Male financial advisors are three times more likely to be involved in misconduct than women, but women are 50% more likely to lose their jobs as a result, according to a new paper (pdf) by business professors at Stanford and the universities of Chicago and Minnesota.
Women, who are less likely to be repeat offenders, also have a harder time finding new jobs after they’re fired.
About 7% of the 1.2 million registered financial advisors in the US are guilty of some form of misconduct, which can include misrepresentation of investments, excessive trading, and outright fraud. Men make up three-quarters of the profession, but were sanctioned at a higher rate than women, not just in total—so it’s not a result of there being more men around. Their transgressions also had larger consequences: settling the violations of men cost their firms 20% more than those of women.
The study’s authors looked for explanations for the disparity, but couldn’t find one other than “taste-based discrimination,” or simply put, sexism.
They considered that women might be fired more frequently for violations because the didn’t perform as well, but the evidence shows that women advisors were as productive as their male peers. Reinforcing the theory that it was employer bias, they found that while customer complaints led to most misconduct charges for male advisors, women were much more likely to be accused by their managers.
These findings probably aren’t a surprise to women in the industry. The pay gap in finance is one of the largest among all sectors, and examples of sexual harassment on Wall Street abound, from the Smith Barney “boom-boom room,” which cost the firm $150 million in settlements, to the innumerable examples of vulgar and demeaning actions. In a recent survey (paywall) by the Financial Times, two-thirds of women in asset management said they were subject to sexist behavior. A quarter said they had been sexually harassed.
One possible solution is increasing the percentage of women in executive positions of financial firms. The authors of the discrimination study found when there’s a higher percentage of women in management, there’s less bias against women.
Unfortunately, there’s a long way to go. Finance is one of the least hospitable industries for women leaders and they make up less than 30% of executives at the biggest finance and insurance companies.