The Washington PostDemocracy Dies in Darkness

Women in finance work just as hard as men — and are more likely to get fired

(Scott Eells/Bloomberg)
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Data show men in the financial industry are three times as likely as women to engage in misconduct: fraud, negligence, risky investments. On average, they commit errors that are 30 percent more expensive to their firms. And they’re twice as likely to offend again.

Female financial advisers and stockbrokers who perpetrate similar wrongs, however, face a greater risk of losing their jobs.

That's all according to a new paper from researchers at Stanford University and the University of Chicago, which found women in wealth management typically endure harsher penalties for slipping up.  

Business professor Gregor Matvos and his colleagues looked at data on misconduct for financial advisers and stockbrokers registered in the United States from 2005 to 2015, a pool of about 1.2 million. Men, they saw, comprised 75 percent of the field and filled more than 80 percent of leadership roles. Women, who made up a humble quarter of the sample, fared the same as men in terms of productivity.

They were still 56 percent more likely to get fired after a mistake. “Women just have less margin for error,” Matvos said. “They walk on more of a tightrope. Employers are less lenient toward them.”

The data, he said, suggests gender discrimination plagues the industry. Not that women are necessarily devalued, he said — men could simply inspire softer feelings in their bosses.

“It might be that they don’t even notice they’re discriminating,” Matvos said. “They might think, 'But Harry’s a good guy, I know Harry well. Maybe I’ll be lenient with Harry.” Maybe you don’t realize you don’t apply the same leniency to women.”

Previous research indicates men in power tend to prefer others who look like them. Hannah Riley Bowles, a public policy professor at Harvard University, has argued that bias can reign until bosses work to open their minds. 

There’s an economic case for that. Emotionally prizing male workers over female workers — or white employees over black employees, for that matter — heightens the risk of losing talent or holding onto subpar folks.

Gender aside, financial advisers who misguide you will probably reoffend, the researchers pointed out. Male financial advisers who broke the rules are five times as likely as someone with a perfect record to do it again. Female financial advisers are four times as likely.

Glossing over those troubles can be costly. The median settlement after misconduct is $40,000 for male advisers, the authors acknowledge, and $31,000 for female advisers.

Men, though, have a better shot at professional recovery.

According to Matvos’s numbers, nearly half (47 percent) of male financial advisers who lost their job after misconduct found new employment in the industry within a year. A third of female advisers enjoyed the same fate.

“The financial advisory industry is willing to give male advisers a second chance,” the authors conclude, “while female advisers are likely to be cast from the industry.”

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