Closing the Gap

Closing the gap Leadership perspectives on promoting women in financial services

Closing the gap Leadership perspectives on promoting women in financial services Contents 02 Introduction 04 Gender diversity in today’s financial services industry 10 Career perspectives 14 View from the top: Secrets to success from female senior executives 17 Headwinds at the top: Ongoing challenges for senior-level women in financial services 20 A roadmap to gender parity at all career stages

02 | INTRODUCTION Introduction Where does the financial services sector stand when it comes to gender equality? To answer the question, this report looks at the experiences of financial services employees in North America, gathers insights from senior female leaders, and reviews best-practice policies and programs to promote diversity and inclusion.

INTRODUCTION | 03 After 32 years in the financial services likely to outperform on profitability and 27 percent more 2 Furthermore, industry, what’s most encouraging to me likely to demonstrate superior value creation. is that the topic of gender diversity is on companies in the top quartile for ethnic/cultural diversity fire. But there’s still a lot of work to do. on executive teams were 33 percent more likely to have 3 industry-leading profitability. Margo Cook, Nuveen Advisory Services Improved representation of female leaders will lead to a more rounded view of customers. This is particularly critical in financial services, given that more than half of women now In North America, women account for over half of the en- control their household finances and are responsible for 4 try-level work force in financial services. They have reached household savings and investing. Furthermore, companies the highest levels within firms and their numbers at the top that do not focus on gender diversity will find themselves at continue to grow, albeit slowly. Despite this progress, women a disadvantage in the war for talent. still represent fewer than one in five positions in the financial services C-suite. There is much work to be done to achieve gender parity in the financial services sector. Anybody who doesn’t think about how Our research for Women in the Workplace, a collaborative to bring in more women won’t be able to initiative between LeanIn.org and McKinsey, examines the compete, because they’re just cutting out gender parity gap in financial services and looks at what half the talent from their opportunity set. can be done to close it. As part of Women in the Work- place’s effort to create the definitive fact base on wom- Jenny Johnson, Franklin Templeton Investments en’s advancement in leadership, we surveyed more than 1 and 14,000 employees at 39 financial services companies interviewed 12 female senior executives at financial ser- Given a strong business case for change, much more work vices firms in North America. Although the data are based needs to be done. Our research breaks down the current on North American research, we believe the insights and state of gender diversity in the financial services industry implications have global relevance. to consider the impact by subsector, employment level, More than 90 percent of financial services companies and race. We also explore employee experiences in the surveyed assert a commitment to gender diversity. This workplace to better understand the root causes of today’s commitment makes clear business sense: Companies challenges. The gender parity issues facing the financial with greater gender diversity perform better. McKinsey’s services industry are complex, but there are ways to address research has shown that companies in the top quartile for these challenges to improve the representation of women at gender diversity on executive teams were 21 percent more every level. 1 Combined, the 39 financial-services companies employ approximately 1.2 million people; survey respondents were selected from non-front-line employees, which total 575,000. 2 Measured as economic profit margin. 3 Sundiatu Dixon-Fyle, Vivian Hunt, Sara Prince, and Lareina Yee, Delivering through diversity, January 2018, McKinsey.com. 4 Chris Metinko, “Women are the new CFO of the household,” The Street, April 19, 2017, thestreet.com.

04 | GENDER DIVERSITY IN TODAY’S FINANCIAL SERVICES INDUSTRY Gender diversity in today’s financial services industry To build a definitive fact base on women’s advancement in leadership, we omen remain leveraged insights gathered from financial services firms in the Women in the W Workplace Survey. These firms represent three sub-sectors in North America: significantly underrepresented banking and consumer finance; asset management and wholesale banking; 5 in the upper and insurance. levels of financial Our research shows that women remain significantly underrepresented in the upper levels of services firms. financial services firms. Women and men in financial services begin their careers at parity, mak- ing up roughly equal portions of entry-level staff, but higher up the ladder, women account for only 19 percent of positions in the C-suite (Exhibit 1). This is slightly lower than the 22 percent average for US women overall.

