With the Supreme Court decision to overturn affirmative action last year, and the subsequent retreat by numerous corporations and financial institutions in their enthusiasm towards DEI initiatives as they navigate swelling political headwinds, it seems like an appropriate time to once again examine the status of gender participation within the investment management industry.
This is especially important given the wealth of data that substantiates the enhanced performance derived from more diverse investment teams.
Over these last four decades, I managed smaller cap equities for an extensive list of leading institutional investors in both North America and in Europe. Throughout that period, I observed the woeful lack of women in my field, and it disturbed me on several levels. Since 1981, the percentage of women in decision-making roles rose from an abysmal level of 3% to a pathetic 13%. While this glacial move was taking place, occupations like doctors, lawyers, dentists and accountants saw female participation grow from between 8% to 20% of practitioners to near or even above parity. This rising shortfall in the investment field was inexplicable and unacceptable.
Last summer, I decided to do something about it. I joined the faculty of the business school at the University of Connecticut to expand its longstanding Student Managed Investment Fund (or SMIF) program. My objective was to go broader and deeper into the current student population, and to share the invaluable experience of managing money in the stock market with as many female students as possible.
To address this, my plan was to create a new program that centered on three underserved cohorts of the UConn community: women, younger students, and underrepresented constituencies. My mission was two-fold: to raise the understanding and awareness of the multitude of careers within the investment management industry, and to properly prepare these students to succeed by exposing them to what it takes to thrive on Wall Street. This involved increasing access to the powerful experiential learning experience of managing real money in the stock market, while in college. I knew this needed to be approached differently to address this chronic deficiency. So, the UConn Opportunity Fund Project came to life.
Over this past year, I have learned much from this initial cohort of female students. First was their annoyance at being pushed aside and left in the back of the room by the males who dominated their classrooms. They recognized that to be heard they needed to combat this marginalization. But then they faced a shortfall in their belief in themselves and their capabilities. Together, this undermined their interest in applying for the legacy Student Managed Investment Fund housed at UConn for over 20 years.
After conducting interviews with a diverse group of female students at UConn and other schools, I found that there were four obstacles to increasing their participation in the field: awareness, access, acceptance and confidence. At the outset, I deduced that in order to address each of these barriers, what was needed was a dedicated cohort of like-minded women who could work collaboratively to master the intricacies of investing. I also understood it needed to be part of an immersive program that focused on developing both technical and soft skills.
I became convinced if we could create a supportive environment, they would develop essential capabilities while developing the self confidence that is mandatory to succeed. Providing the ability to connect with other women, and learn in a team-centric environment, allows them to nurture their confidence and put them on the path to career success.
With the backing of University President Radenka Maric and Business School Dean John Elliott, last fall I began teaching the basics of fundamental equity investing, in a class called The Building Blocks of Investment Analysis and Research. Despite this initial class not earning academic credit, the demand was overwhelming. I had 21 female students, including four seniors, eight juniors, four sophomores and five freshmen.
Addressing disadvantages
The purpose of all this was to address the long-standing disadvantages our female students faced as they begin their career-building journey. My belief is that by giving them exposure as early as possible to all this information, our students are not just better prepared to engage with these career opportunities but have a much stronger sense of where their true interests lie.
Having mastered the first course, which covers a distinctive blend of material in accounting, economics, finance and capital markets, these women become more confident in the skills they have acquired and their capabilities. They also benefit from the supportive infrastructure embedded in the program, which provides all the participants with mentors and exposure to established women in the profession.
This spring, 17 of these women were properly prepared to tackle their next challenge, the Applied Investment Analysis course, where they began managing a sliver of the university’s $633 million endowment. Here, they are given the responsibility of investing money in the stock market, learning how it’s done in the real world. More importantly, they could do this without concern for feeling judged or being fearful of making mistakes, something that all investors do.
Creating an all-female team to train as investors was a monumental advancement for our school. To my knowledge, this spring marked the first of its kind, among the more than 600 student-managed investment funds at coed universities in the U.S. In combination with the legacy SMIF at our Storrs campus, I believe we also held claim to the No. 1 spot in the nation for female participation within an SMIF, at over 55% of our student investors.
But we are doing more than just immersing these students in the ways of Wall Street. My job is to prepare them to capture the coveted internships, traditionally granted to men, that lead to the highly sought after first jobs that initiate rewarding lifelong careers in finance. In addition to the mentors, they have personalized professional development training from a seasoned HR executive in finance to improve their interviewing skills, best present their resume, and refine their portfolio of soft skills, to help each of them to better negotiate the world of recruiting. We have also emphasized exposing them to female participants in the industry, who become both resources and role models. This allows them to see themselves in these roles and it makes it real.
Students weigh in
The students spoke loud and clear about the impact this program made:
"(This program) inspired me and has given me the confidence to pursue any finance career — no matter how daunting it may seem. I end my first year in college excited to pursue my future career and motivated to learn more about equity investment research."
"(Having) an environment for women to feel empowered has made a huge impact on me, and I am sincerely grateful for the knowledge and confidence it gave me."
"With the Building Blocks course, I learned the fundamentals in a welcoming, positive environment that encouraged experimentation and intellectual curiosity. Now, finance is 'demystified' as I know some of the basics and realized that I can do it!"
The critical link to all these comments is that these women never would have signed up for this program had it been a conventional class dominated by men; they just wouldn’t.
The application rate of women for our legacy student-managed fund (founded in 2003) remains a fraction of their proportion of the school population. We can debate long and hard about why that is, and I am in no position to prove anything in this argument. I just accept the insurmountable evidence that there are too many women in schools today that perceive themselves to be imperfect, or inadequate, or ill-equipped, and that perception is guiding their attitude, and ultimately their unwillingness, to participate in programs like conventional student-managed funds. We can choose to ignore or accept this and come up with ways to overcome the self-created obstacles and demystify not just the industry, but also the environment by adopting one simple step: Start them out in a female-only environment.
Upend the status quo
It’s vital to understand this is a selective program and these women are already top performers in the school of business. But many were unable to muster enough of an inner belief in themselves to dive into the deep water of finance. While there have always been women willing to swim among the sharks, there have never been enough of them. We can maintain the status quo and keep having women remain a small minority in the investment industry or we can adopt such measures as carried out in the UConn Opportunity Fund Project and move the gender needle to where it needs to be.
The intent of this endeavor is to expose more young women as early as possible to the career possibilities in this industry and to give them a new perspective through a targeted and richer mix of experiences. All of this work will serve them throughout their lives, while making each of them standout candidates as they pursue attractive summer and full-time employment opportunities in investment management. It will also accelerate the pipeline building of young female talent.
I look forward to seeing our program grow and thrive. But it’s equally important to see other SMIF programs emulate our approach, and to have the industry work with our program, and others, to address this underrepresentation at its point of origin — early in the college experience. Only then can we move the needle to its long overdue level of parity much sooner than could happen without this novel approach.
Steven M. Wilson is the director, Investment Management Initiative, at the School of Business, University of Connecticut. This content represents the views of the author. It was submitted and edited under Pensions & Investments guidelines but is not a product of P&I’s editorial team.
