Examining the Gender Pay Gap Among Financial Planning Professionals: A Blinder-Oaxaca Decomposition

Posted: 19 Aug 2020

See all articles by Derek Tharp

Derek Tharp

University of Southern Maine - Department of Finance and Accounting

Meghaan Lurtz

Kansas State University - School of Family Studies and Human Services

Katherine S. Mielitz

Oklahoma State University - Stillwater

Michael Kitces

The Kitces Report & Nerd's Eye View; Pinnacle Advisory Group

David Ammerman

West Texas A&M University

Date Written: November 26, 2019

Abstract

The financial planning industry has been identified as having one of the largest gender pay gaps. This study examines whether male and female financial planners receive equal pay for equal work. Using detailed data on the backgrounds and practices of 710 financial planners, an unadjusted pay gap of 19% was observed between male and female financial planners. Blinder‐Oaxaca decomposition analysis suggests that 91% of this 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 gender pay gap of 1.8%, which is much smaller than the commonly cited pay gap among male and female financial planners. This unexplained pay gap may suggest unequal pay for equal work but could alternatively result from other unobservable differences. Degree of motivation by performance pay and revenue production explained the largest portions of the pay gap. Implications regarding gender‐based discrimination in financial planning are discussed.

Full Text Available Here: https://doi.org/10.1002/cfp2.1061

Suggested Citation

Tharp, Derek and Lurtz, Meghaan and Mielitz, Katherine S. and Kitces, Michael and Ammerman, David, Examining the Gender Pay Gap Among Financial Planning Professionals: A Blinder-Oaxaca Decomposition (November 26, 2019). Financial Planning Review, Vol. 2, Issue 3-4, September-December 2019, Available at SSRN: https://ssrn.com/abstract=3677162

Derek Tharp (Contact Author)

University of Southern Maine - Department of Finance and Accounting ( email )

United States

Meghaan Lurtz

Kansas State University - School of Family Studies and Human Services ( email )

KS
United States

Katherine S. Mielitz

Oklahoma State University - Stillwater

Stillwater, OK 74078-0555
United States

Michael Kitces

The Kitces Report & Nerd's Eye View ( email )

P.O. Box 2231
Reston, VA 20195
United States
703-375-9478 (Phone)

HOME PAGE: http://www.kitces.com/

Pinnacle Advisory Group ( email )

6345 Woodside Court, Suite 100
Columbia, MD 21046
United States
410-995-6630 (Phone)

HOME PAGE: http://www.pinnacleadvisory.com

David Ammerman

West Texas A&M University ( email )

2501 4th Avenue
Canyon, TX 79016-0001
United States

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