Equality in Quantitative Finance

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Contents

❖ Perception❖ What Can Companies Do to Attract

and Retain More Women into Quantitative Roles?

❖ Attracting Women into Quantitative Finance

❖ Avoiding Headwinds❖ Experiences From the Industry❖ Advice to Female Professionals ❖ Advice to Employers

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Why are there so few women in quantitative finance?Quantitative finance is undoubtedly a male dominated industry, and while that problem is widely recognised and efforts are being made to rectify it, significant challenges remain. Here we attempt to understand the difficulties facing the industry while presenting possible solutions for achieving greater diversity.

Perception

Given the lack of senior women across all of financial services, the challenge employers face will involve breaking stereotypes, by being more accessible, culturally aware, and offering the flexibility that employees need to achieve their maximum potential.

With so few women holding senior positions in quantitative finance the problem is two-fold:• Lack of female representation in senior management positions often prevents employers

from considering the challenges female professionals face at all levels;• Masculine culture and male dominated work forces make attracting and retaining

female professionals more difficult.

Larger financial institutions have more capably dealt with many of the underlying issues, but these same strategies and techniques can be utilised by smaller firms to increase gender diversity.

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What can companies do to attract and retain more women into quantitative roles?

Given demand significantly outweighs supply, the industry must work to attract more female graduates. To do so firms must market themselves to female graduates by:• Attending university career fairs;• Sponsoring events;• Offering internships & work experience;

For women already working in the industry, efforts should be made to• Enhance networking opportunities;• Offer mentorship to individuals internally and externally;• Listen to and address concerns

Listening to female professionals offers us insight into the many challenges women have faced entering the industry and when developing their careers.

Speaking with Quant Minds in January 2018, Jessica James, Managing Director, Senior Quantitative Researcher at Commerzbank AG, expressed her view that the scarcity of women can be attributed to a ‘compound interest’ problem where initial challenges are then exacerbated at each ‘turnover point’, whether that be limited promotion opportunities, redundancies or other factors. This, combined with the difficulty of balancing personal and professional motivations means that a significant number of women exit the industry without realizing their full potential.

https://knect365.com/quantminds/article/0d47ec1c-de80-47d8-9882-5ed48ffe1205/we-cant-change-the-nature-of-the-finance-industry-overnight-so-we-need-to-work-on-the-bias

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Attracting Women into Quantitative Finance

Young professionals are often guided in their career decisions by personal experiences and exposure, whether that be gained from family, friends or during their education. At an institutional level organisations must work to ensure that they engage female talent at the earliest possible opportunity, as without a sufficiently large talent pool emerging from higher education, there will continue to be a lack of female talent entering the industry.

In the US, major financial institutions including Morgan Stanley, Bank of America and JP Morgan have contributed funding to Girls Who Code, which after 6 years has reached 90,000 girls across 50 states, and is aiming to achieve gender parity among computer science graduates by 2027. This one organisation’s efforts exemplify the success that can be achieved by engaging young women, with alumni who attended their programmes being 15 times more likely to enrol in computer science or related degree subjects at university. Similar efforts in the UK and internationally would likely produce similar outcomes.

In the UK, data from HESA shows female graduates continue to represent a minority of graduates in key technical subjects, as exemplified by year-on-year data over the last 5 years.

Percentage of female graduates 2012/13 - 2016/17Engineering & Technology: 17.3-18.6%Computer Science: 18.9-23.2%Mathematics: 39-41%

https://www.hesa.ac.uk/news/11-01-2018/sfr247-higher-education-student-statistics/qualifications

Only 12.1% of graduates came from these technical subjects in 2016/17, which means employers must look outside of the UK. Given 6% of UK university students in higher education came from the EU, and 13% from the rest of the world, employers should also ensure they are accessing talent pools internationally where possible.

https://www.ukcisa.org.uk/Research--Policy/Statistics/International-student-statistics-UK-higher-education

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Where to start:

• Offer insight into the industry by reaching out to schools, offering internships and work experience for female students in secondary and higher education;

• Demand greater female representation in interview processes where possible;• De-masculinise workplace culture through networking, mentorship (which can and

should include male mentors) and making senior management accessible and accountable.

Achieving higher retention of female staff:• Engage female professionals who are often less likely to achieve fast track promotion;• Ensure equal opportunity for promotions and career enhancement;• Allow staff access to mentors and mechanisms to deliver feedback to management;• Enable staff to balance personal and professional ambitions by offering flexible

maternity leave and agile / flexible working schemes where possible;• Encourage shared Parental Leave to support gender parity;• Monitor and enforce solutions to gender pay gap.

