Closing the Gender Gap Can “Grow the Cake for All”

By

Halla Tomasdottir

The CFA Institute European Investment Conference is a focused, interactive conference for Europe’s leading investment professionals. The 2017 CFA Institute European Investment Conference will bring portfolio managers, analysts, chief investment officers, and CEOs together in Berlin on 16–17 November.

“In the world of investment, we have probably heard a lot more about the growth opportunity of China and India than we have heard about the fact that the world’s largest opportunity is actually here already — it’s the incredible growth in females’ income and our ability to tap into that,” said Halla Tomasdottir, founder and CEO of Sisters Capital.

Speaking at the 2015 European Investment Conference, Tomasdottir emphasized that women’s growing participation in the labor market and higher rates of education have increased “the power of the purse” (i.e., women are making more consumption decisions). Consequently, she said, it simply is not smart business to not understand their needs.

Nonetheless, despite growing evidence that boards with greater gender balance significantly outperform boards that have what Tomasdottir describes as a “hormonal imbalance,” women remain woefully underrepresented on corporate boards. The problem is particularly acute in the financial sector, where women manage no more than 2%–3% of institutional assets.

“This is indeed not a women’s issue. Nor is it a zero-sum issue. This is a hard-core economic issue that has the potential to grow the cake for all,” she said, citing a McKinsey study that posits that closing the gender gap can add as much as US$28 trillion, or 26%, to global annual GDP by 2025.

Tomasdottir earned her bona fides in the business case for diversity during the disastrous financial collapse of her home country, Iceland, in 2008. At the time, Tomasdottir was the executive chair and a co-founder of a new investment firm established by women just the year before. Not only did her firm manage to avoid losing any of its clients’ assets, but also it went on to triple its assets following the crisis. While Tomasdottir attributes the firm’s success to, first and foremost, the quality of its team, she also believes her company thrived because of its values — values that accounted for the “feminine” as well as the masculine, which is traditionally well represented in the finance sector. Those feminine values were:

  • Risk Awareness: Understanding the risks taken.
  • Profit with Principles: Making a profit in a constructive and meaningful way.
  • Emotional Capital: Valuing people, culture, and intuition.
  • Fierce Independence: Staying true to our values.
  • Straight Talking: Speaking our minds and being authentic.

Once the global media — which had cast Iceland as a symbol of the worldwide financial crisis — caught wind of Tomasdottir’s story, her firm was bombarded with interview requests. The world media, in the context of Tomasdottir’s story in particular and the larger crisis in general, asked: What if it had been Lehman Sisters instead of Lehman Brothers?

But, Tomasdottir said, “our vision to put feminine values into finance was never about believing that women are better but rather about believing that a better balance between women and men, and between the feminine and masculine values, would probably lead to better dialogues, to healthier dialogues — and ultimately better decision making.” In fact, as Tomasdottir recounted later in her presentation, her firm’s board was originally composed of women only — and it was a disaster. Furthermore, Tomasdottir emphasized that she believes everyone holds these masculine and feminine values to varying degrees.



Though the majority of the (mostly male) audience had agreed in a poll before Tomasdottir’s presentation that there is a business case for greater diversity in investment decision making, many, including moderator James Mackintosh, questioned her criteria for labeling particular traits either feminine or masculine.

Tomasdottir explained that research has established a number of values that are generally identified with one gender or the other and specifically pointed to values-based approaches to business and investing, which are more traditionally associated with feminine values, as an example.

Regardless of what is typically considered masculine or feminine, Tomasdottir emphasized the importance of embracing diversity in all its forms so as to avoid herding behavior. Gender, she acknowledged, is just the low-hanging fruit in an approach that promises to benefit society at large.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the author’s employer.

Photo credit: Paul White

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