LAYING THE PIPELINE

SOLVING WALL STREET’S GENDER GAP AT THE TOP GOES BEYOND TALKING ABOUT WORK/LIFE BALANCE, SAYS ERIN BELLISSIMO. WE NEED MORE WOMEN IN THE INVESTMENT CAREER  PIPELINE.

In 1993, fresh out of Bucknell University, Erin Bellissimo went to work on Wall Street as an analyst at J.P. Morgan. At the junior level positions, the number of women and men were fairly evenly balanced across the financial industry. Bellissimo was determined to prove that she could work just as hard as her male colleagues.

So when she came down with a 102-degree fever one winter during a major mergers and acquisitions deal, she didn’t think twice about coming to the office — despite the five feet of snow piled up on the streets of New York. She did make one concession to the weather: Instead of the Melrose Place-style skirt suit that was the uniform for women in the finance industry at the time, Bellissimo decided to wear a pantsuit. The next day, she was summoned to human resources and given a lecture about appropriate work attire.

In 1995, Bellissimo left Wall Street to earn an MBA at the University of Pennsylvania’s Wharton School. After getting the degree, she could have returned to banking and Wall Street. She enjoyed the work and was good at it. But as someone from a traditional family in upstate New York, she also wanted to eventually start a family of her own and was unsure it was the right environment.

In the finance industry in the late 1990s and early 2000s, however, work/life wasn’t so much of a balance as a seesaw. Many working women either didn’t have children or if they did, they didn’t get to spend a lot of time with them. So Bellissimo did what so many women in the finance industry have always done — she put her ambition on the back burner. Bellissimo took a position with Columbia University that provided a more flexible work arrangement so she could focus on family. Her husband continued climbing the Wall Street ladder.

Women historically have had success in starting executive training programs in the finance industry, but retention was and continues to be an issue. Today, the senior executives of Wall Street banks are still nearly all-male. In America, women make up just 10% of mutual fund portfolio managers, 6% of chief investment officers, 6% of senior leaders in private equity and 3% of hedge fund managers. Less than 3% of the $70 trillion in assets under management around the world is managed by women.

Bellissimo had long wanted to do something about that, and now she’s finally in a place where she can. In 2018 she became the managing director of the Notre Dame Institute for Global Investing, where she’s used her extensive Wall Street connections to bring dozens of financial luminaries to South Bend.

In February, she organized the second annual Women’s Investing Summit, an all-day event featuring 25 of the top women executives in the finance industry. Attended by several hundred undergraduate and graduate students, the event included panels with titles such as “Value Creation Through Active Management” and “Real Assets to Credit and Nuances in These Markets,” as well as a case study on the music streaming service Spotify. In many ways, it was a typical finance industry conference — except that all of the speakers were women.

“The idea was to put all these smart, talented women up on stage so that women in the audience could go, ‘I’m as smart as her, I could do that,’ and men could go, ‘Oh, I could work for her, that’s totally normal,’” Bellissimo explained. “It’s a bit of a Jedi mind trick approach to the diversity issue.”

She invited the speakers to talk about almost anything they wanted — industry trends, portfolio management strategy, market predictions, career advice — but she made clear to everyone that one phrase was verboten: “work/life balance.”

“What we’re trying to do is emphasize the talents, ideas and investment acumen of speakers rather than highlight somebody who’s really good at multitasking,” Bellissimo said. After all, she points out, when was the last time anyone heard a man at a finance conference discuss how he juggled career and family?

To increase the number of women in top positions on Wall Street, Bellissimo says, you have to get more women into the career pipeline. That’s why she also serves on the board of Girls Who Invest, a national nonprofit that encourages young women to consider careers in the finance industry. Every year, it sponsors a competitive summer program open to all American undergraduates that includes four weeks of academic instruction and six weeks of experience at a leading investment firm. Notre Dame is one of the program’s three partner universities, along with the University of Pennsylvania and UCLA. The program’s goal is to have 30% of the world’s investable capital managed by women by 2030. (For summer 2020, GWI will conduct sessions online due to COVID-19.)

“I’m very much a believer in investing as a career for women,” Bellissimo said. “And I also believe it isn’t given enough consideration by women. With Girls Who Invest, you have an environment where the gender issue is taken out of the equation — you’re in a classroom for four weeks with only women.”

As director of the NDIGI, Bellissimo also takes Notre Dame students, male and female, on career treks to top financial firms. “It’s all about giving students the biggest leg up we can by getting to them earlier and putting them in an environment where they can be comfortable asking questions and learning.”

Research suggests we’d all be better off if there was greater gender parity on Wall Street. A recent report by Bank of America found that companies that focus on gender diversity at the board, C-suite and firm level consistently achieve higher returns on equity and lower earnings risk, and generally trade at a premium compared to less gender-diverse companies.

“People looking through different lenses at the same problem come up with better answers,” said Wendy Cromwell, a senior managing director and partner at Wellington Management, and one of the speakers at the Women’s Investing Summit. “There’s tons of research that shows that diversity creates better outcomes from a profitability standpoint.”

Investment banks are becoming more aggressive about pushing companies to diversify their boards. In February, Goldman Sachs made news when it announced it would no longer handle IPOs for companies unless they had at least one board member who was a woman or underrepresented minority, citing research showing that U.S. companies with at least one female board member outperformed more homogenous companies one year post-IPO. Beginning in 2021, Goldman Sachs will raise the target to two diverse board members for IPO clients. BlackRock, the world’s largest asset manager, has threatened to stop investing in companies that don’t have diverse boards.

