Female financial advisers punished more severely for misconduct
Female financial advisers are more likely to punished severely for misconduct, even though they are less likely to engage in wrongdoing, according to a new study. The report particularly condemned Wells Fargo, finding that female financial planners at the bank were 25% more likely to experience “job separation” following misconduct than their male peers. Across the sector, female advisers had a 20% higher chance of losing their jobs and a 30% reduced chance of finding new employment within a year than male colleagues. When controlled for variables, the data revealed that women experienced a 50% larger punishment than men.

We examine gender differences in misconduct punishment in the financial advisory industry. We find evidence of a “gender punishment gap”: following an incident of misconduct, female advisers are 20% more likely to lose their jobs and 30% less likely to find new jobs relative to male advisers. Females face harsher outcomes despite engaging in misconduct that is 20% less costly and having a substantially lower propensity towards repeat offenses. The gender punishment gap in hiring and firing dissipates at firms with a greater percentage of female managers at the firm or local branch level. The gender punishment gap is not driven by gender differences in occupation (type of job, firm, market, or financial products handled), productivity, misconduct, or recidivism. We extend our analysis to explore the differential treatment of ethnic minority men and find similar patterns of “in-group” tolerance. Our evidence is inconsistent with a simple Bayesian model with profit maximizing firms and suggests instead that managers are more forgiving of missteps among members of their own gender/ethnic group.