It’s summertime but the livin’ ain’t easy for everyone. In this issue, we examine the challenges females face in the investing industry, the headaches for firms dealing with new legal restrictions on interviewing and the difficulties banks have retaining their junior investment bankers. The capital accumulated for private equity and private credit is causing surprising difficulties and capital is being increasingly deployed into other investing firms through seeding and staking. These are interesting times, indeed. We hope you find this edition valuable and we look forward to continuing the dialogue.
The Odyssey Search Team
Where Are Wall Street’s Wonder Women?
The biggest movie of the summer is the first Superhero blockbuster to star a female lead and be helmed by a female director. While Wonder Woman has inspired millions at the movie theater, many on Wall Street remain disappointed by the dearth of “Wonder Women” with influential roles in finance. Fresh on the heels of a barrage of stories about women being mistreated and harassed in the VC space (as detailed in a recent NYT article), we decided to look into our own industry’s relationship with women. Unfortunately, it remains harder to find women in lead roles on Wall Street than it does in Hollywood. The numbers speak for themselves – according to a recent survey by Investment News, women own just 5.2% of mutual funds, manage 3.3% of hedge funds, and lead a measly 2.1% of active PE funds (established since 2004).
We see three contributing factors to the lack of successful females in the investment management space. The first is something we might term the “Role Model Problem.” With few successful role models in the current financial pipeline, women are less apt to visualize a career for themselves in finance than their male counterparts, thus fewer women enter the existing pipeline, and behold: a vicious, self-generating negative feedback loop is formed. As a result, women tend to have a somewhat distorted view of the investment community. As a female senior credit analyst at a large NY firm told us,
[Finance] is portrayed as an aggressive, extremely stressful and cut-throat job vs. the methodical, analytical, research job that it really is.
Reaching further back, a second stumbling block is the STEM problem. According to the National Girls Collaborative Project, women make up half of the U.S. college-educated workforce, but only 29% of the science and engineering workforce. Given the industry’s preference for math, engineering and science backgrounds, it becomes particularly challenging to climb the ladder of Wall Street without first stepping on those bottom educational rungs. Industry wide, only 3% of senior investment roles in HFs were held by women, according to a 2014 article in CIO magazine. Without the quantitative and technical backgrounds, female candidates are at a distinct disadvantage when it comes to applying for investment positions in the boom areas of systematic trading and data-lead strategies. However, female seniority in areas such as compliance, HR, and marketing can serve as a beacon of hope. As one female COO of a $5B hedge fund put it to us, “I currently work with many female leaders in the non-investing side of the business, and I believe this is an area not to be undersold. Seeing women visibly in leadership positions should be celebrated regardless of whether it is front of house or not.”