GENDER DIVERSITY IN TODAY’S FINANCIAL SERVICES INDUSTRY | 05 The lower representation of women does not appear to be driven by attrition; in fact, company-level attrition among females is either equal to or lower than attrition among males for every financial Women of color services role, except for the most senior positions. And yet, as they advance through their careers, are 34 percent women steadily lose ground to their male peers at every stage. The biggest drop occurs early in less likely to make their tenure, where women are 24 percent less likely to attain their first promotion than their male their first promotion peers, even though they request promotions at similar rates (Exhibit 2). Women of color are particu- larly disadvantaged; they are 34 percent less likely to make their first promotion than men in finan- than men in cial services (see sidebar “For women of color, an even steeper path to leadership,” page 8). financial services. Exhibit 1 Exhibit 2 Women, especially women of color, are underrepresented in the leadership of Women–and North American financial-services firms. women of color in r–are Employees by level, % share A = Entry level D = Vice president particula B = Manager E = Senior vice president significantly less likely C = Senior manager/director F = C-suite than men to attain their first promotion. Promotions as share of total White men Men of color employees of the same gender/race in previous level, % A B C D E F A B C D E F Manager 10 31 43 49 60 70 73 100% 18 17 14 14 10 8 100% 8 8 6 Entry level C-suite Entry level C-suite White Men White Women men of women of White women Women of color color color A B C D E F A B C D E F Senior manager 8 8 30 27 28 21 17 17 100% 21 13 9 5 3 1 100% 6 6 Entry level C-suite Entry level C-suite White Men White Women men of women of color color Note: Figures may not sum to 100%, because of rounding. Total C-suite representation for women overall is 19%. Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, 5 Many companies engage in a multitude of activities. For the purposes of this report, financial services companies have been assigned to a pri- womenintheworkplace.com mary classification. Private equity sits within the asset management and wholesale banking sub-sector.

06 | GENDER DIVERSITY IN TODAY’S FINANCIAL SERVICES INDUSTRY Gender parity by the numbers Representation Gender-diversity trends vary across the three financial-services subsectors included in our survey. Employees by level, % share A = Entry level D = Vice president B = Manager E = Senior vice president C = Senior manager/director F = C-suite Asset management Banking and and wholesale banking consumer finance Insurance White 33 33 men 29 37 43 48 47 48 54 59 63 60 72 74 74 65 10 75 19 71 Men 19 of color 21 8 14 16 17 9 18 8 23 Women 23 of color 16 13 6 7 9 19 10 11 4 13 6 9 7 10 7 4 43 7 5 1 2 40 3 32 1 White 28 3 28 27 26 women 25 26 22 21 17 18 20 18 17 17 13 A B C D E F A B C D E F A B C D E F Note: Figures may not sum to 100%, because of rounding. Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com

GENDER DIVERSITY IN TODAY’S FINANCIAL SERVICES INDUSTRY | 07 Attrition Early-tenure attrition for women is equal to or lower than it is for men across all subsectors. Attrition, % lost Women Men Asset management and Banking and Insurance wholesale banking consumer finance 18 16 14 14 13 13 13 13 12 12 12 12 11 11 11 11 11 11 11 10 10 10 10 10 10 9 9 9 8 8 Entry Manager Senior VP Senior Entry Manager Senior VP Senior Entry Manager Senior VP Senior level manager VP level manager VP level manager VP Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com Promotions Early-tenure women are promoted at lower rates than men across all subsectors. Management promotions, % promoted Women Men Asset management and Banking and Insurance wholesale banking consumer finance 10 9 9 8 8 7 7 7 6 6 6 5 5 5 4 4 4 3 3 3 3 2 2 1 Manager Senior VP Senior Manager Senior VP Senior Manager Senior VP Senior manager VP manager VP manager VP Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com

08 | GENDER DIVERSITY IN TODAY’S FINANCIAL SERVICES INDUSTRY For women of color, an even steeper path to leadership In the financial services industry, women of color represent one in five employees at entry levels, but they virtually disappear from representation at higher levels. Across the 39 financial services companies we surveyed, there are only 10 women of color in C-suite roles today.

GENDER DIVERSITY IN TODAY’S FINANCIAL SERVICES INDUSTRY | 09 One factor is lower promotion rates: At nearly every step in of color often enter financial careers at an inherent disad- the pipeline, women of color in financial services are pro- vantage; facing compounded bias due to both their race moted at lower rates than both men and white women. Attri- and their gender, they must work doubly hard to prove tion rates for women of color are also higher than those for themselves. “You come in on probation at a deficit and white women in entry-level and middle management roles. needing to prove your worth more than your counterparts These trends are especially perplexing considering that versus coming in with support and the belief that there’s more women of color express an ambition to make it to the a reason you’re at the table. If you can stand with confi- top than their white female peers. Thirty-six percent of en- dence, and believe in your abilities, you earn your way out try-level women of color desire to become a senior execu- of the deficit, so to speak. It’s a very tight range at which tive—a proportion nearing that of their male peers–versus you have to figure out the game, how to play it, and how to 22 percent of white women. deliver,” she notes. Women of color face unique challenges and often feel that Sponsorship is one way to address some of these chal- they are held to a higher standard. Senior-level women of lenges. When reflecting on their careers, senior-level color are more likely to view any failure, big or small, as women of color in financial services are much more likely having jeopardized their success. Moreover, they are more to cite a manager or leader as critical to achieving their likely to view “playing the game” and being well-liked as promotion (55 percent versus 44 percent for white women). critical to success (Exhibit A). Yet, across all industries, women of color—and in particular black and Latina women—receive lower levels of support As a woman of color, Beverly Anderson, head of cards * from managers. and retail services at Wells Fargo, observes that women Exhibit A Senior-level women of color face unique challenges. Perceptions of success factors for senior-level leaders in financial services, % agreeing Women White White of color women men Knowing how to play the game is critical to my success 73 66 60 Being well liked is critical to my success 43 30 38 Any failure, big or small, will jeopardize my success 30 24 23 Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com * Alexis Krivkovich, Kelsey Robinson, Irina Starikova, Rachel Valentino, and Lareina Yee, “Women in the Workplace 2017,” October 2017, McKinsey.com.

