Coming Out on Wall Street: It's a Business Decision

Johann Shudlick spent the early part of his career at Goldman Sachs in the closet. After a few years as an analyst, he decided the time was right to come out. Nervous, he sat across from his boss at dinner to break the news. “I’m gay,” he said. His boss exhaled audibly. “Thank god. I thought you were quitting,” he said with relief.

Wall Street is oft-maligned for a number of reasons, but it’s tough not to argue that financial firms are at the forefront of LGBT (lesbian, gay, bisexual, transgender) equality. The support often comes from the top down. Goldman Sachs chief executive Lloyd Blankfein, Bank of America CEO Brian Moynihan and several other top Wall Street executives have been vocal supporters of LGBT equality and have spearheaded a host of workplace initiatives aimed at recruiting LGBT employees. Still, much work needs to be done at the lower rungs of Wall Street to truly level the playing field.

The Business Case for Being ‘Out’

You can point to several reasons for Wall Street’s leadership on the issue. Many LGBT employees have a higher level of education, and consequently they are more prevalent in industries that hire workers with higher education degrees, said Christian D. Weis, the spokesperson of the LGBT network at Commerzbank, the second biggest German lender.

There’s also the fact that Wall Street is built to serve other industries, giving employees more exposure to other cultures, often making them more accepting and supportive of different lifestyles, said Todd Sears, founder of Out on the Street, an LGBT leadership organization for Wall Street.

That said, the most common response is that being inclusive is a good business decision. Financial services, perhaps more than any other prominent industry, is built on human capital. Banks want to create the deepest talent pool possible. “It’s what’s between your ears that generates revenue,” Sears said.

"When you operate in a true meritocracy, it is blind to things other than what you contribute,” said Julia Hoggett, a managing director at Bank of America Merrill Lynch who came out early in her career. If any bright candidates are 'self-deselecting' themselves from your firm or industry then ultimately the firm is impacting its chance to be as effective as it possibly can be, she said

Despite what seems to be a more supportive environment than those in other industries, bankers still find plenty of reasons to remain in the closet.

“On one hand, you can think: I am in a results-oriented business, my contribution should be able to be measured tangibly, and as long as the results I generate are compelling, being out shouldn't matter,” said Shudlick. “On the other hand, you could also see the perspective that, given the consensus-driven culture used to determine and reward one's contributions, there may be a reluctance to voluntarily insert a variable into the equation that could potentially impair your [career] prospects.”

Shudlick fought with the decision to come out. He wasn’t worried about overt bigots – as active discrimination tends to not be a good career move – but was concerned about the possibility of closet haters. “Back then, in my mind at least, I felt that if I came out, I ran the risk that I might alienate those people, or even worse, create enemies out of them,” he said.

The Benefits of Being ‘Out’

Shudlick and other openly gay bankers we talked to were surprised with the support they were given, along with the lack of discrimination they faced. But more so, they felt liberated – not just personally, but professionally. Being openly gay allows you to bring your whole self to work, said Shudlick, who feels people underestimate the emotional and intellectual capital that it takes to essentially live a lie.

The benefits are quantifiable. LGBT employees who are out at work are more likely to be promoted and to stay at company than are those who remain in the closet, according to research from Out of the Street. "I tend to think it's not a coincidence my career didn't really start to take off until after I came out,” said Shudlick, who is now a VP within Goldman’s investment banking division and the co-head of the firm’s LGBT network.

The advantages of coming out go beyond personal liberation, says Hoggett. It can quite literally open doors. Being out “often provides you exposure to a broader span of the organization than you might get simply from the business that you are in,” she said. This is especially true in client-facing roles, where banks seek out openly gay employees to cater to the rather affluent LGBT community, which represents $790 billion in buying power. "I have not felt for one minute that [being openly gay] is a hindrance,” Hoggett said.

Roughly 17% of LGB men and 9% of LGB women believe their open sexual orientation can be leveraged as a business asset, according to Out on the Street. Five years ago it would have been zero, Sears said.  Fifteen percent of men and 10% of women say they have expanded their networks since coming out.

"People tend to obsess over the worst-case/disaster scenario, and fail to consider all the amazing things that happen coming out,” Shudlick said.

Obstacles Remain

Leaders in the LGBT community on Wall Street are pleased with progress over the last decade or so, but are far from ready to declare victory. Wall Street has still yet to see an openly gay chief executive officer of a major firm. In fact, no global CEO of a Fortune 500 company has come out. Commenters on the blog Gay Banker talk of a “pink ceiling” that exists in New York, where gay men and women can only climb so high on the corporate ladder.

Sears, for one, thinks a sea change is coming. Several heads of major business units are openly gay – including two at HSBC. Marlon Young, CEO of Private Banking Americas at HSBC, and Antonio Simoes, Head its U.K. Bank, are both out, according to Sears.

Another concern is the ability to filter the message of equality and support from the C-level down to middle management. "Change is effected from the bottom and the top,” said Hoggett, “but how do you make sure managers in between, to whom people report, have the same principles and put them into effect in their management? That is a challenge well recognized across the industry and something we are all working to address."

Ally programs, run by Goldman Sachs, Bank of America and dozens of other Wall Street firms, can help. Straight workers who support the LGBT community can sign up to be part of the ally network, take part in events and, in Goldman’s case, place a tent on their desk that identifies them as an ally, helping to build a community that is otherwise invisible, said Shudlick.

Still, the percentage of LGBT employees who are willing to come out at work hasn’t changed at all since 2011. A third of people who are out in their personal lives still remain closeted at work. The fact that it is still legal to fire someone for being gay or transgendered in 29 states surely has an effect.

Then there’s the overseas fight. U.S. firms have been at forefront of supporting LGBT employees, and European firms are catching up. Things aren’t near as sunny in Asia though.

Homosexual behavior is illegal in 76 countries, and global non-discrimination clauses can be difficult to enforce, Sears said. In Hong Kong, for example, tens of thousands of people protested when the government assembled a task force just to look at LGBT equality. Sears is taking Out on the Street to Singapore in October in an effort to help change the culture.

Acceptance and support must also improve outside of big corporations located in sprawling cities. “In smaller companies and away from the cities it might be slightly more difficult for gay people,” Weis said.

Recruiting from the LGBT community has historically been difficult, but significant strides are being made with programs designed to help candidates uncover the myths of Wall Street culture.

"We've heard anecdotally that some undergrads feel that 'If I'm LGBT, I can't work on Wall Street,'” said Shudlick, who has helped lead Goldman’s Pride Month activities and other awareness initiatives. "There is a perception among some people that Wall Street is a hyper-masculine, 'frat-like' culture,” he said. “The reality is that not all of Wall Street is like that. You don't have to be able to see yourself as the archetypical trader or banker to be successful here."

Hoggett echoed his sentiments, noting the palpable “sense of amazement” exuding from young gay people that Wall Street was trying to recruit them.

The Next Frontier

Increasing the number of LGBT employees willing to come out at work cannot be accomplished solely through company-sponsored programs and initiatives, Hoggett said. It’s the small, under-the-breath comments – typically from straight people – that keep LGBT employees up at night.

"Making a positive statement about your perception of the gay community, however subtle, will likely be remembered by that person and have a very material impact on their level of comfort and confidence in the work place,” she said. “Often, it is the very small things that can make the biggest difference."