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Wall Street elites keep everyone else out

A privileged group of white men cultivate a workplace culture in hedge funds in the U.S. that impedes women, people of colour and people with a weaker social foundation from being hired or promoted. This is what Megan Tobias Neely’s research shows

17. Mar 2022
6 min
Af Regner Hansen

“Hedge funds invest on such a large scale that they can shape the financial market”.

This is how American Megan Tobias Neely explains why she has zoomed in on hedge funds in her latest research – powerful investment companies that collectively manage thousands of billions of dollars. She has a PhD in sociology and is an adjunct professor at Copenhagen Business School (CBS).

That Wall Street incomes are high is well known. Megan Tobias Neely was curious about the dynamics in the funds as a workplace that help explain this development, which picked up speed during the deregulation of the financial market during the Reagan era.

She got a sense of it when she was employed as a junior analyst in a large hedge fund after her university studies – and also experienced the 2008 financial crisis from the inside.

“There was a lot in the media about the unethical behaviour and in some cases criminal excesses in the financial sector. I wanted to look at the entirely legal, everyday activities”, says Megan Tobias Neely.

She was also driven by the fact that 97 per cent of hedge fund investments are managed by companies who are led by white men. Less than a fifth of the employees are women. Why is there this inequality in the sector?

Megan Tobias Neely chose an anthropological approach in her research and was an observer in a number of hedge funds, interviewed nearly 50 employees and managers and participated in a number of events in the sector.

Six years of research are summarised in her book “Hedged Out – Inequality and Insecurity on Wall Street”, which has just been published.

Family connections and networks

Based on her material, Megan Tobias Neely notes that there are several factors in recruitment for hedge funds that favour white men with a privileged background.

“Many get jobs in a hedge fund through personal connections. In most cases, it is through family, but it can also be through social circles or their network at the elite university where they went. For example, black students are not part of the same fraternities as white students. And women, for example, can rarely come up with anything matching in job interviews where hobbies are often discussed. There is a lot of focus on whether the person fits in. White men are most comfortable hiring white men”, says Megan Tobias Neely.

In terms of security, she adds that the tendency to bring in “clones” is supported by the fact that hedge funds operate with great risk. Add to this that men are generally seen as better able to deal with risk than women.

They see it as a meritocracy

Megan Tobias Neely notes that the white men in hedge funds explain the gender and racial inequality amongst the employees by saying that it is the most qualified who are hired.

“Many who have gained a foothold in the sector explain that it is due to their intelligence and hard work. But when you look at them more closely, they often have an elite background”, Megan Tobias Neely says regarding this story that the selection is based on meritocracy.

In hedge funds, it is also suggested that there is supposedly a “supply problem” when it comes to women – i.e. that women are not interested in financial analysis.

A newly hired hedge fund analyst in the U.S. receives the equivalent of a little over four million Danish kronor in annual salary on average. A portfolio manager receives the equivalent of approximately nine million Danish kronor in annual salary on average.

“Hedge fund employees defend the extremely high salaries by saying that investments require insight and that they deal with significant values and take big risks”, says Megan Tobias Neely.

Stereotypical job functions

The skewed pattern in terms of gender, race and social background is reflected in the distribution of job functions and promotion in hedge funds, Megan Tobias Neely points out.

Female employees – regardless of expertise – are often placed in service functions.

“Women are more recognised for social skills than technical skills, and therefore are seen as suitable for customer service, for example. There is also an assumption that women cannot fully engage in the demanding work of managing values if they have children”, says Megan Tobias Neely. In the sector, this view is expressed as the “mother career path”.

Employees of colour are often assigned specialties corresponding to regions in the world that they are – relatively arbitrarily – associated with.

“Black and other non-white employees are thus locked into a niche and have fewer paths to promotion”, says Megan Tobias Neely.

She adds that Black men also struggle with the challenge that, like other employees, they have to be able to land deals, but easily risk being perceived as aggressive because that is the stereotype about Black men.

“Socially beneficial investments”


The inequality amongst employees is reflected in the founders and directors of hedge funds, and the explanation, according to Megan Tobias Neely, is the same dynamics that favour white men with elite backgrounds.

Her research shows that the directors’ exorbitant salaries, which are far above the high salaries of their employees, are justified by the directors by saying that they contribute to efficiency and stability in a sometimes tumultuous financial market and that they make “socially beneficial investments”.

Structural changes

What can be done? Megan Tobias Neely says that it is not within the scope of her research to answer that. However, she believes that targeted efforts to promote equal access and equal conditions in hedge funds and the financial industry in general will be insufficient. There needs to be structural changes in the U.S., including more political regulation, stricter supervision and tougher taxation. Like is happening in Europe.

“Redistribution through taxes to strengthen welfare efforts can help because it generally puts women and minorities in a better position than now”, she says.

Megan Tobias Neely also highlights the importance of trade unions in ensuring proper working and employment conditions in the sector.

“Wall Street is totally anti-union”, she says of the reality in the U.S.

Megan Tobias Neely

Adjunct Professor at the Department of Organization at CBS.

Also affiliated with the Women’s Leadership Innovation Lab at Stanford University.

PhD in sociology, University of Texas in Austin.

Research thesis: Workplaces and economic inequality with a focus on gender, race and social class.

Co-author of the book “Divested: Inequality in the Age of Finance”, Oxford University Press, 2020. The book is about how the financial sector promotes inequality in the U.S.

Author of the brand new book “Hedged Out – Inequality and Insecurity on Wall Street”, University of California Press, 2022. The book is about the Wall Street culture exemplified by hedge funds.