Speaking to a senior talent acquisition specialist at a major bank offered us insight into their corporate strategy and potential solutions for achieving gender parity.• 1 in 8 quants in the bank are female, and the majority of those females are at the most

junior level in their teams. When quant roles are advertised the bank receives 1-2 qualified female applicants for every 50 qualified male applicants;

• To address this the bank has participated in programmes such as Momentum - aimed at bringing underprivileged students into finance / offering internships after completing an interview style selection process;

• Many other organisations have created professional networks for female professionals, allowing opportunities for networking and mentorship while also fostering discussion on key issues.

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Avoiding Headwinds

Listening to the Career Progression Panel at October’s Women in Quantitative Finance Conference offered important insights into the panellists’ personal experiences of:• Unconscious bias;• Imposter syndrome (doubting ones’ own accomplishments);• The opportunities gap;• The compensation gap;• The lack of workplace flexibility for families.

One of the questions the panel faced was whether being a woman in quantitative finance had an affect on career progression and the conclusion was unanimously that it does. Many senior female quants share similar frustrations, having seen their careers stall at the point they decide to have children. Their stories recount:• Unspoken peer pressure from male colleagues & superiors for a perceived ‘lack of

commitment’;• Being overlooked for project work due to lack of facetime;• Missing out on promotions to less productive colleagues due to maternity leave;• Losing trading books to colleagues due to extended absence;• A lack of, or token support for flexible working;• Inflexible management structures & review systems

Women’s experience shows a systematic bias which all too often gives female professionals a binary choice of advancing their careers or having a family. This repercussions of that choice then prevent all but a few women from realising their potential, and rising to more senior levels in the industry. Those exceptions either forego families, or enjoy high level sponsorship from colleagues and employers. With competition for senior female quants so high, headhunting to fill vacancies from such a small pool of talent will inevitably not be enough to realise a more equitable gender balance at senior levels.

Those employers who work to tackle these issues will quickly separate themselves from competitors, making their working environments more equal and thereby better retaining female staff while concurrently becoming more attractive to female candidates at all levels.

Ultimately, with an increasing number of LPs including diversity as a key component of due diligence, asset managers will have to sit up and take note, enforcing real change to achieve greater diversity, lest they lose out to competitors who have outperformed them.

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MODERATOR:• Jessica James: Managing Director, Senior Quantitative Researcher, Commerzbank AGPANELLISTS:• Katia Babbar: MD, Head of e-FX Algorithmic Trading, FX Product, Lloyds Bank Commercial Banking• Rebecca Phillips: EMEA Head of Diversity and Inclusion, Goldman Sachs International• Christoph Burgard: Head of Risk Analytics For Global Markets, Bank of America Merrill Lynch• Hanna Assayag: Director eFX, HSBC Bank Plc• Natalie Basiratpour: Director, Octavius Finance• Nozha Karmous: Head of Algos and Valuation Model Review, HSBC Bank Plc

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Experiences From the Industry

We were privileged to speak to senior female quants who shared their own experiences with Octavius Director Natalie Basiratpour.

One senior female quant reflected that she has faced more headwinds than tailwinds in her career. Male dominated teams have often been prone to unconscious biases, meaning that women often lack confidence in key moments, from making their voices heard in internal staff meetings to pushing for project work (which is a key point for career development), promotions or higher compensation. Women seem to lose out for a variety of reasons at critical moments early and mid-way through their careers. Whether this is due to a lack of confidence among young female professionals who are severely underrepresented, unconscious bias from their superiors, or overlooking more experienced female professionals balancing family & professional commitments, key challenges persist. She also noted that these experiences aren’t exclusive to quantitative finance, and that the opportunity gap and the pay gap persist across many areas in financial services and beyond.

Many key challenges become particularly pronounced for women with families. Having started off with a level playing field, one professional expressed her view that women with children are viewed differently. Colleagues and superiors assume a lack of focus and commitment, and many organisations haven’t historically dealt with this challenge well either. In her experience returning to work after 6 months maternity leave, colleagues has been promoted and major projects had been assigned to others. After having her first child, management gave away her responsibilities, following the birth of her second child they asked how many children she was planning to have….one of her close friends in the US had a more extreme experience still, with a clear expectation that taking more than 2 weeks maternity leave implied a lack of commitment. Her own view is that pay, promotions and project work should be decided based on deliverables, not facetime in the office, and that organisations must ensure flexible working is possible.

Even for women seeking flexibility for reasons other than family, many of these experiences are shared. Another senior female quant who balances time between quantitative finance and academia highlighted her own experience of a severe lack of flexibility. To her, the decision to take flexibility early in her career directly penalised her in an environment where working from home or leaving before male colleagues outweighed comparative productivity and ultimately negatively affected project distribution, promotion opportunities and compensation.