10 | CAREER PERSPECTIVES Illustration to come Career perspectives We have taken a deeper look into women’s perspectives at both entry and Interviews with senior management levels to uncover why female representation declines at female financial each stage. Our interviews with leading female financial services executives services executives point to factors that enable women to succeed and advance, and they suggest point to factors actions financial services firms can take to advance gender diversity. that enable women to succeed A slow start: Barriers for entry-level women in financial services and advance. The experiences of entry-level women in financial services help to explain the steep drop-off in female representation between entry-level and middle management roles. Most notably, many women early in their careers do not aspire to top positions, and even when they do, they often lack the support needed to rise to the top.

CAREER PERSPECTIVES | 11 An ambition gap Women in entry-level roles in financial services seldom envision themselves in a top executive A limited number of position; only 26 percent aim for this goal, as compared to 40 percent of their male peers and female role models Illustration to come 31 percent of entry-level women across all industries. Entry-level women in financial services in leadership cite a lack of interest in such roles, concerns about balancing family and work commitments, the positions may limit perceived pressure associated with the top jobs, and too much politics as the primary reasons the leadership career path is less appealing (Exhibit 3). While entry-level men share some of women’s motivation these concerns, they are significantly less likely to express concern over the pressure of the to make it to the top. job. This difference may be explained in part by real differences in the experiences male and female leaders report having in the work place. A limited number of female role models in leadership positions may also limit women’s motiva- tion to make it to the top. “The lack of women in C-suite positions is a self-perpetuating cycle,” says Deanna Strable, executive vice president and CFO at Principal. “Because we don’t have many females in the C-suite, young women don’t see role models or potential paths towards executive level leadership and are more likely to de-select themselves out of higher-level lead- ership roles.” Marianne Lake, CFO of JPMorgan Chase, believes that having more women at all senior executive levels is important to inspire entry-level women to aim higher. “I think women are looking at the industry, the board, the C-suite, and management to find people who are sim- ilar to them so that they understand they can also succeed in those roles,” she observes. Moreover, entry-level women are more likely than men to express concern about failure on the job. This may result from a confidence gap, but could also reflect a real difference in the impact of failure for men and women. Fifty-seven percent of entry-level women say that fear of a high-profile failure would impact their day-to-day experience as a top executive, compared to just 42 percent of their male peers. Lower ambition in entry-level roles is not the sole reason for women’s lower representation in the C-suite. Most of the senior women interviewed for this article were driven to succeed but say that they never consciously aspired to reach the uppermost levels of leadership. Rather, they simply worked hard to do their best at every stage in their career and maintained a strong Exhibit 3 Entry-level women in financial services cite several reasons for a lack of interest in top executive roles. Desire to be a top executive Leading reasons for not wanting to become a top executive for entry-level employees, among entry-level women, % agreeing % indicating “yes” Challenge Not interested of work-life Don’t want Too much Men Women in work balance the pressure politics 40 26 41 40 36 34 Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com

