Study: Women financial advisors punished more harshly than men

A working paper suggests it’s the result of gender bias in a male-dominated industry.

Are women punished more punitively for misdeeds at work than men? In the financial advisory industry, they are according to a new working paper from Harvard Business School on the “gender punishment gap.”

Researchers used 10 years of data on financial advisors’ employment information from the Financial Industry Regulatory Authority (FINRA), an independent nonprofit authorized by the U.S. government to monitor financial firms.  The info also contained details about whether an advisor had ever committed misconduct and detailed each infraction.

Men misbehave 2x as much, women 20% more likely to be fired

Male advisors committed misconduct twice as often as female advisors, it was found. However, when women committed misconduct, there were bigger consequences: they were 20% more likely to be fired, and 30% and to have a harder time finding employment afterward.

While women are punished more heavily than men for their misdeeds, their misconduct that is 20% less costly to the company women are less inclined toward repeating the misconduct. Men, on the other hand, are more serious, repeat offenders, with higher settlement costs to the firm – up to $20% – incurred if they are caught.

The researchers attributed the unfair treatment of women advisors, and the more laissez-faire treatment towards their male counterparts, to gender bias, especially since the industry is male-dominated.

Female managers make a difference

However, the gender punishment gap narrowed when the women financial advisors worked at companies with a greater number of females as managers or at the local branch level. This told researchers that the gender punishment gap was not dictated by certain firms or financial niches. Instead, it was a phenomenon called “in-group tolerance.” Simply put, people are more tolerant of those that are more like them.

In the workplace, men are less likely to come down hard on men – “male executives seem to be more forgiving of misconduct by men relative to women,” says the paper – which leaves women out in the cold. But in a financial advisory workplace where there are more women managers, female bosses are less likely to respond to women’s misconduct with excessive harshness.

A recent Wall Street Journal story deals with the same topic on women high positions in their field and the little leeway they are given to make mistakes as opposed to men. Both the article and the above Harvard Business School working paper referred to another Harvard working paper from last year on surgeons.

If a female surgeon’s work resulted in the death of a patient, physician referrals to her dropped 54%. If the same happened to male surgeons, however, the reaction was not nearly as harsh. The paper noted that this may be because “men appear to be treated as individuals.”

Sheila McClear|is a reporter for Ladders and can be reached at smcclear@theladders.com.