A statistics scandal in the gender pay gap
Glen McLeod says he’s done hours of work for a client who now won’t pay, writes Susan Edmunds.
Some would-be borrowers have been getting a shock when asked to pay for mortgage adviser services – but there’s a warning that people shouldn’t expect the service to be free.
In one recent case, a young couple were handed a $3500 bill by their mortgage adviser soon after the birth of their first child. They had repaid a loan early when they moved to a new house, and the broker charged the fee to recover the resulting commission clawback from the bank.
Mortgage advisers are usually paid on commission by the lender and if the borrower does not hold a loan for sufficient time, the lender can ‘‘claw back’’ the commission it paid to the broker. The broker then often tries to recover this from the client.
In another case, mortgage adviser Glen McLeod said he did hours of work for a client over two years and was not paid.
He said he helped the client get preapproval for a home loan but they were initially not able to find a house to buy. He suggested they come back later and try again when they were ready, which they did.
‘‘We got to the point of setting up the rate structure and then they just stopped getting back in touch.’’
When he finally reached the client, he was told that they had decided to take a loan from HSBC instead, because they felt they would get better rates. But McLeod said he had not even been given a chance to explain what rates were available for the loans he had arranged. 123RF
Glen McLeod Mortgage adviser
McLeod said his terms of engagement clearly stated that his services could be charged at $250 an hour for a maximum of 10 hours, if work was done for a client who then decided not to go ahead.
But when he sent this client an invoice for $1500, which he said he discounted out of goodwill, the man refused to pay it. ‘‘I’ve sent an invoice every month for four months and on the last one I said ‘this has been sent to a debt collection agency’.’’
He said the client argued that he could not do that but McLeod was confident he was within his rights. He said a significant investment of time was involved.
‘‘It’s two years of follow-ups and collection of data.’’
He said it seemed to be an industrywide problem that people expected mortgage advisers to work for nothing.
‘‘The service is not free, it’s just usually paid for by the bank. We have to be licensed – it costs a fortune to get a licence – we provide a professional service like an accountant or lawyer. At some point someone has to stand up and say ‘enough is enough, it’s not a free service’.
‘‘I employ five people to assist with the work I do. If [a client] went to a lawyer and got advice, they would receive a bill and if they didn’t pay, they would be crucified.’’
Financial Advice NZ chief executive Katrina Shanks said mortgage applications could be time consuming and had a level of
Hcomplexity that required knowledge and skill to perform.
‘‘Some financial advisers do apply a fee for the use of their professional services if an application process is not completed using their services. This would have been part of the disclosure statement that the financial adviser would have provided at the beginning of the conversation. If a client is unsatisfied there is a very robust complaints process and access to disputes resolution schemes which a client can follow.’’
If the client took a complaint to McLeod’s external dispute resolution service it could cost him $1000 – or two-thirds of the bill amount. But McLeod said it was a matter of principle.
Susan Taylor, chief executive of Financial Services Complaints Ltd, said her organisation received complaints about fees charged by mortgage advisers from time to time.
‘‘Our view is that mortgage advisers are entitled to be paid.’’
She said fees should be reasonable and be adequately disclosed. ‘‘Most mortgage advisers’ terms of engagement set it out clearly that they will charge a fee in certain circumstances.’’
She said people were probably used to not paying for mortgage advisers’ services, which created the issue.
‘‘That’s one of the reasons we emphasise to advisers that they should make sure their fees are not just disclosed but discussed with the client so there are no surprises later on.’’ ere’s a male-female statistic for you. Each week men take home 42% more of the weekly earnings pool than women. Kiwis earn $3.8 billion a week via their wages and self-employment in 2022. Of this, $2.23b is earned by men and $1.57b by women.
There are obvious reasons behind the severity of the 42% tilt. More men are in the workforce, so we’re not comparing one man with one woman. Plus, fewer men work part-time.
I’d still argue 42% is an interesting starting point, because it shows the gender imbalance in the economy. It’s the feeding station for societal issues like the pay gap, pension gap and financial power gap.
While there’s a tidal wave of money into male hands each week, 42% is not the gender pay gap. Let’s be clear about that, before New Zealand’s chief statistician has a conniption.
The gender pay gap is reported at 9.2%. This is reached by comparing the median hourly rate of a man to a woman. It irons out the bias by using hourly, not weekly wages. The median ranks us in order of high to low hourly rates and picks the person sitting bang in the middle of the queue.
