple studies have shown that men tend to think they know more than they do when it comes to investing and act on that over-confidence. A Merrill Lynch study conducted in 2005 found that women are more likely to report less knowledge about investing, yet they make fewer mistakes and don't repeat them as often.
On the client side, a recent Boston Consulting Group study found that 70% of female clients are dissatisfied with the financial services they receive. Respondents complained of disrespectful advisers and patronizing advertisements. Male oriented firms tend to communicate in a more aggressive way — and may be losing out on half of the available clientele as a result.
Wall Street may never sleep, but the financial industry needs to wake up. Now more than ever, we can't afford to hire only male leads.