Thursday, June 30, 2011

The courage of women

I want to cover a topic that is not discussed much in the world of finance: the courage of women. In an arena in which women have been scarce and where financial genius and wizardry are often synonymous with being male (and there are many excellent men out there), it’s interesting to note, by gender, some of the key players in financial events of recent years.

In a world where corporate interests have a big voice, it was a woman who stood up and advocated protecting the consumer, the “little guy.” It was a woman who promoted regulation of the derivatives market, an arcane market that few understood well but in which immense risk could be taken. It was a woman who blew the whistle on Enron and its overinflated evaluations. And the list goes on.

In the same time frame, we witnessed Bernie Madoff carry out an enormous Ponzi scheme that defrauded individuals of their retirement savings and institutions of their endowments. And it was a young derivatives broker who brought down Barings Bank, one of the oldest of the United Kingdom’s investment banks. This dude even had the audacity to write a book titled “How I Brought Down Barings Bank and Shook the Financial World.” Another male trader almost took down France’s second-largest bank. The former head of the International Monetary Fund, which had been dealing with the financial situation in Greece, which is threatening the very existence of the Euro, has been under house arrest. And the list goes on.

At the risk of making gross generalizations about gender and finance, the above outline makes me hope we will begin giving truly serious consideration to furthering the role of women in the financial world and start opening doors more widely to them. One useful role I could see for women is in curbing the excesses that we have witnessed in recent years and that have caused some venerable firms to go knocking at the doors of government for help. The risk-averse attitude of women (considered a fact but hardly documented in the data), often considered a weakness, may turn out to be a strength. As women rise to the top, I hope their voices will be heard.

Some progress has undoubtedly already been made. The top regulator of financial markets and head of the Security and Exchange Commission is Mary Schapiro. At the Department of Labor, Phyllis Borzi is the Assistant Secretary of Labor for the Employee Benefits Security Administration, whose mission is to protect the security of retirement, health, and other employee benefits for America’s workers and to support the growth of the private sector employee benefits system. We are talking about trillions of dollars here! The endowments of some of the wealthiest universities, such as Harvard, are managed by women, and many Ivy League colleges and universities (which are some of the richest institutions in the United States) are headed by women. We have yet to see any woman go down in flames from their seats at those positions of power, but, of course, history will tell. The helm of the International Monetary Fund will be given to a woman. This is another milestone, though I wish women were not brought in only when crises occur and when everyone—man or woman—will face very difficult situations and is more doomed to fail than to succeed.

I believe that one ideal job for women in finance is that of financial advisors. A critical quality in that job is the ability to care for clients and listen to their needs and concerns, and women can excel in that. And, important in wealth management is not only wise investing but also the right amount of protection, against disability, death, and other risks. Coming back to my posts of a few weeks ago, there was much wisdom in the football players’ bringing their mothers to the New York Stock Exchange to discuss financial literacy. That memory still warms my heart.

Women have used cleverness and ingenuity when caring for others, achieving important results. My favorite example is Ethel Percy Andrus. A school principal who retired in the late 1940s to take care of her ailing mother, she was shocked to discover how many retired teachers had no health insurance. As there was no national health care program for people over age 65 (Medicare wasn’t created until 1965), Ethel turned to insurance companies to offer group health insurance to retired educators. She was turned down by more than a dozen companies but she persisted until one company agreed to develop a health plan for retired teachers. The plan became so popular that non-educators also wanted to purchase it. In 1958, Ethel established AARP (then known as the American Association of Retired Persons). The rest is, well, history.

No comments: