A 2018 working paper by a team of finance professors found that female brokers are typically disciplined more severely for misconduct than are male brokers. This, the professors found, was especially true at Wells Fargo Advisors.
According to regulatory disclosures from between 2005 and 2015 involving financial advisors from 44 firms, Wells Fargo Advisors stood out. After allegations of misconduct, 41% of male financial advisors either resigned or were fired. The number was 69% for female advisors, and Wells’ was the largest gap the professors identified.
Yet The Intercept found that, of the 25 largest broker settlements at Wells Fargo between 2005 and 2015, only a single case involved a female broker. Moreover, women were involved in fewer customer disputes and interactions with regulators, and they had lower settlement costs than men. That ought to make them more valuable. Unfortunately, that value apparently goes unrecognized.
Women performed better, received harsher discipline
The Intercept and Type Investigations checked with the Financial Industry Regulatory Authority (FINRA) to see which brokers’ records had legal disclosures listed from when they worked at Wells Fargo. These disclosures related to liens, bankruptcies, customer complaints (regardless of outcome), terminations after a misconduct allegation, and civil, regulatory and criminal cases involving that broker.
At Wells Fargo, that resulted in a list of 1,555 brokers with at least a single disclosure. There were 1,283 men and only 272 women. That translates to only about 21%.
According to the professors’ working paper, male brokers tend to be more costly for Wells. Over half of the male brokers with disclosures faced settlements, compared to only a quarter of female Wells brokers. The average settlement among males was $228,593, while the average for females was $113,762.
The largest 25 settlements involving female brokers at Wells totaled $7 million, and three of the women involved were fired. The largest 25 settlements involving male brokers totaled $73.1 million. None of the men were fired.
Furthermore, the Intercept found sharp gender disparities in Wells’ response to serious violations. When women were accused of fraud or forgery, for example, 38% were fired. Only 6% of the men were fired, even though men committed more fraud in general.
Of those who were fired, 75% of the women never worked in the industry again. That only happened to 59% of the fired men. Plus, Wells Fargo kept many men on despite serious issues while firing women for a couple of minor violations.
Wells Fargo denies the allegations. However, this could be an example of a workplace where lack of a uniform policy allows bias to arise in individual decisions. To discuss how your decisions could affect your workers, discuss your policies with an employment law attorney.