Where Are the Women on the All-America Research Team?

Illustration by Weld Williams

Illustration by Weld Williams

Once it seemed as if equity research departments would lead the way to gender equality on Wall Street. No longer.

On Tuesday, Institutional Investor will release its 47th edition of the All-America Research Team, long regarded as the definitive ranking of Wall Street’s top research analysts.

You’ll need to get out your reading glasses to find the women on it.

In fact, you’ll need them for any AART roster compiled over the past decade. The obvious explanation? There simply aren’t that many female analysts who are eligible (female research assistants generally don’t count).

As one analyst (quite logically) reasons, “There are more male senior analysts across Wall Street than women, so the probability of a woman being named to the All-America Research Team is less than a man.” End of story. Or is it?

One source challenged the validity of stacking up the numbers of female and male AART honorees in the first place. “It’s apples to oranges,” he insists. “The women are so much better than the men because they have to be. They are survivors.”

Consider that as you scroll through the analysts named to the 2018 All-America Research Team when it’s released this week. Getting these jobs, staying in these jobs, excelling at these jobs requires greater quantities of smarts and grit for women. Maybe that’s just the way it is, but it’s not the way it should be. And it’s not getting better; it’s getting worse.

The number of female chief executives is minuscule and declining. Women with undergraduate and advanced degrees outnumber men, but women as a group are still paid less on average, according to U.S. census data. And who cares that true gender equality would increase the gross national product by 26 percent, as the McKinsey Global Institute calculates?

In the 2009 All-America Research Team, 161 male analysts made first, second, or third team in their respective sectors. There were 25 female analysts so honored, a measly 13.4 percent of the total.

In the eight years following, the number of women earning top-three positions never again reached that level. This year female sell-side research analysts will account for 11.9 percent of the first, second, and third teamers.

The sectors where female analysts have received the highest proportion of nominations for their research coverage speak for themselves. In 2009: Specialty retail stores. Department stores. Apparel and footwear. Cosmetics and household products. Food and drug chains.

In 2018: Beverages and household products. Department stores. Specialty pharmaceuticals. Biotechnology (more on that later).

Now consider the opposite end of the spectrum, the industries in which no women were nominated for their research. In 2009, it was life insurance. In 2018, it was life insurance, plus shipping and integrated oil. If I had world enough and time, I’d look into that life insurance thing. Is it devoid of female stars because it’s considered a man’s world — or because women are smart enough to steer away from it?

There was a point in time when it seemed that equity research departments might — even would — lead the way to gender integration and equality on Wall Street. But that moment is long past, preserved in the sentimental recollections of the women who were part of it, and in decades-old Harvard Business School case studies.

Today’s star analysts who happen to be female are recognized by Institutional Investor’s annual ranking for their competence, their diligence, and their resilience. But one has to ask, given the opportunities available to smart, educated female job seekers, why they would even want to pursue a career in investment research.

In 1972, the debut year of the All-America Research Team, four out of the 85 analysts identified (including runners-up) were women. That’s 4.7 percent. Three covered — you guessed it — cosmetics. The fourth, textiles.

In short order, the AART became widely accepted as the annual report card for sell-side research. Analysts who made the cut had their calls answered, their pay packages fattened, their résumés circulated. For women all-stars it was a badge of legitimacy, notes Boris Groysberg, professor of organizational behavior at Harvard Business School and a longtime student of the All-America Research Team. “It made these labor markets visible,” he explains. The rankings spoke volumes, and Groysberg and his colleagues relied on them over many years to reveal the inner mechanics of Wall Street research operations.

While still working on his doctorate, Groysberg teamed up with professor Ashish Nanda to produce a series of four case studies examining the impact of the arrival of Jack Rivkin, the man brought on in early 1987 to lead the research department at what was then Shearson Lehman. As head of global equity research, Rivkin was charged with transforming the firm from a research cesspool into a research powerhouse. In concert with the talented Fred Fraenkel, he took swift remedial actions: reorganizing the department and doubling its size, establishing operational goals, building relationships with analysts, ensuring their independence, creating an investment committee, introducing performance evaluations, revamping training, and collecting and circulating metrics. “II or die” became a motto and a goal.

In October 1987, Shearson Lehman was the 15th-ranked firm on the All-America Research Team. A year later the merged and renamed Shearson Lehman Hutton leapfrogged to the seventh slot. Then to fourth in 1989. The firm took first place in 1990 — and held it for three years straight.

According to the first case study co-authored by Nanda and Groysberg — Lehman Brothers (A): The Rise of the Equity Research Department — Rivkin had a special talent for identifying “the best people.” One of the first he hired was Drexel Burnham Lambert’s top-ranked airlines analyst, Helene Becker, who still works this beat today for Cowen & Co.

Another was biotech pioneer Teena Lerner, who arrived at Lehman Brothers in 1987. As an emerging field, the biotechnology sector created windows of opportunity for women with backgrounds in science and biology — Lerner rattles off the names of Denise Gilbert (first Smith Barney, Harris Upham & Co., then Montgomery Securities), Linda Miller (PaineWebber), Jackie Siegal (Raymond James), and Joyce Lonergan (Cowen) as examples.