Only one female professional Octavius Finance spoke to felt she had received senior sponsorship at key moments in her career. She described herself as extremely lucky and unique in that case. When starting her career in New York City she watched as friends in electronic trading were often overlooked for project leadership positions against male colleagues. Yet despite having senior sponsorship she too saw her career go sideways /

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backwards after the birth of her first child. Her career stalled after the birth of her second child, and only after coming to London did she start to see opportunities opening up for her. To achieve that she had to speak up, demand her dream role and put herself in that position. Again she was lucky in that she was mentored by senior women, and their advice was particularly useful when she started her family while continuing to work to enhance her career.

While attracting female talent at entry level is key, retaining and incentivising female talent has been the most evident failing point in our discussions with senior industry professionals. To rectify these issues organisations must ensure compensation, project work and promotions are decided by productivity and outcomes. Further to that they must also not make assumptions for employees with children.

While networking and mentoring opportunities are important, it’s impossible to ignore the fact that women in quantitative finance are a small minority. Many young professionals Octavius Finance spoke to were either unaware of networking opportunities within their respective institutions or externally. Still more mid-level and senior professionals were unable to access those opportunities given professional and family commitments.

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Advice to Female Professionals

Internal and external networking are important opportunities to empower female professionals, to make their voices heard and discuss shared experiences. Whether they be internal organisations or independent networking groups like Quantess London, these forums may be critical to working toward equal pay and equal experience in a professional environment (https://quantesslondon.com/).All of our sources felt that women should do more to make their voices heard. Oftentimes the reason they are overlooked is simply because it is harder for a woman to speak up. Being under-represented many women find it difficult to negotiate, whether it be for a high profile project, an increase in pay, or a promotion, as they run the risk of being ostracised by a male majority.

Speaking to a senior female candidate who had recently been promoted to a much more senior role, she told us “this year I made it a target of mine to get a promotion, Partly because I was so annoyed about a (male) colleague who got promoted last year. He definitely didn’t deserve it, but I know he asked and asked for it. I decided that I can’t be so annoyed if I do nothing about it. I didn’t let my pregnancy stop me from asking either because I know it won’t affect me doing my job”.

Being vocal pays dividends. Women should therefore use networking opportunities to increase their confidence, determine their worth, better understand negotiation tactics and through all of that push for equal treatment to their male colleagues. Where an individual feels they would benefit from learning enhanced negotiating tactics, they should invest in those skills in the same way they did their education.

Equal opportunity and compensation are rarely guaranteed by employers, particularly in finance, and those who avoid confrontation and don’t market themselves or negotiate will inevitably lose out, regardless of gender. Professionals must remember that they work in an environment where deliverables are quantifiable, take confidence from that and do everything in their power to ensure their worth is directly linked to their productivity.

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Advice to Employers

Without action from employers there will continue to be a stark lack of female professionals in quantitative finance, especially at senior levels. While we can clearly see effort being made to make workplaces more attractive to women, these efforts are not always being capitalised on. Through the conversations Octavius Finance have had with women at all levels and across different functional areas in quantitative finance there are concrete actions that can be taken to recruit and retain female professionals. Those firms that act on these issues will be at a significant advantage against competitors given LPs are increasingly prioritising diversity when selecting managers.

• Employers can reach a wider and more diverse audience through outreach to students and young professionals;

• They should encourage and foster the growth of female networking bodies, ensuring employees are aware of such groups and that they are also accessible;

• Female and Male mentors should offer advice and insight to junior colleagues;• Men’s and Women’s careers must not divaricate when they choose to have a family.

Finance may benefit from referring to the tech community who have made significant strides in this area (https://www.recode.net/2018/1/31/16944976/new-parents-tech-companies-google-hp-facebook-twitter-netflix)

Solutions may include:• ensuring parents’ workloads are maintained by colleagues for the duration of a

colleague’s parental leave;• offering and/or enforcing increased paternity leave to narrow the opportunity gap;• allowing more flexible working; with an employees’ responsibilities and worth being

determined by deliverables rather than face time in the office.

Octavius Finance spoke to female professionals across multiple functional areas across the industry, yet experiences were largely shared. Unless financial services firms change practices in key areas they will continue to pay lip service to the challenges facing female professionals, and will fail to achieve a more equitable gender balance.

Given so many women referenced sources of inspiration outside of finance, particularly in technology or politics, it feels poignant to close with a quote from Michelle Obama’s recently published book, Becoming, “What I knew from working in professional environments … is that sameness breeds sameness, until you make a thoughtful effort to counteract it”.

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