12 | CAREER PERSPECTIVES Exhibit 4 omen The 2017 W Entry-level women are less likely than men to have managers who act as their orkplace in the W advocates and help them identify opportunities. research showed Support received from managers and senior leaders by entry-level employees, % agreeing that women who receive advice Manager or senior Receive support Receive support Senior leader leader advocated from manager from managers from manager in provided advice for you for specific in navigating identifying to help advance opportunity in organizational and senior opportunities in last year past year politics leaders on career advancement are more likely to Women 42 40 35 22 be promoted. Men 49 49 40 29 Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com sense of their value to their company. Marianne Lake, for example, says that she has “always been ambitious, but in the sense that I’ve always wanted to be the best that I can be at what- ever I’m doing at the time.” Kathleen Murphy, president of personal investing at Fidelity, says that she simply realized one day that she had what it took to take on an executive role. “I went from being the general coun- sel and chief compliance officer to the chief administrative officer, with all the various staff func- tions reporting to me, and spending a lot of time with the CEO. I’m looking around the table and thinking, ‘I can do this too,’” she explains. Inadequate access to sponsorship For entry-level women, lack of support and sponsorship is an additional barrier to advance- ment. The 2017 Women in the Workplace research showed that women who receive advice 6 from managers and senior leaders on career advancement are more likely to be promoted, and yet earlier tenure women receive less encouragement and support from managers and senior leaders in advancing their careers than do their male peers. Such encouragement and support can make all the difference, as Karen Peetz, retired president of BNY Mellon, relates: “There are inevitable ups and downs [during the course of a career], and the downs get mag- nified. Often women and minorities give up during that down time, partly because they don’t have the support infrastructure that tells them to keep going, because it will get better.” Furthermore, entry-level women are less likely than men to have managers who act as their advocates and help them identify opportunities to pursue. Nor do they receive senior leaders’ advice on advancement or navigating organizational politics as frequently as do men (Exhibit 4). 6 Based on reported rates of promotion in prior two years.

CAREER PERSPECTIVES | 13 Exhibit 5 Entry-level and senior-level women have differing views on success factors. Differing perspectives on success factors among entry-level and senior-level women, % agreeing Strong Being an Delivery of Innovative Sponsorship Strong communication effective team exceptional problem by a senior leadership skills player skills solving leader skills What I’ve Entry- repeatedly seen level 54 47 44 32 31 30 is that we’ll get women groups of only women together. Women who Senior- congregate on level 45 29 48 25 56 39 women their own without men are depriving themselves of Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com sponsorship and opportunity. Céline Dufétel, CFO at T. Rowe Price, suggests that women may have difficulty finding sponsors Jacqueline Molnar, because male leaders might feel that they have less in common with their female colleagues. Western Union “Throughout the course of my career I’ve found it at times lonely and exhausting to stand out so much. I think it can be hard for colleagues to relate to you and they’re sometimes uncomfort- able giving you feedback or mentorship. They’re not as comfortable going to dinner or having a drink with you and you miss out on those valuable personal interactions,” she says. In addition, entry-level women may not insist on such support because they do not yet recog- nize the importance of cultivating a strong network of supporters and advocates. Whereas se- nior-level women come to view sponsorship as the factor most essential to success, entry-level women believe that performance is the strongest driver of advancement. They tend to view strong communication skills, being an effective team player, and delivering exceptional results as the most important factors of success (Exhibit 5). This failure to recognize the significance of sponsorship is exacerbated by the fact that the vast majority—81 percent—of entry-level women in financial services cultivate networks that are largely female or evenly split between males and females. In contrast, 94 percent of entry-level men cultivate networks that are largely male or evenly split between males and females. The fact that entry-level women skew toward women in their networks can impact their opportunities down the line. As these women progress through their careers, their networks will have fewer and fewer women who can serve as sponsors, since the upper levels of corporate management are predominantly male.

14 | CAREER PERSPECTIVES View from the top: Secrets to success from female senior executives The female financial services executives we interviewed have successfully navigated many of the challenges described in this report. They are passion- ate about the advancement of women in the field, and their perspectives pro- vide insights into how entry-level women can move up the ladder. The interviewees consistently highlighted three fundamental building blocks to success for women in financial services: sponsorship, risk-taking, and know- ing and communicating one’s value. Build a strong network of sponsors The female senior executives we interviewed consistently cited sponsorship as a critical suc- cess factor. This view was reinforced by our data, and is unique to senior-level women in finan- cial services, as compared to their male peers, younger counterparts, and senior-level women in other fields. Senior-level women in financial services are also more likely to see “political savvy”—that is, knowing how to navigate office politics—as an important driver of success than their male peers. When I was in my twenties, I had what I call a ‘first believer,’ a man who said, ‘Why don’t you apply for this principalship?’ I had excluded myself in the typical way: ‘I’m too young. I haven’t done this before. I only hit seven and a half of the ten requirements.’ Having had that sponsorship, particularly by a man, was profound for me. Jacqueline Molnar, Western Union I’m a huge proponent of sponsorship. I can track the times when my career accelerated due to male sponsorship—mostly white male sponsorship— early in my career. I happened to meet the gentleman who was the head of corporate banking early in my career. He stayed with me as I moved through my career, and that made a huge difference. Stalls in my career have been due to the absence of sponsorship or not having the right one. Beverly Anderson, Wells Fargo Everybody has something to teach you. My approach has always been to be candid with myself about my own gaps and seek out people who were great at those things who I could learn from. That’s also how I build teams—it’s all about complementary skills. Céline Dufétel, T. Rowe Price

