Why There Needs to Be More Women in Finance

by Joan Brooks

In the '60s, America's second wave of feminism spurred more women to join the workforce, and they've been inching up the corporate ladder ever since. In fact, more women run Fortune 500 companies today than at any other point in history.

But these kinds of developments remain isolated cases. STEM, for example, is still a male-dominated field, with only 30% of the world's researchers being women. And the pandemic has even prompted what experts are calling a She-cession, where socially enforced domestic duties are causing women to suffer more job and income losses than men.

One career that's taking plenty of blows is finance, where female representation has been scarce for years — though 49% of employees are women, a mere 15% become executives.

Why women rarely advance in finance

Your job prospects depend on both your secondary and tertiary education. But, as previously discussed here on 50/50 Leadership, kids are rarely encouraged to learn financial literacy in high school.

Further, when applying for college, women tend to choose majors with lower earning potential than men, as they feel this will more realistically land them a job. As a result, 62% of finance degrees are held by men, giving them an advantage when applying for entry-level jobs.

And when trying to advance their careers, it's difficult for women to break into positions held by "the old boys' club," especially when senior male executives tend to sexualize younger female employees.

But facilitating the advancement of more female executives won't just help break the glass ceiling. Here's why everyone wins when there are more women in finance.

Women stabilize banking

In 2018, the World Economic Forum found that including more women in all aspects of banking would actually make the entire industry more stable. And these benefits extend to investors, too. This is because women help reduce risk, making it easier to manage.

In fact, contrary to popular belief, they make less emotional and more financially sound decisions than men. Consequently, women can help banks cut down on losses during periods of economic uncertainty.

Women are better investors

Consequently, Fidelity Investments found that women's investments earn higher returns than those of their male counterparts. And because they're more likely to take part in socially responsible investing (SRI), they invest more responsibly, too. By supporting companies that aim to bring about social change, women are able to integrate their moral principles with their financial decisions.

Gender-diverse workforces are happier and more creative

Earlier this year, researchers from the University of Essex found that diverse workforces are revolutionizing the workspace. Spearheaded by women, these employees help companies innovate their way to success.

And having more women in the c-suite won't just raise profit margins by 1% — it'll improve employee engagement, too. In fact, women professionals can improve both employee relationships and the company's relationships with its clientele.

Reversing the trend

However, it's not too late to turn the tide on the decline of women in finance. Here, proper education lends a helping hand.

As we've touched on before, it's important to teach financial literacy as early as high school, and strive to put more women in the faculties of male-dominated college courses. This is because having women instructors in their formative years actually helps young girls take interest and perform better in traditionally male spheres.

More importantly, empowering mentorships help women aspire to have careers that go beyond what they feel is "realistic." In fact, this overview of online accounting programs by Maryville University shows that graduates can go on to roles in financial advising, financial analysis, and financial management — roles that women are currently severely underrepresented in. Women teachers can also encourage students to further climb the academic ladder, as graduates of masters degree programs have a 29% higher earning potential.

By leveling the educational playing field, women can grow the knowledge and confidence they need to make a name for themselves in the cutthroat world of finance. And with strong women mentors by their side, Professional Woman's Magazine writes that there's no need to rely on the connections men often have to resort to, either.

Exclusively for 5050leadership.org by Joan Brooks