Why Women Should Opt for a Career in Finance?
Wednesday, June 14, 2017, 6:00 AM | Leave Comment
We all have heard stories of how women play caution with their money and want security, very unlike men who are more willing to take risks.
However, is that really a bad thing or just a blessing in disguise, making them better money managers?
Why women are better investors? Should they pursue a career in finance at all? Such and more questions answered in this post.
As per the data provided by 2017 Catalyst Women CEOs of the S&P 500, women currently hold 29 of CEO positions at S&P 500 companies. 19.9% of Board Seats in these companies are occupied by women while 44.3% of total employees at S&P 500 companies are women.
These statistics are a reminder of the increasing participation of women in professional space. When we delineate the results to financial services industry, the Oliver-Wyman Global Women in Financial Services 2016 report reveals 20% of board members in the financial services industry are women.
The growth has been consistent over the course of past two decades. Both of these statistics indicate that women have a major role to play when it comes to various financial services related occupations.
What is the reason that more and more women are climbing the rope to establish themselves as an authority in an industry which was once considered a male bastion?
Why accounting and finance serve as the perfect career choice for women?
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Evidence suggests women are better at investing
Gender differences have been the favorite topic of water cooler discussions across the professional world.
A new research comes along every now and then that highlights the Venus versus Mars divide and this time it’s the world of investing.
According to USA Today, women just seem to win this battle. Two finance professors, namely Brad Barber and Terrace Odean, conducted a six-year study to find that men trade 45% more than women.
However, the excess trading has reduced their net returns by 2.65 percentage points a year. At the same time, women’s net returns have only reduced by 1.72 percentage points.
As per Nelli Oster, a mutual fund manager herself, the better performance of women owes to the differences in the way the fairer sex views investment.
Women seldom invest for short-term profits. They are more patient and have a longer-term, non-monetary goal in their mind. They will always take their own sweet time to perform due diligence before taking the plunge, which is in contrast with men’s behavior who are more impulsive to market changes.
May be that’s also one of the reasons why female hedge fund managers are establishing their authority all over.
As per a report by professional services firm Rothstein Kass, women’s hedge fund index returned 6% over the course of six and half years ending in 2013, compared with the 4.2 % gain of the S&P 500 companies and the 1.1% of an overall global hedge fund index.
With women hedge fund managers consistently outperforming their male counterparts, it might be just safe to assume that women might just be better at handling money matters, not only at domestic levels but also at higher levels of corporate.
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The differences in behavioral instincts make them better at money management
Men are involved in trading more frequently than women and hence are more averse to making bad decisions.
Furthermore, men are stuck with their losers for a longer period than women.
Also known as confirmation bias, men’s boneheaded behavior often puts them in a sticky situation.
Fear of losing reputation and ridicule prevents them from reducing their losses due to which they keep holding on to losers for years.
Women, in contrast, are more sensible, more disciplined, less emotionally attached and quicker at unloading losers.
A lot of bad male financial decision making has to do with the high levels of Testosterone, the Macho attitude.
Excess of testosterone gives rise to unwarranted optimism that leads to irrational decision making. Women produce only 10 percent the testosterone of men, so they are less susceptible to take risky gambles, and thus lose less.
In fact, experts suggests that men, who are lucky enough to have a wife or girlfriend and involve them in financial decision making are surely to step away from some of the crazier deals that they would have pursued otherwise.
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Finance is definitely the way to go for women
While these are conclusive evidences to advocate more participation of women in finance roles there are other reasons as well.
Mergis, the recruitment firm conducted a study in 2011, to reveal that professionals engaged in accounting and finance can afford a better balance between career and personal life. 86% of men and 80 percent of women responded that they will recommend their relatives to pursue such a career.
In fact, women are already considering finance as a viable career option.
As per a study by Randstad Financial and Professional, for the first time in the history, more women are interested to make a career in financial and professional services jobs than men.
A decade of evidence can surely not go wrong. So if you are a woman looking to apply to a finance job, there cannot be a better time.
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Saurabh Tyagi is a blogger and a professional career author with proven expertise in writing for topics related to jobs, job trends, different job opportunities, various workplace and industry information, tips and strategies for job seekers. You can follow him on LinkedIn or Twitter.
