March 5, 2015 INN Exclusives

Financial Advisors Haven’t Bridged The Gender Wage Gap

By Cyril Tuohy InsuranceNewsNet

The worst-paying job for women in the U.S. is that of financial advisor. Let’s just repeat that and let it sink in: The worst-paying job for women in the U.S. is that of financial advisor.

Before heading for the exits to wage another skirmish in the gender wars, perhaps we should qualify that statement.

The financial advisory profession is the worst-paying job for women when compared with what men earn in the same position, according to 24/7 Wall Street, using the most recent data based on the Current Population Survey from the Bureau of Labor Statistics (BLS).

So, yes, the financial advisory profession is the worst-paying job for women but only in relative terms, not absolute terms.

Among financial advisors, women earned only 61.3 percent of what men earned last year, according to the 24/7 Wall Street analysis, a disparity that that harks back to levels last seen in the 1970s.

On average, the wage gap for all occupations was much narrower as women made 82.5 percent of what men earned in 2014, according to the findings.

Ariane Hegewisch, a study director at the Institute for Women’s Policy Research, which was not involved in the latest 24/7 Wall Street research, said that when it comes to income, women financial advisors trail their male counterparts to an extent.

Among financial advisors, the earnings ratio between men and women often fluctuates from one year to the next, but in 2014 the earnings gap for financial advisors was especially low, she said.

“It’s staggering that (the wage gap) is changing so slowly, especially because there have been attempts to deal with bias in the distribution of accounts,” Hegewisch told InsuranceNewsNet.

“We were pretty taken aback and if you look at class actions, you’d think it would change because large firms were involved,” she added.

BLS data indicate there were 335,000 workers employed in the financial advisor profession with median weekly earnings of $1,337, a figure that doesn’t include self-employment.

Male financial advisors, of which there were 201,000 in 2014, earned $1,637 a week. Women, of which there were 134,000 in 2014, collected $1,004 a week.

Hegewisch said the financial advisory profession has always been an occupation with one of the widest wage gaps. Previous surveys have shown women earning 65 percent or even 67 percent of what men make, but it’s “always below 70 (percent),” she said.

Still, “this year it’s particularly low,” Hegewisch added.

Susan L. Combs, president of Women in Insurance and Financial Services (WIFS), said the results were unexpected.

“I was surprised by that but I’m also wondering what the pool was,” Combs said in an interview with InsuranceNewsNet.

Outcomes could have been skewed, she said, particularly if they measured income generated by women who find themselves in administrative and support roles.

Those roles, while they may qualify as financial advising for statistical purposes in the eyes of the Labor Department, don’t really qualify as a financial advisor or producer, she said.

Women financial advisors make “a heck of a lot more” than the $1,004 a week indicated in the survey, said Combs, president of the insurance brokerage Combs & Co. in New York City.

“If you’re earning $52,000 in Missouri, you’re doing all right, but in New York City $52,000 puts you in a support role, not a production role”

Pay gaps generally are wider in traditionally high-paying occupations. Similar to those occupations, revenue generated by a financial advisor is contingent on commissions, bonuses and merit pay, and sometimes all three.

But with commission rates for financial advisors more or less equal, whether men or a women close the sale, the wage differential between the sexes in the financial advisor profession is still very high.

Karen Roberts, former WIFS president and financial advisor with Emerald Financial Group in Deerfield Beach, Fla., called the differential “a ridiculous number considering that we all have the potential to make the same amount of money.”

“I wonder if the difference is that more women work in corporate and men are more independent and get higher payouts because men want to be entrepreneurial and women are scared,” Roberts said.

“If I sell a product, I get paid the same (as a man). But depending on who I work for, that changes the percentage payout.”

Roberts also said the earnings gap could be due to women not working as much as men because of family obligations such as children or elderly parents. It also could be due to the fact that women still don’t negotiate contracts for themselves as favorably as men do, which means women often settle for less.

Still, a nearly 40 percent difference between what women and men make is a big difference, no matter how commissions, bonuses and merit pay are calculated.

“Women need to become better negotiators and pay attention to what they are making or not making,” Roberts said.

Despite the “horrible” gender gap numbers, Roberts said the financial advisory profession remains as good a match as any for women because the profession ultimately rewards hard work, yet allows for the flexibility that many women look for in life.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at cyril.tuohy@innfeedback.com.

Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at cyril.tuohy@innfeedback.com.