CAREER PERSPECTIVES | 15 Take risks early and often The senior-level women we interviewed encouraged younger women to take risks early in their careers. These risks can involve trying out different business units, roles, locations, and even in- dustries to build a broad foundation of experiences that will serve them in future leadership roles. I’ve been open-minded about my career path and have taken some calculated risks. I’ve been willing to move to new regions, countries, businesses, and roles. That gives you a lot of breadth and exposes you to different experiences and core skills. I believe I have the role I have today because the operating committee saw me succeed in such a wide variety of roles, in good times and bad. Marianne Lake, JPMorgan Chase Have the courage to take risks. Taking small risks has enabled me to hone my judgment and gave me the experience to take larger risks. Ranjana Clark, MUFG Union Bank, N.A. In general, men seem to have more confidence in their ability to get to the next level, to take the next risk. Women too often are more conservative in their approach. If you are conservative about your career, over and over again over the course of 20 or 30 years, the cumulative effect is that you aren’t going to advance nearly as much as the person who takes risks. Kathleen Murphy, Fidelity The path to a promotion is not always an immediate promotion; sometimes it’s gathering the right experiences in different areas. You may need to take a few lateral moves to get to where you ultimately want to be. Alice Milligan, Citi

16 | CAREER PERSPECTIVES Know and communicate your value Several interviewees credited their success to hard work and a strong sense of confidence in their individual value to their employer or business. Many emphasized the importance of com- municating their worth and accomplishments to those who matter. Your toughest critic is yourself. Focus on your strengths, what’s positive about what you’re doing, what you can change. Often when you’re in a room, your distinguishing factor isn’t how much you’ve accomplished or how smart you are. It’s what you bring that’s different. Why is your point of view making the company, the customer, the employees, the products better? Alice Milligan, Citi If you’re confident, then you’re not afraid to share your views—not just around you but above you. Women often simply put their heads down and do the work—and fail to ensure that their voice is associated with that work. Margo Cook, Nuveen Advisory Services Have a point of view and give your opinion. You have to take a seat at the table. Don’t assume that people know your point of view. It’s important to make your voice heard. Ranjana Clark, MUFG Union Bank, N.A.

HEADWINDS AT THE TOP: ONGOING CHALLENGES FOR SENIOR-LEVEL WOMEN IN FINANCIAL SERVICES | 17 Headwinds at the top: Ongoing challenges for senior-level women in financial services Even women who reach the most senior levels often look back and conclude that their gender has hindered their advancement. Over half of the senior- Over half of the senior- level women surveyed—those who have reached the level of vice president level women surveyed or above—believe that they have missed out on opportunities because of believe that they their gender, compared to just 10 percent of their male peers. This inequity have missed out on continues for several reasons. opportunities because of their gender.

18 | HEADWINDS AT THE TOP: ONGOING CHALLENGES FOR SENIOR-LEVEL WOMEN IN FINANCIAL SERVICES Exhibit 6 Senior-level women Senior-level women are more likely than male peers to experience challenges are also less likely balancing work and family. to have frequent Attitudes toward work–life balance, % agreeing interaction about work with senior Participating in leave The benefits of Participating in a (e.g., maternity or being a top Prioritizing work–life leaders at their flexible work schedule paternity) would executive do not balance would would negatively negatively affect outweigh the jeopordize my company; 41 percent affect my career my career personal costs success of women have these interactions at least monthly, while Women 44 34 31 24 49 percent of their male peers do. Men 36 26 22 13 Source: Women in the workplace 2017, a joint report from LeanIn.org and McKinsey, 2017, womenintheworkplace.com Access to senior leadership remains uneven—even at the highest levels Despite the value they place on sponsorship, senior-level women are still less likely than their male peers to receive substantial support from senior management, even though they ask for it at the same rate that men do. Just 34 percent of senior-level women in financial services say they have received advice on career advancement from a manager or senior leader, while 44 percent of their male peers say they have. The interviewees who cited sponsorship as a major success factor tended to find their sponsors naturally, without consciously seeking them out. Beverly Anderson, for example, found many of her sponsors through working relationships. She explains, “I’ve usually found a way to connect to somebody based on the work that I’m doing. I try to leverage that connection into a relation- ship, and then I make sure that I nurture that relationship, because it doesn’t come often.” Senior-level women are also less likely to have frequent interaction about work with senior leaders at their company; 41 percent of women have these interactions at least monthly, while 49 percent of their male peers do. This trend is worse in financial services than the overall aver- age, as 49 percent of women across all industries have such interactions. Balancing family and work becomes increasingly challenging The ambition gap persists even among women at the most senior levels, and the inability to balance family and work is cited by half of senior-level women as a major reason for not want- ing to pursue top executive roles. This finding is perhaps not surprising given the fact that as women’s responsibilities at work increase with seniority they largely maintain their responsibili-

