A recent study shows women advisors experience higher rates of job separation for misconduct violations than their male counterparts at financial advisory firms. The study indicates that this so-called gender punishment gap is most severe at Wells Fargo Advisors, and the news has not been welcome for the wirehouse.

“We believe there are substantial issues with the authors’ methodology, data, and the variables that underpin the study, and that its findings and conclusions are therefore misleading,” a Wells Fargo spokesperson writes in an email.

“We also note that the study has not been peer reviewed. As always, our focus is on providing a diverse and inclusive work environment, while we continue to serve the needs of our clients,” she adds.

According to the working paper entitled "When Harry Fired Sally," most recently published by the Harvard Business School, women advisors experience higher rates of job separation than their male counterparts for misconduct violations occurring at the same firm, time, and location – even if they have the same qualifications and experience as the men. The study was co-authored by Amit Seru, professor at the Stanford Graduate School of Business; Gregor Matvos, professor at the University of Texas McCombs School of Business, and Mark Egan, assistant professor at Harvard Business School.

Male advisors make up 75% of the total financial advisory industry. And about one in 10 male FAs has, on average, at least one misconduct violation on their Finra BrokerCheck record, versus one in 33 female FAs, the study shows. Yet female advisors are still 20% more likely to lose their job than their male counterparts across the U.S.

The study also reveals that misconduct committed by male FAs is, on average, costlier for their associated firms. Specifically, misconduct by male FAs tends to cost their firms 20% more to settle, the study reveals.

The study authors cite underrepresentation of women advisors in management positions as the primary cause of the apparent bias against women FAs with misconduct marks.

“Male executives tend to be more forgiving of misconduct by men relative to women,” the report states.

At Wells Fargo Advisors, the relative probability of job separation for females versus males following a misconduct finding was the highest in the industry at 26.6%. Comparatively, at A.G. Edwards & Sons (bought by Wachovia in 2007 and Wells Fargo & Co. in 2008), the same figure was 25.3%. At SunTrust Investment Services, it was 21.8%; Allstate Financial Services, 19.5%; Morgan Stanley, 18.7%; PNC Investments, 16.8%; Raymond James Financial Services, 13.8%; Wells Fargo Investments, 13.20%; Banc of America Investment Services, 12.70%; and JPMorgan Securities, 12.40%.


Egan, one of the study’s co-authors, brushed away questions about its methodology. “The data is what it is,” he says.

A number of firms’ compliance staff members initially raised concerns about the study’s conclusions, but then inquired about ways to potentially address the gender gap it identifies, he says.

“Ideally, getting this information out there is going to help,” he says.

For this story, in response to FA-IQ asking the Wells Fargo Advisors' spokesperson if the firm planned to make changes as a result of the study, she wrote: “I don’t have anything additional to add.”

Data reporting by Garrett Keyes.