Sallie Krawcheck is questioning the meritocracies of Wall Street — or, as she’s calling it, the “man-tocracies.”
As Krawcheck describes them, meritocracies are like the “apple pie of capitalism.”
A meritocracy is a system in which the talented are chosen and moved ahead on the basis of their achievement.
“What’s more meritocratic than my industry Wall Street? Core meritocracy. What’s another meritocracy? Venture capital,” Krawcheck said in a recent speech during Ellevate Network’s Mobilizing the Power of Women Summit. “These are businesses that must be meritocracies, in which these businesses are money businesses driving capital to the best returns. So therefore, they will find the best talent.”
However, she added, “it just so happens that the best talent is more white males.”
Today on Wall Street, according to Krawcheck, nearly 90% of traders are male, 86% of financial advisors are male, 90% of mutual fund managers are male, 95% of hedge fund managers are male, and 95% of venture capital partners are male.
“Those males are so damn good … They’re 90-95% of these, by the way, quantitatively measured jobs. That’s amazing!” Krawcheck said. “Here’s the problem: Women are better investors than men. Women are better hedge fund managers, we’re better mutual fund managers, [and] we’re better individual investors. Where’s that meritocracy?”
A growing number of surveys and research papers have shown this. For example, Fidelity reported in 2017 that a growing body of research, including an analysis of the investing behavior of more than 8 million Fidelity retail customers in 2016, showed that women tended to outperform men in generating a return on their investments.
Another report, this one by Wells Fargo Investment Institute, finds that women’s greater willingness to show patience, forgo excessive trading, seek education and adhere to an investment plan has tended to result in better investment results.
In addition, a 2009 study by Vanguard of 2.7 million IRA investors found that during the 2007-2008 financial crisis, accounts led by women lost 13%, while accounts led by men lost 16%.
This is also true for hedge funds, according to other research. From January 2000 to May 2009, hedge funds owned by women gained 9.06%, compared with 5.82% for the composite hedge fund index, according to Hedge Fund Research. And, the Women in Alternative Investments Hedge Fund Index returned 6% from January 2007 through June 2012 while the HFRX Global Hedge Fund Index fell 1.1%.