Finance and the Feminine Mystique:
How Diversity Can Pay Off
Leah Zell talks about family, career and the importance of
having conviction without overconfidence. BY GEORGINA HURST
C
ompanies founded by women generate a
35 percent greater return on equity than
those started by men, says Robyn Ward,
head of new media ventures at United
Talent Agency, while speaking on the “Women Challenging the Status Quo: Building
Businesses Their Way” panel at the Milken
Institute Global Conference on Tuesday. Female investors are three times more likely to
invest in female entrepreneurs, she continues. “We need more women investors, and
we obviously need more women and young
girls educated in STEM [science, technology, engineering and math] that can come up
and start technology-driven companies.”
The Milken confab, which took place in
Los Angeles from April 26 to 29, shined a
spotlight on women this year — the hurdles they face in the workplace as well as the
strides women and men are making in challenging the status quo and addressing gender issues. Speakers ranged from Facebook
COO and Lean In author Sheryl Sandberg
to PAAMCO CEO Jane Buchan to Nasdaq
president Adena Friedman. They discussed
impediments such as inadequate maternity
leave policies, unequal wages and so-called
leaky pipelines that create obstacles for female professional advancement.
COVER OF MEREDITH A. JONES’ BOOK “WOMEN OF THE
STREET: WHY FEMALE MONEY MANAGERS GENERATE
HIGHER RETURNS (AND HOW YOU CAN TOO)”
“While the legal and medical fields, which
were historically also male dominated, have
seen an increase in female participants,
women in finance remain woefully underrepresented,” Meredith Jones, author of
the recently published book Women of the
Street: Why Female Money Managers Generate Higher Returns (and How You Can
Too), tells II. For every female hedge fund
manager, there are 80 male managers, she
contends. There are a lot of reasons people
can point to for this lack of diversity in the financial industry, Jones says, from networks
to work-life balance, gender bias and a lack
of desire among women to pursue business
and finance careers. “It’s difficult to single
out any one, two or even a handful of factors,” she concludes.
Yet Women of the Street, which profiles 12
female money managers, argues that women are superior investors to men thanks
largely to seven characteristics and behavioral tendencies — from exhibiting less overconfidence to admitting investment mistakes while maintaining conviction — that
distinguish female from male investors and
translate into long-term profits.
The financial industry needs more women investors to generate better returns and
achieve greater diversification, reckons
Jones, who founded MJ Alternative Investment Research and formerly directed alternative investment think tank Rothstein
Kass Institute. Below is an excerpt from
Jones’s Women of the Street, in which she
interviews Leah Zell, founder of international small-cap stocks investment firm Lizard
Investors and younger sister of billionaire
real estate mogul Sam Zell.
Meredith Jones: So you learn the smallcap and international equity research side
of the business at Harris [Associates],
and then you took the reins at [Wanger
Asset Management’s] Acorn [International Fund]. At the time, you had two relatively small children. What was that decision
process like for you?
Leah Zell: Careers have inflection points
that are generally obvious only in retrospect. That was, without doubt, a major inflection point in my life and in my career. I
had two small children. I had asked to reduce
my hours because my children are only 26
months apart. Let’s say I was busy. But then
I found that I was in the mommy track and
that I was no longer being considered for pro-
motions. I was no longer in the bonus pool.
I found this to be very demoralizing, so the
decision that I faced was either to retire or to
go back full time and grab the brass ring.
I was in my early 40s. It was very clear
to me that I either was going to make a career for myself or not. From an age perspective, I had my children fairly late. I didn’t
have the luxury of waiting until they were
both in school full time to go back because I
would have been too old. So I just took a deep
breath and made the decision to go back to
work full time and to make it work.
MJ: Because the alternative was just not
acceptable?
LZ: Let me give you another sort of anecdote: After we sold the business — I’m
fast-forwarding here — I had an employment
contract and noncompete contract. There
was a small window before I started Lizard
Investors, and both of my children came to
me after about a year and said, “Mommy, will
you please go back to work? You are driving
all of us crazy.” Work makes me happy, and
I maybe knew that at that first juncture that
if I didn’t make the decision to go full time,
it would have long-term consequences that I
would not be able to undo.
MJ: What were your days like once you
made the decision to go back full time,
take the reins at Acorn, and you had a
two- and four-year-old at home?
LZ: I was blessed, because at that point
I was a partner of the business, and that
meant that I had a certain degree of freedom.
There’s a big difference between investment
banking and asset management: whether
you control your time or not. Anne-Marie
Slaughter addressed this when she wrote her
article for Atlantic Monthly[“Why Women
Still Can’t Have It All”]. I had more control
over my time and could organize it, and I
was also in a position that gave me flexibility, and that’s really critical.
I’ve always been an investor, and certainly at Acorn we had a 24/7 trading desk, so the
trading was done by the people who stayed
up all night, and thankfully, it wasn’t me,
except when I got really crazy. I worked a lot
after my kids went to bed. I’m a night owl, so
it would not be unusual for me to work until
the European market opened.
I also did a lot of traveling, but I would try
very hard to take the last flight out on Sunday
night so I could put my kids to bed. I would
always try to be back by Friday afternoon. I
knew every single flight schedule to Europe
by heart. I knew exactly where I could fly to
get the last flight out from Chicago.
MJ: How do you keep from being overconfident?
LZ: This is a business where you’re always
making decisions on insufficient information. You have to be realistic about the fact
that at any juncture you could be wrong.
There’s this very fine line. Conviction and
hubris — they’re really on the same spectrum. You need to have enough conviction
based on the work you’ve done, but not so
much conviction that you’re not willing to
change your mind when there’s contrary information. Sometimes you don’t know why
you’re wrong; you just know you’re wrong.
We all make errors. When you catch a mistake in this case, you deal with it when it’s a
small mistake. You don’t let it become a big
mistake.
MJ: Finally, what advice do you wish you
had been given at the start of your career?
LZ: I think being your own person is really,
really important in this profession. This is not
a profession where you follow the crowd. In
order to do that, you have to have confidence
in yourself and can’t let others dictate your
self-worth. I would say the same thing about
anyone who wants to be an entrepreneur.
Having confidence in yourself and believing in yourself is mandatory. That doesn’t
mean that you don’t have down periods, and
it doesn’t mean that you don’t have times
when you question yourself, but you have to
be your own mirror; that is the first thing I
would say.
The second thing I would say is that no career follows a straight path. There are always
going to be ups and downs. You have to ride
it, learn from it, and adapt. Turn early and
look down the course. Know where you want
to go, but then get there with flexibility, integrity, intellectual honesty and authenticity.
I’ve also been privileged to have known
many, many successful people. The ones I admire the most are the ones who are still challenging themselves and still learning. Another way of saying it is, you need your own
internal concept of excellence. You need to
pursue excellence, and probably part and parcel with that, you need a very good BS meter.
Reprinted from the May 2015 issue of Institutional Investor Magazine. Copyright 2015 by Institutional Investor Magazine. All rights reserved.
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