Report Calls Out Gender Disparity in Treatment of Adviser Wrongdoing

Female financial advisers are punished more severely for misconduct than their male counterparts, according to a study published by the National Bureau of Economic Research. The study found that men and women in the financial services industry are likely to face job loss for misconduct, but females face it at a higher rate (55% for females and 46% for males).

Moreover, the research found that women are also about 30% less likely to find employment following job terminations for misconduct as opposed to their male counterparts who suffer the same punishment.

Researchers asked, “Are labor markets more forgiving of missteps by men than women?” According to the Bureau’s findings, “anecdotal evidence suggests that is the case;” however they note they lack systemic evidence to back this claim.

According to the report, females also “face harsher punishments despite engaging in less costly misconduct.”

Researchers found that men are three times more likely to cause misconduct than women, and those missteps are typically 20% costlier. However, they note that women only account for about 25% of financial advisers.

In addition, female advisers in the financial services industry also believe there is gender discrimination among their firms. The NBER cited a recent survey indicating that 88% of females in the industry believed this.

Taken together, these troubling statistics may provide an opportunity for firms to reevaluate their discipline strategies to avoid potential gender discrimination.

The full report “When Harry Fired Sally: The Double Standard in Punishing Misconduct” can be found at NBER.org.