In what’s likely to raise eyebrows for an already touchy topic, the findings of a recent study dispute the idea that female advisors are paid less for the same work as male advisors.

The question of gender pay disparities in the financial advice industry is controversial, and a new working paper, “Examining the Gender Pay Gap Among Financial Professionals: A Blinder-Oaxaca Decomposition,” is likely to add to that controversy. (The paper has not at this point been peer reviewed.)

The authors note that the financial planning industry has been identified as having one of the largest gender pay gaps. Male advisors in the study had a mean annual income of $199,619 versus $165,112 for women. Average annual revenue attributed to male planners was $542,373 compared with $550,123 for females. Male and female planners also reported similar average weekly work hours, 43.73 versus 42.08, respectively.

The pay gap between men and women advisors that the study identified is large—about 19%. But this new study indicates that 91% of that gap is explainable, leaving only 1.8% that was not. The study found the variables that explained the largest portions of the pay gap were the degree of motivation by performance pay and revenue production.

One of the authors, Derek T. Tharp of the University of Southern Maine, raised the point about peer review and said the study’s conclusions could change.

“While there is still much research in this area to be done (including both subsequent pay gap analyses and investigating the types of discrimination our study cannot address), our preliminary findings do not suggest that unequal pay for equal work is a major contributor to the gender pay gap among financial planners, and I hope that may encourage women to enter the industry who otherwise may have been hesitant,” Tharp said.

Another author named on the study, Katherine S. Mielitz of Oklahoma State University, echoed those feelings.

"I was very excited when I first read through our preliminary results—the idea that a gender pay gap does not appear to be a result of unequal pay for equal work—is very encouraging," Mielitz said in an e-mail. "Women are very important to the growth and sustainment of our field. That equal pay for equal work seems to be available should be one of many things that encourages women to seek out this profession."

The study looked at detailed data on the backgrounds and practices of 710 financial planners. The data for the study came from the June 2018 Kitces Research Survey conducted through the website of well-known advisor Michael Kitces, one of the study’s authors.

“I would also note that there are limitations to the sample used within our study,” Tharp commented. “Our sample was more CFP- and RIA-centric than the industry as a whole. As a result, our findings may not generalize to the entire industry, and particularly areas of the financial advisory industry that were underrepresented within our study.”

The analysis suggests that 91% of the pay gap can be explained by a model accounting for differences in important individual characteristics including job role, experience, team structure, hours worked, revenue produced, professional designation status, marital status, and psychological factors such as degree of motivation by income potential, performance pay, work-life balance, and stable pay--resulting in an unexplained pay gap of 1.8%.

Co-author D. Allen Ammerman of West Texas A&M University said in an e-mail that he thinks the study results suggest “there's equal opportunity for male and female advisors to make a nice living. Career choices and preferences may affect compensation, but gender directly (in the sense of gender-based discrimination) probably doesn't, at least not significantly.”

Tharp stressed the study was not discounting that discrimination could play some role in the pay gap. He pointed to a particular passage in their working paper that addresses some of the many ways that it could be relevant:

"Discrimination could be present in various other forms, including, to name a few, discrimination during the stages of developing human capital (e.g., education and training), consumer discrimination, discrimination via social mechanisms which influence workplace preferences, discrimination in hiring or promotion, and/or the presence of a hostile work environment that is not equally open to individuals of all backgrounds."

In looking at discrepancies between this and other studies, Kitces noted in an e-mail that prior studies finding a huge gender wage gap in financial services weren’t sufficiently controlling for other factors that this research did take into account, particularly with respect to the years of experience and the kinds of jobs that men and women take in the industry.

This new study suggests that men may choose more variable-compensation-based paths, while women appear more likely to choose stable-income/salary-based paths, Kitces said, and “that the difference in compensation of men and women in the later years may be more a function of that choice about compensation path than unequal pay for genders that choose the same type/path.”

Still, though, Kitces continued, it’s not clear why men appear somewhat more likely to choose one path and women another, and why men tend to have more years of experience building their client base.

Kitces said that those differences could relate to opportunities for men vs. women in the past. For example, while women receive similar pay to men for similar work, they may not have had as many hiring opportunities to move into client-facing advisor roles or could have been limited by family responsibilities that traditionally fall disproportionately to women. It could also be that firms have not provided sufficient support to women. Kitces noted independent advisors who are women tend to have no maternity support.

Annual income was the dependent variable in the study, and advisors who reported individual income of more than $1.5 million were excluded. The study looked at several independent variables, including advisors’ CFP designation status, experience, business role within the advisory firm, team structure, hours worked, revenue from clients an advisor worked with or was responsible for, psychological motivators for choosing a financial services career and marital status.

The study found that for male advisors, the characteristics that were statistically significant in relation to income were their marital status, experience, role, team structure, work hours, revenue and psychological motivators. For example, being single was negatively associated with income, while experience was a positive. Having four years or less of experience was negatively associated with income, while having 20 to 30 years was a positive. Working as a solo advisor was a negative as well as working longer hours, but revenue was a positive. Performance pay was also a strong motivator for men.

For female advisors, the study found statistically significant factors related to income were experience, role, team structure, work hours, revenue and psychological motivators. Having 20 to 30 years of experience was positive. Being an associate advisor or an executive (both compared with a lead advisor) was a negative. Working in an ensemble firm, when compared to working as a solo advisor with support, was positively associated with income. Higher work hours and higher revenue also led to more income. Being less motivated by work-life balance also led to more income.

The study participants were mostly male (82.25%), married (89.30%), CFPs (72.68%), and working as a lead advisor (72.25%), and most had 10 or more years of experience (57.43%). The largest percentage of advisors in the sample worked at ensemble firms (46.20%).

“Speaking only for myself,” said Tharp, “I do hope that these findings may be encouraging to women who may have been discouraged from pursuing a career in financial planning due to the large gender pay gap among financial advisors commonly referenced in the media. I can certainly understand why anyone would feel discouraged from entering a profession if they felt that they would not receive equal pay for equal work.”

The study will be discussed during a session at the Financial Planning Association’s annual conference in October.

The other author on the study was Meghaan Lurtz of Kansas State University.