In the past few weeks two women took on powerful positions in the financial services. Firstly Ana Botin became chairman of Spanish bank Santander following the death of her father Emilio. Then Abigail Johnson replaced her father Ned as chief executive of Fidelity, a huge US fund management firm. Ana Botin is the sixth generation of her family to run the bank, and Abigail Johnson is the third of hers to head their business.
This shows just how important it is for the financial services to have family firms in their sector, because they are one of the few ways for women to make it to front-line positions. (We’ve previously argued that family firms are feminist.)
When the British politician Harriet Harman said that the financial crisis would never have happened if Lehman Brothers had been called Lehman Sisters, she was tapping into a common criticism of the financial sector: that it is too macho, too aggressive and too male.
If there were more women in the City of London and on Wall Street, went the argument, those places would be more risk-averse, less gung-ho and frankly better at doing what society in general wants finance to do: protect and grow savings, and efficiently allocate capital.
Was Harman right? Maybe. Hedge funds run by women returned 9.8% in 2013, compared with the industry average of just over 6%. A seven-year study of 35,000 non-professional investors published in The Quarterly Journal of Economics in 2001 found that women got better returns on their investments than men, largely because men changed their holding 45% more, incurring higher fees that ate into their returns.
This is hardly conclusive, and the lack of women in financial trading jobs makes it hard to study their behaviour in any depth, but if these studies are on the right track, they suggest that anything that can get women into decision-making positions in the financial services must be good.
The industry is notoriously bad at promoting women into top jobs. There are still precious few women on lists of the top fund managers or traders. Arguably the best known is Mina Gerowin, who worked with hedge fund manager John Paulson when he made his infamous bet that collateralised debt obligation contracts would implode, which made him billions.
Interestingly, she left Paulson & Co in 2012 and now works for several companies including Exor, Fiat’s holding company, South Korean electronics giant Samsung and French cement business Lafarge – all of which are family-controlled businesses.
Quotas for women on boards have spread from Norway to the UK to Malaysia. This will probably change things, in the long run, in finance. But as the cases of Ana Botin and Abigail Johnson show, family-owned firms are still the best mechanism for propelling women into positions of power in male-dominated of sectors.
With its belief in shareholder ownership and the maximisation of short-term profits and regular reporting, those in the financial services are often allergic to family firms, which are seen as old-fashioned, nepotistic and opaque. But people who believe in stable, long-term capital might wish that there were more family firms in finance.