The CFA candidates gathered in the vaulted Great Hall of Hart House, once the exclusively men’s athletic facility at the University of Toronto. In two weeks these students would sit an exam with a Level 1 pass rate of 37%. Despite dismal odds, these particular students bristled with confidence because all were enrolled in Michael Hlinka’s (CBC Radio Business commentator) preparation course that boasts a 76% pass rate. They had a statistical edge and they knew it. Mr.Hlinka is known for frank observations of business and economics delivered daily on CBC Radio Toronto. Leveraging Michael’s energy, the students seemed completely self-assured.
They had come to hear Margaret Franklin, current Chair of the CFA Institute, the organization that oversees the exams and sets international standards of education, conduct and professionalism for the investment industry, a remarkable accomplishment for a Canadian. Ms. Franklin had presided over the annual CFA conference in Edinburgh earlier in the week and had flown back the night before to attend this reception.
Ms. Franklin, one of the 22% women of her graduating class fifteen years ago remarked that women constitute only 20% of the current roster of CFAs. Statistics confirm that women have made little progress in the investment business or in the boardroom. In my experience as a manager of investment professionals I applaud this lack of progress. It has made my job easier. As a young U.S. equity portfolio manager, the best coverage from Wall Street came from women. In retrospect, Canada was considered a third world market so many women would be relegated to cover institutional accounts north of the border because lucrative U.S. accounts were covered by men. What I quickly learned was that any woman in the investment business had to be better, more tenacious, more insightful, and more aggressive to survive. There weren’t many of them and the environment was never accommodating. My job was made easier by just hiring the women. They usually held an edge over the men.
Don’t get me wrong. I was never interested in equality or diversity, big themes with big companies these days, I just knew that for both good and bad reasons, women in the industry had to be better than their XY chromosome cohorts.
Speaking informally with a group of women CFA candidates afterwards, and in bewilderment over the apparent lack of progress over the years, I offered my observations about management in the investment business and how to identify “evolved” managers from those less gender neutral. Others encouraged me to list my albeit-unscientific observations as a guide to others.
If you are a manager, how evolved are you?
How to identify evolved managers
If your boss’s wife works, he is possibly evolved. If your boss’s mother worked and he was secure enough not to resent being left alone occasionally, he has a higher chance of being evolved. If your boss has daughters, he has the potential to be evolved.
If your boss’s wife is a stay-at-home “soccer” mom, danger; you are in trouble! Corollary rule; someone observed that 90% of investment bankers’ wives do not work; seek employment with bosses from the other 10%. If your boss’s mother did not work – he has a serious impediment to evolution. If your boss has a son in medical school and daughter in modelling, you are in for serious trouble!
Franklin made an interesting observation that women of an earlier generation were not always helpful to other women. So if your boss is a woman there are no guarantees. In fact some of the same dangers exist. If your boss has a house husband, beware, she is likely to be less empathetic.
Source: Catalyst 2011
Canadian public corporations have only 10.3% women board members according to a Global Survey released by Catalyst in May 2011. Canada is just behind Turkey’s 10.8%! Even the unenlightened U.S. has 15.7%. Why should investment professionals care? As Chief Investment Officer for several large institutional investment companies I have had the responsibility to vote proxies. In my experience, corporate governance in Canada is poor. Nortel is a good example of management failure and lack of board governance yet nobody has gone to jail. Is there any guarantee that adding women to boards would make a positive difference? No. But I know that women in my specialized slice of the world had to be better so why not give them a try? They could certainly not be any worse. In fact, true equality will only occur if women are given a chance to be as mediocre as the boys.
For those of you looking to hire graduates from that CFA class of 2011 and beyond, here is a tip that could give you the statistical confidence of Hlinka’s CFA candidates. Pick the woman. She is likely to be better than the average guy because, unfortunately, she has to be.