UC Law SF WorkLife Law Study: Wealth Advisors List Favors White Men

A new study by the Center for WorkLife Law finds bias likely makes it harder for women and people of color to rank highly on a prestigious wealth advisors list.

An influential list that many people use to pick who will manage their money appears to favor white men over women and people of color, according to new research by the Center for WorkLife Law at UC Law SF.

The center, which has conducted groundbreaking research on bias in multiple industries, did a two-year study of Forbes America’s Top Wealth Advisors List. It found white men disproportionately made up 5.4 to 5.6 times the number of women and minorities combined in both the 2020 and 2021 lists.

“We found the methodologies being used opened the list up to all kinds of potential bias,” said UC Law SF professor and WorkLife Law Founding Director Joan C. Williams, who led the study. “We really feel the company should either explain it and defend it, or it should fix it.”

Women make up about a third of wealth advisors in the industry, but only accounted for 10% of the 2021 list. A fifth of wealth advisors are people of color, but they made up less than 6% of last year’s list.

The rankings are based on data collected and analyzed by the company SHOOK Research. Its founder Robert Shook has emphasized that the Forbes list is not a “robo-ranker” because it also considers qualitative factors like interviews. The company admits the interviews sometimes occur after the list is published, raising questions about how much the interviews actually matter.

SHOOK hasn’t fully disclosed its algorithm for ranking advisors, but it has revealed some of the factors it considers. The center’s study set out to see if the ranking system was susceptible to bias. It concluded that several factors – including how managed assets are assigned and how compliance infractions are weighed – appear to give white men an advantage over others.

The study revealed women on wealth advisor teams almost always ranked lower than their male counterparts on the 2021 list. Meanwhile, pairs of wealth-advising brothers and male team members consistently ranked beside each other on the list.

“There’s a number of women who founded companies with men, and they are not rated right by the men who helped them co-found the companies,” Williams said.

The figure used to measure how much money each advisor manages is also problematic, the study found. SHOOK ranks advisors based on how much of a client’s money is assigned to each advisor individually, even though most client funds are handled by teams of advisors. The act of assigning those funds to one individual often occurs through backroom deals that tend to put women and people of color at a disadvantage, according to prior research. That dynamic was demonstrated in a prior study by the center in which female and minority law partners reported being “bullied, threatened, or intimidated” out of credit for bringing in new clients.

“Relying on individual assets under management basically leaves the door wide open to very commonly documented forms of gender bias,” Williams said.

Rearranging the 2021 list based on how much money is managed by each team instead of each individual would raise the percentage of women on the list to 25%, roughly proportional to the gender breakdown of nominations for the list, according to the study.

SHOOK Research also claims compliance records play a role in rankings, but the center’s researchers found men on the list had twice as many serious compliance issues as women. This could be part of a pattern in which poor behavior is more readily tolerated in men than women, as prior research has demonstrated.

Williams and Research Assistant Olivia Andrews say SHOOK Research should explain why its algorithm seems to favor white men over others or stop using a system that appears to produce biased results. “As women and minorities seek to close the gender and racial wealth gaps, we should be focused on cultivating a wealth management industry that reflects that diversity,” Andrews said. “We don’t need a list that serves as a reminder of the ways white men were able to get ahead while women and minorities were stuck behind.”

Williams’ team has published over 30 articles in Harvard Business Review on workplace diversity and bias and conducted original research on racial and gender discrimination in major industries, including technology, law and engineering. The center has also developed a “Bias Interrupters” program that uses business problem-solving techniques to tackle diversity and bias problems in the workplace.

Read the full study on Forbes America’s Top Wealth Advisors List here.