Voice of Experience: Jane Buchan, CEO and Managing Director, PAAMCO

By Melissa J. Anderson (New York City)

“Are there barriers for women in investment management? Yes, of course, began Jane Buchan, PhD, CEO and Managing Director at PAAMCO. “But it’s fascinating, as when I was younger I would have answered no. As you climb up through the pyramid, you see more barriers and more glass ceilings.”

She continued, “They aren’t overt issues. If we pretend that I’m Jack Buchan, not Jane Buchan, people would think I’m at the table because of what I’d done. But as a woman, more and more, you have people saying you’re just here because they ‘needed a woman.’ There are more and more questions of legitimacy, not that you’re here because you’ve earned it.”

Buchan has spent her career in investment management, and now as head of PAAMCO, an institutional fund of hedge funds, she is looking to change the way hedge funds produce returns for her clients. She also wants to see change in the way women are perceived in the industry.

“It’s very hard to deal with. I like what some organizations have done – ensuring there is a diverse pool of candidates for a position, so that it is clear when you pick a person it’s because they are the best person, not just the right gender,” she added.

Career in Investment Management

Buchan studied economics at Yale and went on to Harvard where she eventually earned a PhD. That’s when she got her start in the investment management industry. “I had a professor and advisor who thought I’d be really suited to the investment business given my quantitative skill set,” she recalled. “He introduced me to a former professor who was working at JP Morgan, and that’s where I started my career and got my basic training.”

“As my career unfolded, I moved to California where I had the opportunity to train for the Olympics and join a smaller firm. Later, I had the opportunity to start my own firm – PAAMCO, a fund of hedge funds. It’s truly good when people want you to start a business,” she said with a laugh. She continued, “When we started the business, we thought long and hard on how we could make the equation of hedge fund investing match the fiduciary profile of our clients.”
That meant being an industry leader on a few topics that are now seen as standard;poiltf for example, position-level transparency from the underlying hedge funds. “Rather than just talking about the issue, we thought it was a worthwhile challenge to change the way the industry practices work.”

And, after over a decade, she’s still excited about changing the way the industry works. “Our clients are big retirement plans, and hedge funds are designed historically to favor hedge fund managers rather than their clients, when it comes to things like capturing fees,” she explained. “We are looking for ways that retirement plans can get better outcomes.”

While retirement plans most likely need to work with hedge funds in some way to have good returns, she continued, PAAMCO believes they can perform better for their clients. “Right now one of the issues is liquidity. How you approach that probably tells you a lot about yourself,” she said. “I think many people don’t recognize that the liquidity issue is a way to help hedge fund managers keep control of an asset, rather than produce good returns. I think ten years from now, the industry is going to be very different on liquidity rights.”

Women in Investment Management

Buchan advised young women in the industry to focus on excelling at their jobs. “I think people underestimate the amount of the time they should be learning.”

She explained, “The world isn’t fair, and I think women need to realize they really need to learn. They do need to be more solid than the equivalent male on the absolute details. One of the ways I think I have been successful is because, frankly, compared to the majority of the males I’ve worked with, I have been better on the details.”

“It’s not fair, but in my industry, you still have to be better as a woman.”

She advised senior women to look at their company practices to ensure that they have a diverse pool of talent on the intake. “That way you deal with the diversity problem up front rather than on the other end and you can be crystal clear that the outcome was solely based on merit.”

“We have a lot of senior women at PAAMCO and we’re more diverse at the top than other firms, particularly financial services firms. We are able to attract top talent of both genders because people know that they will be promoted based on what they produce rather than anything else.”

She also encouraged senior women to be more vocally supportive of one another. “When you have the bully pulpit of authority, use it.” Likewise, she continued, “accept that public recognition. I still see women sloughing off praise they deserve. That was a lesson I learned from a graduate school professor. When you do a good job, don’t be afraid to let people congratulate you!”

In Her Personal Time

Outside work, Buchan spends a lot of her personal time involved in higher education. “It’s very important to me,” she said. “I work with a lot of trustees to colleges. I also spend time mentoring young women here and encouraging them to go to the best grad schools.”

Finally, she added with a laugh, “As far as charity boards, that’s what husbands are for.”