Why Are So Few Women in Finance? It's Complicated

Hollywood is probably one of the more well-known industries that's widely seen as a tough place for women to ascend to the top. When Kathryn Bigelow won Best Director for The Hurt Locker in 2010, she became the first-ever female director to do so. (Chloé Zhao, who won in 2021 for Nomadland, was just the second.) It's notable not only that a female director won but that the pool of female directors was also so small. In fact, from 2007 to 2019, male directors outpaced female directors by a ratio of 20:1. That's a stunning stat.

Yet Hollywood is hardly an outlier when it comes to big-money industries in which women are underrepresented at the top. There's also been a dearth of female workers among the upper echelons of financial management and investment services. Consider this: According to the Deloitte Center for Financial Services, only six of the 107 largest financial institutions in the United States were run by female CEOs in 2019.

Key Takeaways

  • Women and men begin in parity at the start of their careers in finance, but the C-suite is still largely dominated by men.
  • There are comparatively few women role models and mentors in finance, and this may account for some of the gender disparity in top roles.
  • In venture and private equity firms, women account for less than 10% of senior roles.
  • Although the gender gap is shrinking in MBA programs, women account for only 16% of finance faculty at top business schools.
  • Nonprofits such as Girls Who Invest offer programs to bring young females into the world of finance through internships and mentoring programs.

Where Are All the Women in Finance?

Studies paint a mixed picture for women in finance. Though the percentage of men and women entering the field is roughly equal, men typically rise to the top faster than women do. For example, among senior roles in venture capital (VC) firms, only 4.9% of the partners are female. The picture doesn't get much rosier when it comes to private equity (PE), in which fewer than 10% of senior roles are held by women. On the bright side, there is a greater focus on improving diversity, and the overall percentage of women joining VC, PE, and hedge fund firms is rising.

When it comes to gender equality, there are a few reasons why women may not be advancing to the top ranks as quickly as men are. One is a lack of role models. Without more women paving the way, those entering the field may find the path more challenging to navigate or may not even know there is one. Some women have voiced concern about work-life balance, while others simply cite the lack of manager support.

The nonprofit Girls Who Invest was founded in 2015 and continues to invest in young women's future careers in the financial services industry.

The Business School Impact

Based on business school enrollments, the number of people studying finance and business tends to skew towards men. A study by the Forte Foundation found that women accounted for 41% of all full-time MBA students in 2021–a record high that nonetheless illustrates that the field is historically dominated by men.

But the exact size of the gender gap varies among different business schools. For example, 46% of students in Harvard Business School's class of 2023 were women, while at Wharton, women accounted for 52% of the MBA students graduating in 2023. (No statistics were reported for gender-nonconforming applicants at either school).

The gender gap is more pronounced at the faculty level. Studies by the University of Massachusetts at Amherst and Yale University found that among the country's top business schools, only 16% of their faculty were women. There is also a publication gap, with women professors publishing about 17% fewer papers than men.

The lack of women in mentoring or leading academic roles, and the professional obstacles they face, could be relevant factors in the number of women seeking top boardroom positions.

Investing in Young Women

Women need mentors and role models to show that whatever roadblocks have been preventing them from achieving or even considering C-suite level positions can be overcome. And that means starting young.

Fortunately, there are a number of nonprofits and other women-focused organizations rising to that challenge. Girls Who Invest, a nonprofit founded by financial expert Seema Hingorani in 2015, has an ambitious mission to have women managing 30% of the world’s capital by 2030. 

Girls Who Invest's programs and offerings are designed to motivate, interest, and inspire young women to join the investment management and greater financial services field.

The mission is not new for Hingorani. Not only does she bring 25 years of investment experience to the nonprofit, but she's also been heavily involved in diversity initiatives. She's a member of Morgan Stanley's Diversity and Inclusion Senior Leaders Advisory Council and was previously the founder and chief investment officer of SevenStep Capital, an investment platform solely focused on women.

And she's not alone. Ellevest, founded by Wall Street veteran Sallie Krawcheck in 2014, aims to make financial products more accessible to women through investing tools, access to financial planners, education, and coaching. The company's motto says it all: "Ellevest was built by women, for women."

Business schools are also getting in on the action. Though it's not just focused on financial careers, Rutgers Business School's Center for Women in Business aims to "remove barriers, build community, and empower women with the confidence and skills necessary to succeed as business leaders."

The 13-member board is largely female and dedicated to growing opportunities for women through networking events, leadership workshops, female-focused mentoring opportunities, and more.

How Many Women Are There in Finance?

Overall, women outnumber men in the finance and banking industry, but the reverse is true at the most senior positions. At the beginning of 2021, women accounted for about 52% of the industry, according to research by McKinsey, but their representation fell at every step up the corporate ladder. In the C-suite, white women accounted for only 23% of executives, and women of color another 4%.

How Many Women Own Their Own Business?

There are 11.6 million women-owned businesses in the United States, according to the National Association of Women Business Owners. This accounts for about 39% of the country's privately owned firms, although they only account or about 8% of national employment.

How Big Is the Gender Pay Gap in Finance?

The finance industry has the second-largest pay gap in the United States economy, according to a study by Automatic Data Processing, Inc. Based on ADP's research, the average salary for women in the banking and finance sector was $27 per hour in 2019, compared to an hourly average wage of $40 for men. There is also a promotion gap, where men take about 6.6 years to be promoted compared to 7.4 years for women.

The Bottom Line

Things are starting to change. Men may still be dominating the C-suite, but as more women learn about the opportunities available in business and finance, find mentors to help guide them, and break down other barriers, expect to see that gender gap start to close.

Article Sources

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