Sallie Krawcheck Discusses Diversity, Opportunity and Management in AIS Keynote
October 16, 2020
By Jennifer Cuello
EisnerAmper’s 5th Annual Alternative Investment Summit
EisnerAmper’s 5th Annual Alternative Investment Summit, 2020: A Year of Change, featured keynote speaker Sallie Krawcheck, CEO and Co-Founder of Ellevest, a prominent digital-first mission-driven investment platform for women.
The year 2020 marks the 100th anniversary of the passage of the 19th amendment and some American women’s constitutional right to vote. To align with this monumental milestone, Ms. Krawcheck, the author of Own It: The Power of Women at Work, shared her thoughts on embracing the power of diversity in the financial services industry, and challenged the audience to question stereotypes and be part of the positive changes that are happening.
The Case for Diversity
“What traits of a leadership team make an organization successful?” Krawcheck asked. Attributes such as where the individuals went to school, how long they have been working together, and their past track record are factors that generally draw the most focus, she noted. Her background as a research analyst led her to evaluate what drives superior teams, and found that the only driver that can predict strong performance is diversity. “Bringing different insights, experiences and backgrounds together is where the magic happens,” she said.
“Diversity is equality of opportunity, but recognizing its role in client and employee engagement, innovation, efficiency and returns is integral to shifting our mind set.” She noted that diversity can be embraced as more than just “the right thing to do; rather, it becomes a necessary element of success.
In the financial services industry in particular, the movement of diversity has been slow and progress has been hard fought, which has a great deal to do with underlying impressions of men and women.
Acknowledging Gender Stereotypes in the Financial Services Industry
It’s no secret that the financial services industry draws more men and that more investment dollars go to male managers. The real question is, why? Krawcheck emphasized that preconceived notions, such as the impression that men are better than women at math and investing, and that women are more risk averse than men, play a significant role. “Many of these impressions, which have shaped the composition of professionals in the industry, begin in our childhood homes,” she said. “Girls traditionally receive different messages around money and math than boys. While boys are encouraged to make money and aspire to be a CEO, girls are told to be careful, watch mom coupon clip, and aspire to less visible roles.” Krawcheck also mentioned that the gender pay gap also starts in the home; and said that boys are generally getting higher allowances than girls for the same chores.
As girls grow up into young women, there is less of an emphasis on them making more money, as opposed to men; as well as a lack of powerful female role models to look up to in the industry. The culmination of these experiences leads to women and men differing in their feelings about money; where men associate money with power, strength and independence, women have a tendency to associate money with isolation, uncertainty and loneliness.
Krawcheck highlighted that these experiences have created a ripple effect that have made most accept that men are better suited for the industry than women. However, she noted that the research revealed that women are just as good (if not better) than men at math and managing money, and that women are more risk aware (not averse) than men. The conclusion that can be drawn is not that women are not suited for the industry, but rather that the industry and its infrastructure have been tailored to and directed towards men.
With this frame of mind, Krawcheck founded Ellevest; an investment platform made for women, by women. She recognized that the problem is not that women don’t want to invest, but that there are a lack of products in the market that are targeted to them.
What Financial Services Professionals Can Do to Be Part of the “Mega Trend”
Krawcheck’s message was that to achieve varied points of view, great debate, and ultimately better performance, companies and individuals need to shift their mindset and be willing to get out of their comfort zone. She challenged everyone to look for opportunities to be drivers of diversity and be ahead of the growing trend in the industry with the following advice:
1) Recognize that diversity is not lowering the bar; since diversity drives performance, it is actually raising the bar.
2) Rather than hiring the best person for the job, hire the best person for the team. In many cases when individuals hire the best person for the job, they default to individuals with similar traits and backgrounds to theirs. Hiring the best person for the team acknowledges that the team is better when there are different insights and backgrounds.
3) Shift the focus from culture fit to culture add: When a boss hires someone similar to them to be part of their team, it will make them feel comfortable; it’s important they challenge themselves to be uncomfortable.
4) Challenge middle management to abandon reasons why a diverse candidate cannot be found and make it a necessity to fill the role.
5) Pay one’s team for diversity.