HEADWINDS AT THE TOP: ONGOING CHALLENGES FOR SENIOR-LEVEL WOMEN IN FINANCIAL SERVICES | 19 ties at home. Nearly half of senior-level women say that they continue to shoulder most house- hold responsibilities, while just 13 percent of their male peers say the same. Compared to their male peers, senior-level women are also much more likely to believe that prioritizing work-life balance—including participating in flexibility programs such as maternity leave and flexible work schedules—will undermine their ability to succeed at work, perhaps because they perceive the penalty to be higher as their responsibilities at work increase with seniority. Ultimately, they are less likely than senior-level men to view the benefits of top lead- ership as being worth the cost (Exhibit 6). Some of these women worry that a financial services career does not structurally lend itself to work-life balance. Margo Cook, president of Nuveen Advisory Services, comments, “Finance ca- Finance careers reers don’t feel friendly to women. Some women are attracted to related industries like consult- don’t feel friendly ing or accounting where the structure better allows for them to have kids and then re-enter the to women.... We as work force without the sense of falling behind. But the finance industry can do a better job of an industry must that. We as an industry must figure out how to keep women through the course of their career.” figure out how Women may also be limited by their colleagues’ assumptions about their work-life priorities. to keep women Karen Peetz observes, “The prejudice that holds women back is the limiting of expectations. It’s through the course assuming you don’t want to do certain things. I had two kids and was married, so people as- of their career. sumed that I wouldn’t want to take an assignment in London, that I wouldn’t want to drag them along. That wasn’t true. Be vocal about what you want. Don’t assume that people will know.” Margo Cook Nuveen Advisory Services

20 | A ROADMAP TO GENDER PARITY AT ALL CAREER STAGES A roadmap to gender parity at all career stages Today, with women occupying fewer than one in five roles in the C-suite in fi- Women occupy nancial services, achieving gender parity in the sector seems to be an ambitious fewer than one goal. Yet, there is a path to get there. Through extensive research and interviews in five roles in with leaders in the field, we have identified a number of best-practice solutions the C-suite in to address the challenges. financial services. 1. “Rebrand” the industry to make it more attractive to women. Demonstrating that financial services is a sector in which women can thrive is a critical first step to achieving parity. Doing so will help improve female representation at the earlier stages of the career funnel—and is particularly important in sub-sectors such as asset man-

A ROADMAP TO GENDER PARITY AT ALL CAREER STAGES | 21 agement and wholesale banking where women start out below parity. According to Céline Dufétel, “For investments roles, it’s an entry-point issue. Very few women seek those careers out of school. I remember when I was interviewing for an internship way back when, the banks felt intimidating to me, which is why I chose consulting. That’s why at my company we make a concerted effort to attract women—for example, a stock pitch workshop for first- year women MBAs and partnerships with organizations such as Girls Who Invest.” Initiatives of this kind signal that the sector will support and celebrate women. Targeted initiatives can also help address the lower levels of excitement women express about aiming for the top. As some interviewees pointed out, the financial crisis damaged the industry’s reputation and made it less appealing to college graduates overall. The industry must make a special effort, then, to rewrite its narrative. Financial services companies should publicize their efforts to It’s important to boost gender parity in the workplace and make clear that these efforts are being taken seri- expose female ously with visible action. leaders to junior A rebranding of financial services will require its leaders to commit to change—not only by folks in the taking action to make their companies places where women can thrive, but also by voicing organization, so their commitment to galvanize the industry at large. As Margo Cook from Nuveen Advisory that junior women Services says, “Making these issues a standard, let alone accepted, topic for all leaders to talk about—male or female—is what will break down the walls.” Speaking up for change will can talk to and see propel other companies and the industry overall to move toward greater equity for women. role models. 2. Enhance the quality of and access to sponsorship. Alice Milligan, Citi As our data demonstrate, sponsorship matters to women at all career stages, especially in financial services, where senior-level women are more likely than their entry-level peers and senior-level women in other industries to cite sponsorship as the most important contributor to their success. There are concrete steps that financial services companies can take to ensure that women— especially women in the earlier stages of their careers—have more and better access to sponsors. First, they can expand offerings for formal sponsorship programs. At present, less than half of the financial services companies we surveyed have such programs, and only 58 percent have formal mentorship programs. These programs should be designed specifically to address the challenges that hinder entry-level women from advancement into the senior ranks. Specifically, they should ex- pose entry-level women to female role models in senior positions. “It’s important to expose female leaders to junior folks in the organization, so that junior women can talk to and see role models,” Alice Milligan, chief digital client experience officer at Citi’s U.S. Consumer Bank, observes. Furthermore, senior leaders, including men, should be actively involved in promoting sponsor- ship so that it becomes a company-wide priority. The small number of senior women cannot bear this responsibility alone; there simply are not enough of them to address the scale of change required. Leaders and managers should be coached to speak directly about how they navigate the career challenges that entry-level women face, so that these women will feel more desire and confidence to strive for top positions. In this same vein, managers need to be prompted to encourage women to take on stretch opportunities—given the importance of build- ing a résumé of diverse experiences cited by many of the senior-level women we interviewed.

