Gender inequality in the financial industry, on both the professional and personal side, is not just a social or legal issue – it is a business one. And it is a topic we reflect on often here at AFM: our own iconic founder is a pioneer for women in business, and we all share an ingrained commitment to advancing and empowering the presence of women in our industry and beyond.
It is perhaps not news that we are in the midst of a $22 trillion shift in assets to women. By the end of 2020, women will hold an estimated 32% of the total private wealth figure. Female leadership in C-suites across the globe is also, finally, trending higher (though still just about 5% of Fortune 500 CEOS are women). And in venture start-ups and established corporations alike, there is growing evidence that companies perform better when they have more women in senior leadership positions.
A recent Stanford University School of Business Study conducted found that these figures are not coincidental – more and more, investors actually factor into their decisions whether a company has gender diversity. The study focused on dozens of companies in the tech and finance industries. The fascinating and conclusive findings were that participants valued companies with better gender diversity numbers because they expected those companies to be more innovative and creative. This is good news for the growing number of female-founded funds that invest in female founders, such as Halogen Ventures, Forerunner Ventures, SoGal Ventures, Female Founders Fund and BBG Ventures. And as the profile and success of these funds rise, so does our consciousness as investors to create a more equitable environment.
Other female-founded companies are closing the gender gap with retail investors who may previously have felt excluded from participating in the intimidating world of markets. Service providers and financial advisors are creating interfaces and portfolios that encourage those groups to dive in.
But the prevailing wisdom is that if providers are guiding women to invest, they should also emphasize female leadership in their own organizations. Sallie Krawcheck of Ellevest recommends evaluating investment managers or potential services by requesting concrete answers to questions such as: What percent of your senior leadership team are women? What percent of your client-facing employees and employees with P&L responsibilities are women? What percent of your financial advisors are women? Anything below 50% women, she says, is too low. Firms with strong female representation will be “raising the bar” — for their investment performance as well on their leadership team — by moving to a truer representation of our population in senior roles.
As the world begins to emerge from the first global pandemic lockdown, we are learning that the COVID-19 crisis statistically hit working women harder. Those in caregiving roles have faced an increased burden in the wake of school closures, with working mothers finding themselves even more stretched than usual as they juggle home-based work, home-schooling, childcare, and housework. It is more important now than ever to focus on including women as part of business conversations to ensure our workplaces are not set back in gender equality by these dramatic challenges. As the World Bank Group’s Women, Business, and the Law 2020 points out, “equality of opportunity is good economics.” And seeing the impact female leaders make on the bottom line drives diversity of all forms in a positive direction.