For Katie Koch (ND ’02), a partner at Goldman Sachs who manages the bank’s $54 billion active equity investing platform, diversifying boards is less about social justice than about the bottom line. “It’s not a question of equitability or fairness,” she said.

“There’s a lot of things in life that aren’t fair. This is really about going after optimal performance for your equity portfolio or for that corporate board.” As an example of how gender parity gives investment banks an edge, Koch cited her own team’s recent decision to invest in a2 Milk, a small-cap New Zealand company that markets premium dairy products and plans to start making infant formula.

“The women on our team knew that if there’s one thing millennial women want to spend money on, other than their own health and wellness, it’s the health and wellness of their children,” she said. “Women consumers drive the decisions around what to feed their babies, so we knew they would pay a premium price for a premium product. I think the life experience of women investors who happened to have families brought to the table was very powerful and produced better outcomes for our clients.”

Molly Shannon (ND ’88), a senior managing director and partner at Wellington Management, believes that women generally take a different approach to investing than men. “Women tend to think very longterm,” she said. “Studies have also found that women tend to reduce the emotions around risk. They’re less personal, more drawn to data and facts. That can be a counter to their male counterparts who may be more influenced by the emotion of the moment.”

Wall Street may be coming around to the idea that more diverse boards make better decisions, but when it comes to their own gender parity, especially at the highest levels, many firms have a long way to go. The Bank of America report found that only 1% to 3.5% of wealth managers are women — despite the fact that women’s accumulated financial assets are rising 1.5 times faster than men’s and could reach $110 trillion by 2025. That’s partly because women live longer than men, and partly because more countries around the world are reforming their laws to give women full economic equality.

“Women investors don’t necessarily only want to work with women advisers, but they want to know the company they’re working with considers and values their perspectives as a customer,” said Kathleen Murphy, president of personal investing at Fidelity Investments.

“If we don’t have women in financial services that can help us think through how to approach women, we’re going to have too narrow of an approach. Diversity of thought is critically important.”

The good news is that after years of talking the talk about supporting women in finance, Wall Street firms may finally be starting to walk the walk. Goldman Sachs recently expanded its family leave policy to five months for both men and women. Offices are adding pumping rooms with refrigerators to store breast milk. Technology has allowed women more flexibility to work from home while taking care of children. Not that firms had purely altruistic motives for all of these changes; many were implemented after the world financial crisis of 2008, which gave Wall Street a black eye and made it harder to recruit top college graduates.

“The great financial crisis turned a lot of people off from finance in general,” Bellissimo said. “So the industry really had to retool and convince millennials it was a respectable occupation. The explosion of the technology industry offered an alternative to high paying jobs. Suddenly the investment banking business was having to compete with Amazon and Google and all these Silicon Valley firms that were seen as much more interesting places to work. Wall Street firms started to implement new work standards and norms to try to make themselves more attractive.”

One of the women who took advantage of this new, more family-friendly environment was Koch, who rose to a top leadership position at Goldman Sachs while having three children, ages 5, 3, and 1 — something that was only possible, she says, because of the firm’s generous family leave policy. “My family is my absolute biggest priority,” Koch said. “When you have a demanding career, family can’t come first every time, but I really try and make sure that my husband and my children do come first over time.”

As a manager, Koch oversees a team of about 150 people. She encourages all of them, male and female, to take their full family leave. “The best way to get women to take their maternity leave is to also have the men take their paternity leave,” she said. “I know from personal experience that dads are really needed at home in those first few months. It’s such an important time for any family.”

Those options haven’t always been available to women on Wall Street. After earning her MBA in 1998, Bellissimo worked for a few years at a management consulting firm, then took a job at the Columbia Business School, where she co-founded the Heilbrunn Center for Graham and Dodd Investing, a valueinvesting program based on the teachings of legendary 20th-century economists Ben Graham and David Dodd. Recently married, with the first of what would eventually be four children to care for, she wanted a less stressful job that allowed her to be home on evenings and weekends.

Despite all the challenges she faced, Bellissimo says she doesn’t regret her time on Wall Street — in fact, she sometimes wishes she had stayed the course at J.P. Morgan. Because the financial sector is so results focused, it can be a good place for women to make their mark, she said: “In investment management, if your returns are good, nobody can debate your performance — it is objective. So, I think it’s a wonderful industry if you’re worried about some of those cultural biases. If you do it well, you can be successful.”

Murphy, Fidelity’s president of personal investing and another speaker at the Women’s Investing Summit, agreed that more women should consider careers in finance. “It’s a great opportunity to have an impact on people’s lives,” she said. “And there are so many paths once you get into financial services. At the conference, you're hearing from people that are running portfolios, managing money directly. You’re hearing from people who have broader management roles. At Fidelity, I run a giant direct-to-consumer business that happens to be in financial services. Once you get into the field, your career path can take so many exciting directions.”

Given a level playing field, Bellissimo believes women are every bit as capable as men of success at the highest levels of finance. “It’s challenging, and the hours are tough, and there are no rewards without hurdles you have to jump over,” she said, reflecting on her nearly 30-year career. “But in finance, they’re very open to taking smart individuals and pushing you to the edge of your capabilities. And when you’re pushed to the edge, that’s when you learn the most.”

The Institute supports investment management research; provides experiential learning opportunities; convenes workshops, conferences and guest speakers; and coordinates internship and career placement opportunities for Notre Dame students.