22 | A ROADMAP TO GENDER PARITY AT ALL CAREER STAGES No matter what Sheri Rhodes, chief technology officer at Western Union, recognizes the importance of senior policies you have, leaders inspiring their younger colleagues through sponsorship: “I’ve been fortunate to have if your senior had sponsorship—from both men and women—throughout my career. I have the responsibility team doesn’t to model that behavior and to be an advocate for change.” demonstrate that While female role models are crucial, both men and women should serve as sponsors and behavior, it won’t mentors to ensure that women build the diverse networks they need throughout their careers. permeate through If sponsorship and networking groups involve only women, Karen Peetz notes, they can “un- the rest of the firm. wittingly be viewed as some kind of fringe effort. It’s a best practice to have heterogenous groups, with men involved as mentors, coming to programs, and demonstrating their support.” Jenny Johnson, Beyond formal programs, companies should monitor the quality of and access to sponsorship Franklin Templeton for both junior and senior-level women. For example, a best practice is to send out an annual Investments sponsorship survey to identify sponsors and candidates for sponsorship, so that gaps can be identified and addressed early. 3. Eliminate bias in reviews and promotions. Reducing bias in reviews and promotions would likely boost the lagging promotion rate for entry-level women and help to alleviate senior-level women’s sense that their gender has hindered their advancement. This perception is not misplaced: as noted earlier, entry-level women in financial services are 24 percent less likely than their male peers to be promoted, versus 18 percent of women overall. It is therefore especially important for the financial services industry to address the biases— often unconscious—that are holding back female talent. While 79 percent of companies in the financial services sector offer unconscious bias training, only 18 percent require it. Uncon- scious bias training must tackle not only gender, but race, sexual orientation, and other forms of bias. This is particularly critical given the double bias women of color face. Such training can increase inclusiveness for all people. Effective intervention requires going beyond merely helping individuals recognize bias to providing them with the tools to address bias head on, particularly in high-stakes situations like hiring, performance, and promotion discussions. A commitment to addressing unconscious bias needs to come from the top to be effective. Jenny Johnson, president and COO at Franklin Templeton Investments, confirms, “No matter what policies you have, if your senior team doesn’t demonstrate that behavior, it won’t perme- ate through the rest of the firm. From the CEO down, we encourage everybody to take uncon- scious bias training, and then we track the number of people who do it.” 4. Give employees the flexibility to balance work and family. Our interviews have highlighted the common perception that the financial services field is less conducive to work-life balance; in fact, challenges in balancing work and family are the num- ber one reason senior-level women do not strive to become a top executive. To address this, financial services companies must find ways to offer more flexibility in the workplace. Flexibil- ity programs are common across the financial sector: currently nearly 90 percent of financial services companies offer extended maternity and/or paternity leave, and 92 percent offer flexible work policies. However, our research shows that women—especially senior-level women—fear that partaking in flexibility programs may hinder their advancement.

