Working in finance is incredibly rewarding, fast-paced, and enjoyable. It takes hard work and plenty of knowledge to become a successful finance professional, and myriad stumbling blocks can and do come up in the business. These challenges can be doubly compounded by your gender or gender identification, especially if you’re a woman.
As I have written before, women are underrepresented in finance—even today—as we all navigate the new COVID era and go through the collective social justice awakening around gender and race stereotypes. According to Investopedia, “Studies conducted by the Harvard Business School paint a tough picture for women: Among senior roles in venture capital and private equity, women held just 9% and 6% of the positions, respectively. Hedge funds bring that number to lower depths: Women occupied only 11% of senior management roles.”
Those numbers are quite disheartening but, sadly, unsurprising. The truth is, women in finance face many challenges that differ quite substantially from those faced by their male counterparts. Here are some of the most common challenges women face in the finance industry and what we can all do to support women already in the financial space or looking to enter it.
A Lack of Female Mentors
There’s no question that while the number of women in finance has risen over the last ten years, it’s still nowhere near equal to the number of men in finance. In fact, there is a significant lack of female leadership in finance, as this 2019 report by the consulting firm Deloitte points out. As a result, there are fewer female mentors in finance.
While that sounds like a dire situation, it doesn’t mean you cannot find women or even men who would be more than happy to mentor you and inspire you as you pursue a career in finance. Just know that you’ll probably have to work a bit harder to find a female mentor in the financial space if you’re set on having one.
If you don’t have a woman at your firm who might mentor you, you can always look outside the company. Check out resources like Girls Who Invest and Ellevest to learn more about finding female mentors in the financial space. While external mentors may not be able to directly promote you, they can help you navigate the challenges that come up in your career and give you guidance when you need it.
Being Expected to Act Like “One of the Boys”
It’s not uncommon to hear coarse, harsh, and even offensive language used on the trading floors of some of the most powerful and profitable banks. It’s also not uncommon for men in financial roles to be promoted faster, offered better deals, and be more supported in their career paths than their female counterparts. There’s are reasons that finance is considered, to this day, to be an “old boys’ club.”
Check out this Harvard study released in February 2020, for example. It shows that over a four-year period, male employees in finance who had male managers were promoted at a faster rate than their female counterparts, with no observable difference in performance. The study suggests that the reason for this is because men benefited more from socializing with their male bosses than women did because male employees may schmooze with their male bosses in ways that females will not.
The foundations of these biases are deeply entrenched and range across everything from social, educational, and racial structures based in male bonding to elite schooling and social networks that may go back generations.
The only real way to address this issue is for all of us to continue to challenge those gender stereotypes that we carry with us throughout our lives. The problem with these kinds of stereotypes is that we may not even be aware of them. As the study points out, one of the only real ways to address this gap is for companies to offer more gender-neutral means of both career assessment and socializing.
If the study isn’t enough to prove my point, take a look at this firsthand account by Rachel Greenberg, posted on Medium back in 2019. In it, Greenberg candidly discusses the kind of gender discrimination she faced while working as an analyst at an investment bank. Greenberg is now a successful entrepreneur.
If you are a woman or identify as female and have a passion for finance, it’s essential to be aware of this particular challenge and its complexity so that you can be on the lookout for gender discrimination. As Greenberg mentions in her piece, it’s vital that women speak up, step up, and work on challenging the established practices of the “old boys’ club.” Women in finance should also seek out mentors of either their gender or gender identity to help support their upward trajectory through the ranks.
The Language of Finance
Have you ever considered some of the language that’s used in finance—for example, expressions like “spread” or “naked position”? While these terms are all used regularly—and, as this story at Ellevest points out, in academic textbooks—there’s an inherent sexualization in several financial terms. In addition to sexualized words, many racist sayings are regularly used in finance—and they’re equally offensive and off-putting.
To address this challenge, we all collectively need to think more comprehensively about how our language choices reinforce gender or race stereotypes. The problem with these words is that the more often they are used, the less offensive they seem (think of it like exposure and desensitization), and the more ingrained they become. There are numerous great alternative words to use, and in some cases, you could even win additional business or make your mark in the financial world by encouraging everyone to use more appropriate terminology that doesn’t include racist or sexist language.
In addition to this, much work needs to be done to ensure that the finance environments are less threatening and aggressively sexual toward women, people of color, and individuals with different sexual orientations. A lot of this work comes down to a combination of corporate culture and employee education and awareness.
The Motherhood Gap
An additional challenge that women in the financial business must address is the issue of childbearing and child-rearing. Finance can be incredibly demanding on your time, attention, and effort. Deciding whether or not you want to start a family or have children is majorly important and will ultimately change your life for good. Like a job in finance, children are incredibly demanding but also incredibly rewarding.
When and if you decide to have children, you’ll take time away from the office to be with your newborn, as you should. While this is common and encouraged in all businesses, many studies have shown that taking time off to have a baby does impact your earnings, promotion potential, and the future of your career path. For example, a study from 2019 shows that, in general, first-time moms see a 30-percent drop in their pay, while first-time dads get raises, according to CNBC. While pregnancy and child-rearing discrimination are illegal, they still occur, and women should be aware of the complex challenges that can arise as a result of these decisions.
These issues are obviously not just limited to careers in finance, either. Women in all lines of work face the decision about children and the ensuing challenges that come up around having a family. Recognizing how it may impact you in both the short and long term is vital to ensuring that your career follows the trajectory you want. It’s also vital to managing any expectations you and your employer might have about what your future looks like in finance.
Whether you decide to have a family or not is an intensely personal decision, and you should always strive to make the best decision for you. Companies can do a better job of supporting those who want to have a family by offering things like paid leave, advancement opportunities upon returning to work, and even in-office childcare. Collectively we all need to advocate for the support of working families so that we don’t continue to see the motherhood and parenthood gap grow.
The Bottom Line on the Challenges That Women Face in the Finance Industry
The world needs more women in the financial industry for a multitude of reasons, without question. As that happens, it’s vital to become aware of the different challenges women face when pursuing a career in finance. Everything from subtle bias to long-held gender perceptions, child-rearing issues, and even language choices can present challenges. However, with the proper support from business leaders and society as a whole, it’s entirely possible to overcome each one of these challenges and help women rise to the highest echelons of finance. The benefits of having women in financial management positions are immense and cannot be denied, and while there’s much work to be done, the future of women in finance is quite bright.