In this week's episode of the CNBC Changemakers and Power Players podcast, CNBC Senior Media and Tech Reporter Julia Boorstin spoke with Karen Finerman, co-founder and CEO of Metropolitan Capital Advisors.
Finerman shares how she built a hedge fund career on Wall Street, the lessons she learned from early risks and failures, and why mastering risk is key to success. She also explains her mission to help women take control of their finances, advocate for themselves, and build confidence around money.
Listen to the full episode here. New episodes drop every Tuesday.
All references must be sourced to CNBC Changemakers and Power Players podcast.
FINERMAN ON THE WORST MISTAKE BEING THE BEST TEACHER
JULIA BOORSTIN: So what was your big mistake and give us a little sense of what your life was like. You graduated Wharton, you're Wall Street in the 80s. What was it like?
KAREN FINERMAN: Yeah, there's a lot of shoulder pads. It was a lot of big hair, but it was I worked for the the Belzberg family and on their risk arbitrage desk and I just found it fascinating and I love the excitement of it. You know at that time the world was different. You literally got your news every morning from the Wall Street Journal at your door and you didn't get a ton of updates during the day, but I just was, I really wanted to make money, which I know doesn't sound as good as being financially independent, but they are the same thing. And that was exciting to me. And then I had this one terrible trade where I just didn't take into account what is the downside, what's our worst case scenario, and how bad is that if it happens? I hope I never do that again.
BOORSTIN: So what did you learn from that horrendous trade? And also, how did you come back from it?
FINERMAN: It was tough. I mean, it stayed with me. It's literally like a scar in my psyche. I learned to cap your risk, understand your risk, and size the bet accordingly. And those are, I mean, if you can learn that off of someone else's story, great. You do learn it quite well when it's your own really bad trade.
BOORSTIN: And so do you feel like you're more risk averse because of that or you're just more cautious or how would you put it?
FINERMAN: I think I'm a better risk manager. I'm not more risk averse. I won't take that kind of risk, but a better risk manager, hopefully.
FINERMAN ON CONTINUING TO LEARN
BOORSTIN: So having navigated those worlds and taken on your own risks of starting your own thing and figuring out how timing is everything and how to react to that, what would your advice be to people of any gender who are trying to navigate those earlier days of their careers?
FINERMAN: I mean, would be, if you can, find somewhere where you're learning and keep learning and, you know, sometimes I hear young people who feel like, all right, I've had a couple years experience in this field, I'll stay in this field. And clearly now we have to be more, we have to be more flexible. Things are changing quicker than they ever were, but just always be learning new skills.
BOORSTIN: So is that why you became a media personality? Because you were risk arbitrager, then hedge fund, and now you continue to run your fund, but you also became a media personality. And I heard that the folks the folks at "Fast Money" were going through a magazine of the top hedge fund managers, because that's how they found things in those days, and then picked up the phone and called you and asked you if you wanted to join the show.
FINERMAN: They did. It was "Trader Monthly." It was a "Women in Wall Street" article. And they said, do you want to come try out for this show? And it was not on my radar screen at all. It just, I had no expectation. And so I decided, all right, what the hell? I'll give it a try. And so Susan and Mary Duffy, who you know, did this.
BOORSTIN: Our colleagues at CNBC, my colleagues at CNBC, yeah.
FINERMAN: Yes, yeah, so we did this screen test of with Dylan Ratigan was the host at the time and it was, you know, Guy and I mean it was, it was fun. We had a good time and I thought, you know what, that was sort of interesting. And then, you know, they asked me, do I want to be on this show? And I remember thinking, you know, I'm a hedge fund manager, what, I sort of take myself very seriously and what would that mean if I were on a show? What would that do to my reputation? And then I realized, okay, I'm a hedge fund manager, what kind of reputation do I really have anyway, what the hell, do the show, it's fun. And so I remember they wanted to sign a three-year deal and I said, just, I cannot fathom a three-year deal, but I ended up signing it and now we're in our 20th year, which is just astounding to me.
FINERMAN ON TEACHING WOMEN TO ADVOCATE FOR THEMSELVES
BOORSTIN: What inspired you to write this book and really decide that you want it to be a voice about women and money and teaching women to talk about money?
FINERMAN: if I had to distill it in one sentence, to me it was teaching women what I've learned about getting out of your own way and women very often are what's in their own way. A lot of times—
BOORSTIN: And what do you mean by that, getting out of your way?
FINERMAN: Getting out of your own way, second guessing. Right? I think women spend a lot of time second guessing, not speaking up, things that don't come naturally to me at all. Not speaking up, speaking up actually doesn't come so naturally to me. Negotiating for a better deal, that does not come naturally to me. One of the things I liked about, you know, picking stocks is you don't negotiate with them. The price is the price. You just buy it and it doesn't need to know who you are or what, you know. So, being able to sort of advocate for yourself and something also I think women sometimes have trouble making decisions. They weigh too much. And so, a fair part of it is how to make decisions and how to, that was important to me to try to distill it into a thesis of how to make decisions and when to know that which decisions are, it doesn't matter what you decide.
FINERMAN ON MAKING MONEY VS. FINANCIAL INDEPENDENCE
BOORSTIN: One thing I love so much about your podcast is that it really de-stigmatizes talking about money. And I think it's still kind of crazy that women feel this ick factor around talking about money or salaries or investments that men don't seem to feel. And you're right, it's 100% socialized. There's nothing biological about that.
FINERMAN: Right, yes. You know, I went to Wharton and I was there and a finance professor asked me, this is maybe a year two ago, why aren't more Wharton women, and there's plenty of them, 50-ish percent of the class, why aren't they in finance? Finance is the heart of Wharton. And I said, you know, I really think it is if you major in finance, you are declaring to the world that you want to make money and some women are not comfortable with that or they don't want to do it. But if I were to instead say, I want to make money, if I were to instead say, I want to be financially independent, it's far more palatable, but it is the same thing.