A ROADMAP TO GENDER PARITY AT ALL CAREER STAGES | 23 To “de-risk” flexible policies—in both perception and reality—companies must encourage Hold executives leaders of both genders to signal their acceptance and usage of flexible working policies. Ad- accountable, ditionally, companies should foster open dialogues about how policies could be enhanced to and then reward better meet employees’ and their families’ needs. and impose Companies should emphasize that these policies are for everyone, not just women. As Kath- consequences leen Murphy notes, “Flexible policies such as flexible hours or working virtually are often on leaders who important—and they are gender neutral really, as they benefit everyone. Both women and consistently fail men want to have the ability to attend kids’ events, or work flexibly to balance personal ob- to institute those ligations.” policies and Moreover, as Jenny Johnson remarks, such gender-neutral policies boost employee satisfac- procedures. tion across the board. “If companies encourage men to participate in personal activities, both men and women will be happier, because they’ll get to engage in those things, and women Jacqueline Molnar, will feel less stigmatized by participating. It’s all about the culture that you create in your Western Union firm.” Greater participation from men at home also rebalances the increasing workload that senior-level women typically manage as breadwinner and primary caregiver. 5. Build accountability through target setting and measurement. Collecting data on gender is an important first step in creating accountability for advancing gender diversity. Ninety-five percent of financial services companies track gender represen- tation across all levels, and 71 percent measure the gender representation of their promotion candidates. However, far fewer financial services companies have clearly defined what they are striving towards. Thirty-four percent set targets for gender representation at senior levels, and 29 percent for more junior roles. And only 11 percent of financial services companies set targets for gender representation in promotions, which is lower than the 18 percent figure for companies overall—another factor that likely contributes to the lower promotion rates for women. Financial services firms could push further by consistently setting targets for female repre- sentation and promotion rates, and by holding leaders accountable for pursuing them. A quantitative approach will likely resonate with individuals in a numbers-driven financial ser- vices industry. At BNY Mellon, Karen Peetz found diversity targets to be highly effective. “One powerful thing that our company did was to have HR share stats with leaders about diversity at all organi- zational levels. We didn’t have quotas, but we had targets for increasing diversity, year over year, that were part of our executive committee compensations. I’m expected to move the needle every year on having more women and more diverse people on my team. It’s mea- sured, and I get a grade,” she explains. Jacqueline Molnar at Western Union also sees the importance of setting targets and holding leaders accountable. “It has to be a target, a KPI that’s measurable, with metrics against it. Are your slates diverse? Are your interviewees and interviewers diverse? Hold executives ac- countable, and then impose consequences on leaders who consistently fail to institute those policies and procedures.”

24 | A ROADMAP TO GENDER PARITY AT ALL CAREER STAGES The path to parity The goal to achieve parity in financial services is ambitious. However our interviews with fe- male senior executives and deep research demonstrate there is indeed a road to the top, and clear steps that can be taken to pave the way for more women to get there. Moving toward gender parity at the top will require corporate leaders—both male and fe- male—to view gender equality as a strategic priority, and one that is integrated into the organization’s day-to-day work. As Marianne Lake observes, “If we believe that investing in women is critical to the company’s success, we have to think about it constantly. It’s one di- mension of running a successful business. We can have targets around gender diversity—and we should measure them—but making it a priority comes down to leadership and culture.” Beverly Anderson echoes this sentiment and believes that change will come when diversity becomes a universal objective: “The customer base has to demand diversity; the sharehold- ers, everybody has to decide that this is important. We all talk an interesting game around diversity, particularly gender, but without full support it just doesn’t translate into the senior levels,” she says. The investment and commitment yields dividends—in terms of talent, performance, and val- ues. And the urgency to accelerate gender diversity in financial services is increasing as the customer base becomes increasingly diverse. Many believe the competitive marketplace ulti- mately will demand diversity from financial services providers—especially as women increas- ingly take the financial reins of their households. According to Margo Cook, “What will drive change in our industry is the amount of wealth that will continue to transition to women over the next several years as baby boomers age. More women will control assets because of their longer life spans. We can’t stay, let alone thrive, in the business if we’re not shifting how we talk to women. It’s a business case: financial services companies need to change their or- ganization’s landscape to attract and retain their clients’ wealth.” Success will require unwavering commitment from all leaders in financial services to move to- ward parity. As Marianne Lake concludes, “It’s about blocking and tackling. There’s no silver bullet; this is going to be a long game.”

Stacey Chin is a consultant in McKinsey’s San Francisco office, where Marie-Claude Nadeau is a partner. Alexis Krivkovich is a partner in the Silicon Valley office. The authors would like to extend their deepest thanks to the women who participated in the development of this report, from all the survey respondents to the industry leaders quoted directly in these pages. Continued engagement from women throughout the financial services industry—and from their male colleagues—will make the path to gen- der equality a smoother, shorter one. Beverly Anderson, Wells Fargo Ranjana Clark, MUFG Union Bank, N.A. Margo Cook, Nuveen Advisory Services Céline Dufétel, T. Rowe Price Jenny Johnson, Franklin Templeton Investments Marianne Lake, JPMorgan Chase Alice Milligan, Citi Jacqueline Molnar, Western Union Kathleen Murphy, Fidelity Karen Peetz, BNY Mellon (retired) Sheri Rhodes, Western Union Deanna Strable, Principal

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