When finance experts attempt to explain why there are so few women in investment banking (i-banking), they invariably cite the job’s extreme work-life balance—or lack thereof. I-banking demands extremely long hours, and some women might prefer to choose a less demanding career to allow more time with the kids, they say.
Long hours are perhaps one valid reason for the gender gap in i-banking, but they don’t tell the full story. The wage gap in financial services is more extreme than in any other profession, with women earning 55 to 62 cents on the dollar that men make. That’s considerably less than the average for all industries, at 77 cents on the dollar.
To make sense of these issues, NerdWallet examined the statistics and spoke to insiders in order to outline the various factors that go into explaining why women are so underrepresented in investment banking.
The Investment Banking Gender Gap: By the Numbers
In a 2011 census of the securities, i-banking and commodities industries, Catalyst found that 40.5% of employees were women. At first glance, this statistic seems to fly in the face of what we know about the financial services industry. Maybe it’s not the Old Boys’ Club it’s reputed to be.
As we look at more censuses and surveys, though, this picture becomes much more nuanced and complex. In investment banking alone—disregarding those other two fields—25% of employees are women, according to a 2011 Vault survey of the 75 leading i-banks in North America. It seems that, unlike its close finance cousins, there’s a culture unique to i-banking that is less accommodating of women.
As employees move up the ladder, too, this gender disparity becomes more extreme. In that same survey, Vault found that 11% of executives were women. Among chief executives in particular: just 3%, according to a Catalyst survey of U.S. financial companies.
Why are women dropping out of this profession? At least in part, this trend is due to the nature of the job.
“There’s a little bit of self selection… the trading floor tends to be more of a frat,” said Heidi Miller, the former head of J.P. Morgan, in an interview with the Wall Street Journal last year. “Investment banking is a 24/7 job. You’re working every weekend. Some women realize that odds of being a successful big swinger are not high. The investment banking pipeline is equal, but the attrition rates are really high for midlevel women.”
Carol Roth, a former investment banker, WGN radio host, and television contributor, attributes the high attrition rate to women’s intellectual interests:
“It’s unfortunate, I don’t know where it starts, but somewhere, maybe high school, women become less interested in math-oriented endeavors. I don’t know what it is. A lot of women I know don’t follow the stock market or take an interest in finance- and market-related endeavors.”
In short, it’s tough to blame the financial-services culture unilaterally for the high attrition rate. There are still, however, quite a few scathing criticisms of the industry, which we detail below.
Challenging Work Culture
Rather than truly acting as “frats” as some joke about, investment banks are sometimes found to be overtly hostile to women, if unintentionally. According to a writer for Reuters, investment banks regularly face lawsuits for their “pervasive anti-female atmosphere.” The article cites a 2004 Morgan Stanley case in particular, where the bank agreed to pay millions to women it had denied raises and promotions as well as in compensation for “lewd behavior.”
That said, not every i-banker is a “lewd fraternity boy,” in the words of David Loosvelt, a writer for Vault. But sexist comments do sometimes fly freely and there are also male-exclusive events at some banks. Loosvelt cites a multi-event Christmas party, where women were not encouraged to attend the massage session.
Perhaps more than other industries, too, investment banks center on interpersonal relationships. Deal-making is what gets business done, and, with its reputation as an Old Boys’ Club, it’s harder for women to make it.
“It’s a pressure cooker,” said Karen Wright, an executive coach and author of The Complete Executive. Wright helps female i-bankers address their profession’s work-life balance and its emotional burden.
“I had a conversation just an hour ago,” Wright said of a client having trouble building relationships at work. “A lot of the bonding happens when the guys are playing hockey at night.”
The male-only culture isn’t necessarily omnipresent, though. Roth, who’s worked at Montgomery Securities and Bank of America Securities, said that bankers don’t take their clients to the strip clubs like they used to; that was more of a thing of the late 80s and early- to mid 90s, she said. In the 2010s, the social scene is more open, although sometimes it is up to women to take initiative.
“Nowadays, it’s just incumbent upon women to stand up for themselves and take a seat at the table without being invited,” Roth said.
Lack of Mentorship and Infrastructure
Exclusion can sometimes be subtler than that. “Women do not have the benefit of an historic infrastructure to support their success,” said Roy Cohen, an executive coach and author of The Wall Street Professional’s Survival Guide. “Although no one’s success is ever a sure thing, when you have a history in an organization and within an industry you have embedded relationships and advocates. There is also a sense of entitlement that emerges over time: You deserve to be here and other people believe that you do, too.”
This lack of a weak-supporting infrastructure for women is a problem that minorities face, too, according to Cohen; they are often cut in larger numbers when investment banks look to trim the fat. They, like women, don’t have the same safety net as Caucasian men are said to possess.
Again, in large part, it’s up to women to build their own support systems. When she coaches women who deal with these problems every day, Wright recommends, “Stop wishing that stuff wasn’t the way it is, and start dealing with it because it’s the way it is.” The first step: communicate. “The best thing that can happen is for people to talk,” she said.
A Personality Double Standard?
If it’s harder for women to stay in this profession, it’s also true that it’s difficult to fit in at all, simply because some element of gender stereotyping is—whether we like or not—already ingrained in our psyches. For some people, the image of a good investment banker and a good woman are at odds.
This dilemma is what Ilene H. Lang, president and chief executive of Catalyst, calls the double bind: especially in i-banking, it often takes aggression to get to the top, and, for some men, an aggressive woman simply isn’t a good woman.
“A woman being aggressive is not perceived well,” Wright said. “A lot of these men have wives at home. They have a vision what women should be like. It’s still a mind-bender for a woman to be one or the other—or possibly even both.”
That’s not to say that all women hit a glass ceiling. Some are met with immense success. Roth, for example, started as a financial analyst at Montgomery Securities and, by the age of 25, became a vice president. She also insists that women stand up for themselves like she did.
“Another thing that was key to my success, that’s not a typical female characteristic, I was a big advocate for myself,” she said. “If I’m not self-promotional, who’s going to promote me?”