Lerner, who holds a Ph.D. in molecular biology and retrovirology from Rockefeller University, recalls that “the exciting thing about investment research, as opposed to, say, trading or banking, was it sought out those who had industry knowledge. This was very different from other Wall Street careers.” In theory, she says, sell-side research should have been (and should still be) a much more level playing field than sales, trading, or investment banking — and it should be an area that attracts more women. Not just as research assistants, but as full-fledged research analysts, eligible for nomination to the All-America Research Team.

At Lehman, Rivkin made it clear he wanted only the best, no holds barred. Equal opportunity was cultivated. Recruitment was gender-blind. Within two years the firm’s research department was nearly 30 percent female, and its percentage of II-ranked female analysts approached 40 percent — far surpassing all of the other major investment banks in the industry, according to data collected for the case study.

[Sidebar: The Best Research Firms for Women]

“In the late 1980s,” Lerner is quoted as saying in the first of the Harvard case studies, “top bulge-bracket firms developed the unsavory reputation of being particularly difficult places for women to work. People from some firms would brag that every woman who worked there had quit. In my view, the joke was on them. They were passing up on potentially 50 percent of good people.”

In the summer of 1992, politics at Lehman disrupted the house that Jack built. Rivkin was shown the door abruptly, a victim of his own success in a firm that could not tolerate unorthodoxy. Rivkin’s presence through most of the voting cycle for the 1992 edition of the AART was reflected in Lehman’s No. 1 position that year — but the firm’s research department was toppled soon after, falling to second place in 1993, then declining to seventh in 1994 and dropping to No. 13 in 1995.

The research department downsized, from 63 analysts in the fall of 1993 to 49, laying off star Elaine Garzarelli, a ten-year veteran with 11 first-team finishes on the AART to her name for quantitative analysis — not to mention widespread recognition for predicting the October 1987 market meltdown. She chose to hang out her own shingle rather than reenter the fray.

Three retail analysts bolted for Morgan Stanley, including another acclaimed female Rivkin protégée, Josie Esquivel. Teena Lerner hung on until February 1996, then quit.

The Camelot at Lehman was over.

The All-America Research Hall of Fame debuted in 2011, honoring those analysts who had won a first-team position at least ten times. This group represented one third of 1 percent of the nearly 15,000 individuals who had appeared on the AART in the four decades since 1972. Forty-nine analysts qualified, including six women: Meredith Adler, Elaine Garzarelli, Patricia McConnell, Katharine Plourde, Jessica Reif (who has dropped “Cohen” from her name), and Ivy Zelman. As of this year ten more inductees have been added to the list — all men. The 12.2 percent share initially claimed by women has shrunk to 10.2 percent.

Adler spent 18 years in bond research and commercial banking before heading to the sell side at Lehman. She made a successful transition to Barclays following Lehman’s demise. “All I did was always try and add value,” says Adler, who has garnered 14 first-team honors for coverage of a wide range of consumer-oriented companies, including food and drug retailers, discounters, and distributors.

“If you want to be a good analyst, you really have to work to understand how businesses operate,” she explains. “You’d be surprised how many people don’t try that hard to do this.” She did — and was flattered when she found out that at one company she covered, the CEO prepped for conference calls with questions his staff compiled on a list entitled “Meredith Might Ask This.”

“The highest possible praise a CEO could give an analyst,” she notes, is to describe him or her as “balanced.”

As for lifestyle, Adler admits that being an analyst was — and remains — a tough balancing act for an experienced woman associate looking to move up who either has or wishes to start a family. “The way it works with research is you don’t get to advance until someone leaves,” she says. “And then when the opportunity arises, you have to jump on it.”

Adler readily confesses her competitive advantage: Her husband agreed to quit his job to be the stay-at-home caregiver for their two sons. “After a certain number of years, you can start to pull away from the consensus and take some risks,” she notes. Longtime Bank of America Merrill Lynch media analyst Reif seconds this point.

“Getting through that period where you have to prove yourself is key,” she says. “There’s no way around the hard work and dedication, and if you just do maintenance, you might as well quit.” Reif, who acknowledges she has lasted “longer than most,” credits the support and recognition she’s received internally for her tenure.

“The role of research directors is crucial,” asserts Faye Landes, whose résumé includes PaineWebber, Salomon Smith Barney, Sanford C. Bernstein, and Cowen. As an analyst she covered footwear and internet stocks, earning her a first-team ranking three times. Landes characterizes her sell-side career as “long, enjoyable, and lucrative,” and believes that the “gospel of Jack Rivkin” of promoting women as analysts did have an influence on other firms. But that period is long over. Although Wall Street has not shut its doors to women, Landes maintains that it has definitely become more “bro-y.” This is in stark contrast to the rest of the professional working world, which has made an effort to attract and retain women, including by offering benefits such as extended maternity leave and building strong, inclusive cultures.

Landes also firmly believes that research directors could change this “in three years if they wanted to.” And that this mission should not fall exclusively on the shoulders of the women holding this position at major franchises — notably Bank of America Merrill Lynch’s Candace Browning, Joyce Chang at JPMorgan Chase, Diane Schumaker-Krieg at Wells Fargo, and the recently appointed Susan Gilbertson at Mizhou Securities. As Professor Goysberg puts it, “One of the reasons for lack of progress historically is that it’s been undertaken by women for women. Men need to do their part to work toward gender equality and inclusiveness. For me my work on this topic has been important professionally and personally.” Yes, his heart is in this because he has two young daughters.