The American College notes that while 59% of men who work in financial services over a period of at least sixteen years reported net earnings of over $100,000 annually, less than 40% of women with comparable tenure reported an equivalent income.
While the study did not report evidence that gender alone affected financial advisors’ earning potential, other factors that may coincide with gender stereotypes have been linked to this disparity. From family life to educational background, the study said there are many factors that affect a woman’s earning power as a financial professional.
Nearly 70% of female respondents reported having at least one child, a situation that the study authors say can make balancing work and family life more difficult as women were more likely to take on child-rearing responsibilities at home, even if both partners are employed. Moreover, the “American College Benchmark Producer Research 2009” found that having children reduces gross earnings, whereas having a stay-at-home partner increases them.
Nearly 75% of female participants had a spouse or domestic partner, but the vast majority (nearly 87%) of those partners worked outside of the home, whereas one-third of male respondents reported wives who do not. Men with working spouses were twice as likely as female producers to turn responsibilities over to that individual, according to the study.
The amount of hours worked per week also varied significantly between genders, which the study said was also considered a contributing factor to income disparity. More females than males (20.2% versus 15.6%) reported working 30-39 hours per week. Just over 40% of males and 47.1% of females reported working 40-49 hours per week, while 27.6% of males and 20.2% of females reported working 50-59 hours each week.
Another major income factor for both men and women according to the researchers is education; professionals that hold designations such as the Chartered Financial Consultant® (ChFC®), Chartered Life Underwriter® (CLU®) and Certified Financial Planner® (CFP®) earn more than those that do not. Regardless of gender, 54 percent of respondents who hold the CLU® designation – compared to only 31 percent of those who do not – earned $100,000 or more annually. This pattern held true for the ChFC® and CFP® designations as well.
While financial advisors of both genders do see an increase in earnings throughout their careers, the study found evidence that this occurs to a lesser degree for women. “Every day, women in the workforce are striving to shatter the glass ceiling,” said Larry Barton, Ph.D., President and CEO of The American College. He charged educators and researchers to address the gender gap, a form of segregation that still plays a significant role in the employment of many Americans today. “It is our duty,” Barton claimed, “to better understand the challenges affecting women in the workplace and provide the essential knowledge financial services organizations need to eliminate these sorts of disparities.”
“It is widely estimated that American women today own half the nation’s wealth – and that their ownership share will grow to two-thirds by 2030, “ said Mary Quist-Newins, CLU®, ChFC®, CFP®, Assistant Professor of Women’s Studies and the State Farm Chair in Women & Financial Services at The American College, who led the study with Karen Eilers Lahey, Ph.D., the Charles Herberich Professor of Real Estate at the College of Business Administration at the University of Akron. Professor Quist-Newins added that with these statistics in mind, “The industry is looking to recruit and retain more female producers. Our research strives to uncover why the earnings disparity exists. We found there are numerous factors affecting the pay gap; fewer years in the business, lack of advanced designations, hours worked per week, marital status, children and more.”
The American College is a non-profit educational institution devoted to financial services and is the nation’s leading educator of financial services professionals. More information is available at TheAmericanCollege.edu
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