The female genius in finance is worth 700 billion dollars – Corriere.it

After the first complaint by Cristina Chen-Oster, executive of Goldman Sachs from 1997 to 2005, and 13 years after the start of the legal action, the US banking giant will go to trial on June 5, 2023. Goldman Sachs will have to respond to a “class action” which accuses it of having discriminated against thousands of women in terms of salary and career advancement. Studies paint a mixed picture of the status of women in the financial world. Although the percentage of hires is about the same, men generally rise up the ladder faster. For example, between roles senior In the venture capitalonly 4.9% of partners are women, and in private equity the share is less than 10%. This gap it is found throughout the banking and insurance sector. There are signs that the situation is improving, but the process is still too slow. The Gender Gap Report 2022 compiled by the World Economic Forum calculates that, at this rate, it will still take 132 years to achieve true gender parity.

In the past, discrimination against female careers was explicit and was fueled by cultural stereotypes and prejudices. However, as Harvard behavioral economist Iris Bohnet has highlighted, there are automatic and often unconscious cognitive mechanisms that act in a discriminatory sense. The main one is the moral split. One has the theoretical conviction of not having prejudices, but in the moment of action these manifest themselves in an unconscious way. This is determined by the conflict between the intuitive emotional component and the rational analytical component of the human mind. The first is activated rapidly and is difficult to reverse, while the second, slower, has difficulty correcting the behavioral results of the first in time.

These bias they manifest themselves in every aspect of the world of work from its retention and promotion, to evaluation and allocation. There are various examples: managers who offer more opportunities and resources to one gender (usually men) than to another; bias on the remuneration of services whereby women with equal merit are paid less; bias in recruiting that hiring managers, both men and women, appear to be twice as willing to hire a man than a woman. These bias consolidate the phenomenon of the «glass ceiling».

Then there is another relevant aspect of the role of women in finance. It is about their untapped potential as investors and savers. A recent McKinsey report highlighted that there is at least a $700 billion revenue opportunity in the financial system from better serving women as clients. Furthermore, in a 2021 survey of 5,000 investors (3,000 women and 2,000 men) among clients affluent It is in the private banking In Western Europe, McKinsey investigated preferences and their behaviors, discovering that women’s needs differ from men’s. Women investors control about a third of total assets under management, worth €4.6 trillion, which will grow rapidly over the next few years (8.1%, compared to 2.7% for men) and are expected to will reach 45% of the total €10 trillion by 2030, as the number of married women responsible for household financial decisions increases.

The average amounts invested by women are lower and the allocation of savings is different: women’s average portfolios are 32% fixed income and 32% equity, versus 24% and 45% for men. These differences lead to lower average yields. In terms of investment approach, 18% of women reported feeling uncomfortable making financial decisions (vs. 9% of men). It also appears that women are less likely to change their portfolio more than once a month (36% did so, compared to 45% of men), but more likely to make changes if their advisor proposes a new investment ( 32% versus 24% of men). Among women, 58% said they make all or most of their investment decisions in their own households. A third said they shared these decisions equally with someone else in the family, compared with a quarter of men. 42% of women (versus 34%) said they took a risk-averse approach.

These gender differences suggest that the financial world has a significant opportunity to offer clients tailored advisory services, financial education programs geared towards women’s preferences, and personalized products and services.

A final note goes to the cultural models and languages ​​used. As has often been highlighted by Elsa Fornero and as emerges in a 2018 study, the metaphorical language used to describe financial investments is “coined in a virile way”. There are terms borrowed from battlefields, sports and physical challenges. For example, the animals used to describe stock market trends — such as bull and bear — are all associated with masculine traits and aggression. Taurus in particular is an ancient symbol of powerful male virility. This kind of language might cause women to shy away from investment topics, rather than appeal to them.