The Missing Senior Women in Asset Management

College pipeline and other programs have helped firms attract more women to junior-level roles. Now the challenge is to keep them and push them to the top.

Jason Alden/Bloomberg

Jason Alden/Bloomberg

In 1985, Marcia Page got the assignment that kicked off her investing career. Her manager at Cargill asked her to analyze and provide advice on a high-yield bond. Page’s recommendation ultimately led to a $5 million position in the security.

Eight years later, Page co-founded Värde Partners, an alternative investment firm that now manages $15 billion in assets. She remains grateful to her Cargill boss for getting her involved in a key investment decision that would build her resume with solid experience and get her noticed.

But in the next three decades of her investment career, she was disappointed to find that such trust from senior leadership is rare for women in the industry, particularly for those in the early stages of their careers. Few people make it into senior roles without having a history of valuable work assignments.

“I thought we were all progressing,” Page said. Her eagerness — and frustration with the status quo — to help women succeed led her to found MPowered Capital, a firm that invests in female and other underrepresented talent, in September.

Although asset managers have made some gains in recruiting more women for junior roles through college associates programs and other efforts, they have not made as much progress in promoting them to senior roles. Only 12 percent of the top ranks of private equity firms, for example, are made up of women, according to Preqin. The lack of progress comes even as many traditional and alternatives firms have committed to making changes and have set public hiring and promotion targets for women.

Only 11 percent of fund managers in the U.S. are female as of the end of 2020, including those of open-end and exchange-traded funds in equity, fixed-income, and allocation strategies, according to Morningstar. The percentage has remained unchanged for the past decade. Individual funds that are managed only by women dropped to 2 percent in 2020, from 6 percent in 2001.

The college pipeline programs are showing results, according to Kate Ahern, managing director and head of ESG at Cartica Management, a firm that invests in emerging market stocks. “But the real issue seems to be that many asset managers can’t keep women for very long,” Ahern added. “Women don’t stay in asset management as long as their male peers.” That translates to fewer women in senior roles. The pandemic has made that trend even worse, with multiple studies showing professional women leaving the workforce for a range of reasons.

There are many reasons behind the absence of women on senior investment teams and in other senior roles. For one, they are paid less and get promoted at a slower rate than their male colleagues. They are also responsible for a larger share of household duties because their partners are likely to have demanding careers, according to Page.

“Why would they be in a trade that is more expensive but has less upside?” Page said.

The lack of senior-level role models is another barrier for young women in the business, according to multiple female executives at asset management firms. Kate Burke, chief operating officer at AllianceBernstein, said that’s why she joined the board of Rock The Street, Wall Street, a non-profit organization that provides high school girls with knowledge about finance. She wants to let young women know that “finance is something that they can do well.” If girls need role models, the industry needs more women overall.

Sometimes investment firms have “subconscious bias” against women’s ability to be good investors, according to Linda Zhang, CEO and founder of Purview Investments, which is focused on exchange-traded funds. This negative bias is still there, even though there is a whole body of solid research showing women generating similar performance or outperforming their male counterparts across asset classes and across time frames. At the same time, there is a diversity premium in the stocks of public companies when there are more women in all senior leadership roles. Despite that, Zhang said that women are sometimes viewed as more risk-averse and reluctant to pursue innovative investment strategies.

In 2012, Zhang left her role as a fund manager at MFS Investments to lead an ETF research team at a competitor. It was a risky move she said because ETFs were a fairly new concept at the time. But she said she was courageous enough to act on it early and ended up founding a successful firm in the now established sector.

There are multiple ways to increase the number of women in senior-level investment roles, according to Elizabeth Havens, who recruits senior investment talent at the search firm David Barrett Partners. For example, to help young women get the most out of diversity programs, the firm’s senior management team should communicate regularly with them about paths to getting promoted and establish personal relationships.

Burke suggests that frequent and honest discussions about the challenges that women face in the investment world would help, too. At AllianceBernstein, she is one of the founding members of its women’s leadership council, where she helps identify talented women across the organization, encourages them to actively pursue leadership roles, and to take opportunities when they are offered.

Women themselves should be less apologetic and feel less guilty about not always being able to perfectly manage both career and household responsibilities, Burke added. A support network from both family and corporate is necessary for a woman to succeed in a demanding investing career. Other women said companies need to be creative and offer tangible — even if expensive — support services.

Havens said that diversity recruiting and support is “probably at the peak in corporate America,” which gives mid-career women an opportunity to assess what they really want from a job in asset management.

At the same time, the pandemic has proved that investment and other professionals “don’t need to be in the office to do well,” which can be helpful for female investors who “don’t want to choose between work and family,” according to Sloan Klein, a career coach for executives in the investment management and financial services industry.

“In general, more men in investment management have stay-at-home wives, and more women have working husbands,” Klein said. “So there’s a heavier family obligation on [women.]”

Klein said that before the pandemic, many senior-level or mid-level women professionals had asked her for guidance on working from home, but “suddenly that’s not a conversation anymore.”

“I think that is going to be a way for firms to retain the talent,” Havens said. “Allowing for that flexibility allows for a better work-life balance and the needs for many women.”