What Will It Take to Make Finance More Gender-Balanced?

We overheard male classmates bond with internship interviewers about fantasy football drafts. We were taught that Warren Buffett and Benjamin Graham were the best modern investors. We witnessed senior men sexualize younger women employees. It is no wonder we came to fear our gender would keep us from achieving the same level of success as our male peers in finance.

Because one of us (Malin) grew up in Sweden, considered to be one of the most gender-equal countries, with family-friendly policies that emphasize both parents’ responsibility of raising a family, we wondered whether gender equality in the finance industry in Sweden had progressed further than it had in the U.S. – and if there were any lessons to be learned there.

We turned to those most able to effect change in finance: the professionals actively working in the field. We surveyed 60 finance professionals —ranging from partners in top investment banks and senior members of VC firms, to junior traders and entry-level financial consultants—and interviewed 30 in more detail. Our samples were about half men and half women, and about 67% from the U.S. and 33% from Sweden. We asked about gender representation in their firms, and whether they believed they could positively impact gender equality in their workplace (also known as self-efficacy).

Going into the study, we expected to see equal representation of women and men in senior leadership positions in Sweden and higher self-efficacy among professionals in Sweden than in the U.S. We doubted, for example, that we would come across Swedish investment banking teams with under 40% women. Contrary to our expectations, we found that our initial perceptions were incorrect in the more competitive fields of finance, such as venture capital, investment banking, and securities.

Consider investment banking. The Swedish investment bankers we interviewed told us their teams were on average only comprised of 5% to 20% women. Those who responded to our survey also had less confidence than American investment bankers in their own ability to impact gender equality in their firms. And although there were family friendly policies in place in Swedish firms, team members expressed that it was not culturally encouraged to take full use of them.

This made us think that the field you work in can matter as much or more than the country you work in. The more male-dominated fields in finance are also those with the longest working hours (over 60 hours per week), and according to estimates among the employees we interviewed, these fields seem to be comparably unequal (with women making up less than 20% of the workforce) in both the U.S. and Sweden. Family-friendly policies alone may not be enough to drive change in gender equality in finance.

But in fields such as retail banking and corporate finance, where there is higher female representation, our survey respondents and interviewees did suggest that gender equality is greater in Swedish firms than in comparable U.S. firms. Many of the managers in retail and commercial banking we interviewed in Sweden stated that their teams were made up of well over 50% women. Many also had women in senior leadership positions including on boards. The U.S. finance professionals we studied reported lower numbers.

When we asked interviewees why there is a lack of women in their firms, the most common response in both countries was that they believe women are not interested in finance. When pressed further, they identified two reasons: a masculine culture and long working hours.

The long working hours explanation makes sense when you see it as an obstacle to raising a family. The responsibility of raising a family has, in both countries, traditionally fallen more often on women, and prior research has shown that employees who work long hours tend to have a partner that takes on disproportionate responsibility in the home. This was brought up by many of our senior interviewees. Several referred to a discrepancy in “what [men and women] are willing to compromise and give up along the way [for their career],” as stated by a senior U.S. male trader, suggesting that some senior men still believe women are more likely to forego a career in order to raise a family.

But data shows that, at least in the U.S., only 2% of men and 2% of women say they plan to leave the workforce to focus on their families; Sweden’s parental leave policies allude to similar societal views. Although long working hours might have a more negative impact on women than men due to the unequal division of housework and childcare, none of our women interviewees commented that long working hours impact them more negatively than their male colleagues.

More survey respondents and interviewees pointed to a masculine and unwelcoming culture as the main reason for why there weren’t more women in certain fields of finance. Many of the women we interviewed are among the only women at their firms, and they often attributed part of their success to their comfort in a masculine environment. Several described themselves as comfortable in this type of culture, or they were described this way by their colleagues. “I grew up with two brothers, and most of my closest friends are guys… to be honest, it would be more uncomfortable for me to work with a lot of women,” one Swedish female investment banker told us.

It’s not hard to see how this thinking can pressure women to assimilate to the masculine culture to advance in the field, and how this might create a barrier for women, like ourselves, who don’t want to mask our femininity in order to succeed.

We did learn about a few unlikely allies. A number of respondents expressed that their teams strive for more equal gender representation due to external client pressures. To our surprise, respondents told us that clients were one of the main reasons teams kept gender representation in mind. Client-side work is known for harsh hours and a lack of flexibility stemming from unpredictable client demands. But, for better or for worse, many of our female interviewees referenced being invited to meetings because they were women, seeing questions about gender representation in RFPs, and hearing clients explicitly comment on the lack of women on calls. One woman explained, “[I am] expected to show up to a lot more meetings, because we are often criticized for not bringing along women.”

Although this can encourage representation of women, some interviewees noted that it has increased perceived competition between women in their workplace. If management is incentivized to have a woman in each meeting, women are incentivized to maintain their status as the token woman on the team as a tool for career progression.

Another group of allies? Young people, especially young men, in both countries, with less than four years of work experience after college, were most vocally concerned about the lack of equal gender representation at their firms. This is consistent with other research on male allies in the U.S., finding young men to be the best positioned to advocate for gender equality.

The solution to the lack of female representation in masculine fields of finance may not lay in Sweden as we had hoped, but by the end of our study, we felt somewhat reassured. We learned of grassroots movements at finance firms in both countries to promote gender equality. Several of the firms our respondents worked in have started focus groups and are actively having conversations about what they can do to attract and retain graduating women.

Despite the progress that has been made, we clearly still have a long way to go to reach gender equality in finance. We hope that senior level professionals at finance firms will realize that graduating women like ourselves are aware of these issues and are actively choosing careers at firms that are making concerted efforts to improve. Clients also need to use their position of power to effect positive change in the financial firms that they do business with by making crucial but simple demands for equal representation and inclusion. Future students should not have to worry about their gender being a barrier to their success.