The financial industry isn’t always welcoming to women, but there are successful women making strides in finance. When Sallie Krawcheck wanted to launch Ellevest, a digital investment platform for women, she approached several large banks for funding. She pitched the idea, highlighted the market need, and showcased its potential, but none of them were interested. After one meeting, a bank CEO dismissed her by asking, “Well, don’t their husbands manage their money?”
This comment captures a lot of the reason behind the lack of gender diversity in finance. Women face stereotypes, biases, and doubt from both inside and outside the industry. Yet, despite these challenges, women are achieving success and paving the way for others.
Women Encounter Barriers in the Industry
When Catherine Berman and Yuliya Tarasava came up with CNote, an investment platform aimed at fostering a more inclusive economy, they entered the 2017 SXSW Super Accelerator Pitch Competition. Out of many applicants, they were among ten finalists. On stage, Berman noticed they were the only female participants. The rest were all male teams.
Even though CNote won the Best Startup Pitch Company award that year, women in finance often find it tough to climb the ranks. Women make up less than a third of financial advisors and hold fewer than 20% of leadership roles globally. In the U.S., women-owned businesses receive just 2% of venture funding.
The Impact of More Women in Finance
The financial sector has a unique opportunity to drive diversity by supporting women within and investing in women-led businesses outside the industry. This can have a significant impact.
Berman notes that supporting female entrepreneurs doesn’t just benefit them and their families; it creates a ripple effect that positively impacts communities and the broader ecosystem. Berman and Tarasava are demonstrating this through CNote and initiatives like The Wisdom Fund, which channels investments into women-owned businesses. Similarly, Krawcheck’s Ellevest is not only challenging gender diversity issues within their company but also addressing the global gender wealth gap.
Contrary to the critique that women hold too much cash and miss out on investment returns, Krawcheck argues this isn’t valid. An industry dominated by men doesn’t serve women well, she says. If it were majority female, would we have networks like CNBC portrayed investing as a competitive sport?
A study by the Knight Foundation, conducted by Harvard University and Bella Research Group, found that women manage less than 10% of mutual funds and oversee less than 1% of total assets under management. Kristin Hull of Nia Impact Capital highlights the need to shift perspective for true diversity to address the industry’s shortcomings.
How to Bring More Women into Finance
Improving gender diversity involves choosing female-managed funds and supporting advice that benefits women. Society needs to rethink leadership stereotypes. Krawcheck mentions that people are conditioned to see white men as leaders, which must change for genuine equity. A strong preference for familiarity often hinders diversity progress.
CEOs play a crucial role in fostering diversity; it won’t thrive without their commitment. At Ellevest, Krawcheck halts hiring when the team becomes too homogenous, emphasizing the need to bring different perspectives. Nia Impact Capital echoes this approach, being the first U.S. firm to earn Gender Equity Now (GEN) Certification, which Hull suggests all companies should pursue for better practices.
However, even committed CEOs can only hire those who apply. Men tend to submit their resumes more readily than women. To attract female applicants, companies should enhance transparency about pay and candidate pools, ensuring women are part of hiring panels. Having female role models during interviews can be invaluable.
When Chrissy Lee interviewed for an operations role at Kalos Financial, meeting co-founder and then-COO Carol Wildermuth inspired her. Wildermuth’s confidence and openness about her journey made a lasting impression on Lee, who now strives to uplift other women in her role as co-president and COO.
Becoming a Successful Woman in Finance
Women need to support each other’s progress, but one must be active to rise. If individuals like Lee, Krawcheck, Berman, or Hull hadn’t pursued their visions, they wouldn’t be leading female success stories in finance today. Although it’s tough for women now, these challenges can inspire innovative thinking and foster battles worth fighting.
Women should see the lack of diversity not as a barrier, but as a chance to create pathways for a better future for everyone.
