Addressing Gender Folklore
Diversity in investing, or investing in diversity?
The investment industry could learn a thing or two from honey bees. Their communication skills are impressively demonstrated by their so-called “waggle dance,” which details the distance and direction to valuable food sources. And they're extraordinarily efficient in how they optimize foraging efforts for the overall health and well-being of the hive.
Nature is replete with examples of perfect symmetry — from facial features to personality traits. By our own nature, we seek a tranquil balance.
However, this balance hasn't translated to the investment industry.
There’s no shortage of data that illustrates gender imbalance in the investment management industry. Women represent about half of the US workforce and college graduates with a business degree. Yet the percentage of women in the investment industry is far from proportional.* Research from our recent report The Folklore of Finance** revealed the models for success in the investment industry are broken. Investment professionals are failing to deliver alpha on a consistent basis and they’re failing to help investors’ achieve long-term goals.
Could it be that gender-specific differences in investing are contributing to the industry’s failure to achieve true success?
*Julie Coffman, Orit Gadiesh and Wendy Miller, The Great Disappearing Act: Gender Parity up the Corporate Ladder, Bain & Company, white paper presented at Davos, January 2010. See also: Laura Goode, 2010 Heralds Female Majority in the American Workforce, New America Media, January 5, 2010.
**State Street Center for Applied Research, The Folklore of Finance: How Beliefs and Behaviors Sabotage Success in the Investment Management Industry, 2014.