Data collected by an expert studying historic pay differences between women and men in the brokerage business shows that, although the overall compensation gap has fluctuated over time, it has remained significant over the past 30 years.
The gap in 2010 was 41.6% for women classified as personal financial advisors by the U.S. Census and 37.3% for those classified as securities, commodities and financial-services sales agents. In other words, for every $100,000 earned by a male colleague, a women in these respective job categories earned $58,400 and $62,700, respectively.
Since 1988, the pay gap has ranged from a high of 46.9% that year, when the markets were down, to a low of about 17.1% in 2007, when the markets were booming.
In 1995, the pay differential in the securities-sales category was 45.9%. Women in the broader group—sales representatives for finance and business services—earned 30.8% less than men.
“The average difference for advisors with the same experience was about 20% [in the mid-‘90s],” said Janice Madden (left), a sociologist at the University of Pennsylvania, in an interview with AdvisorOne. “Wage ratios by gender have not changed much in the occupation of securities sellers, based on the aggregate data.”
Why the gender discrepancy? “There are lots of differences and factors at work,” said Madden, who looked at the mid ’90s when both Merrill Lynch (BAC) and Morgan Stanley (MS) faced high-profile discrimination lawsuits. (She examined the pay of about 2,000 women and 15,000 men, based on the fees and commissions they made on about 1 billion trades at the time.)
One influence on the pay differential may be that women are concentrated in the lower-paying brokerage firms, she says. In addition, women may get fewer and “worse” accounts.
Plus, client introductions may not be as frequent or advantageous for women in the business. “In other words, there are not the same opportunities,” Madden said.