The median man earns $30.85 per hour and the median woman earns $28 an hour (versus the average man earning $37 an hour and the average woman $33 an hour).
I could have presented the opening statistic in reverse. Men get 42% more than women, or women produce 29% less than men. It’s numerically the same. I’m simply changing the denominator of the equation.
Did I choose a bigger number to get a better headline? No. I simply presented it through the female lens.
I’m interested in what it would take for women to catch up to men. I don’t think any part of the audience (men included) is interested in the fall required to equalise earnings in the opposite direction.
The gender pay-gap statistic of 9.2% has been well honed by our nerds in Wellington, but I still think it contains a major lie in the calculation. That sounds harsh, but hear me out.
Statistics New Zealand describes the maths as ‘‘The income of males minus the income of females, divided by the income
After more than two years of Covid lockdowns and closed borders, Kiwis are travelling again – both domestically and overseas – with travel agents reporting a big increase in interest to book holidays and weekends away.
Air NZ says the strength of demand for air travel has ‘‘far exceeded’’ expectations, with demand for domestic leisure travel now higher than it was before the pandemic.
That’s backed up by a Southern Cross Travel Insurance survey showing 95% of Kiwis are looking to travel domestically or internationally over the next two years. What’s more, it found the top two benefits of travel selected were the opportunity to have a complete break from their daily routine (70%), and to create memories with family and friends (67%).
Are you one of those who’s keen to get travelling again, or at least get out of town for a few days, to recharge your batteries and refocus after a wet winter where everyone’s been feeling a bit frazzled?
If so, but cost is an issue, a weekend away is probably the best place to start. So, let’s look at some ways of keeping costs down.
I suggest the first thing you do – even before you decide where you’re going – is to set a budget.
Travel, accommodation, meals, and spending money needs vary a lot depending on where you go and how you get there, so working out what you can afford and setting a budget to suit will help you to narrow down destination ideas.
Just because you’re not spending a lot doesn’t mean less value. Driving two or three hours to somewhere you haven’t been before can be just as refreshing and rewarding as flying somewhere to a great beach.
The key is to plan your trip activities and finances, because setting a budget will help you get the fun and rest you need while keeping you within your means.
If you’re driving, work out the cost: How many kilometres it is there and back and how much driving will you be doing while you’re there. Then work out how many litres per 100 kilometres your car uses and multiply that by the cost of petrol, and right there will be a chunk of the cost of your weekend.
Accommodation will be the biggest cost, so get on the internet and see what’s available. The main thing is to shop around because there are usually lots of options.
If you want to staying in a hotel or motel, it’s often better to call them directly rather than booking through an online website. These can be useful for seeing what accommodation is available, but going directly will be cheaper.
Because you’re talking to the provider, you’re also doing them a favour – they don’t have to pay the online site – so the chances of getting the best room, an upgrade, a breakfast deal, or an early check-in or late check-out are much higher. They’re also more likely to help should you need to change your dates or even cancel, because they’re not tied to a third-party deal.
One of the main expenses is food. The cost of eating out can add up, but if you get a motel room with a kitchen, you can prepare your own food and save a lot of money.
Airbnb is another option. They will often be cheaper and also usually come with a kitchen, meaning a double saving. But look out for the servicing and cleaning costs – they add up.
‘‘The service is not free, it’s just usually paid for by the bank. We have to be licensed – it costs a fortune to get a licence – we provide a professional service like an accountant or lawyer. At some point someone has to stand up and say ‘enough is enough, it’s not a free service’.’’
of males’’. It’s the last six words I take umbrage with. This is known as the denominator of the equation. We are comparing the difference in earnings to the male income. It’s madness.
Men earn $2.85 an hour more than women. By dividing that by the male hourly rate of $30.85 we discover women earn 9.2% less than men. Eureka, what does that tell us? Absolutely nothing useful. Who is interested in the size of the wage cut required to achieve parity with women?
Women want to know what size pay rise is required to achieve parity. We need to make the denominator our own hourly rate. So we take $2.85 and divide by $28. Our hourly rate needs to increase by 10.2% to level up.
Doesn’t it make far more sense to say the gender pay-gap is 10.2%, not 9.2%? The female lens versus the male lens again.
The male denominator is scandalous in this situation. It downgrades the gender-pay gap and reports a useless number to the audience of both men and women.
Or, you could take prepared meals and snacks to save even more.
For about the same rate, a cabin at a campground could be your thing. And they often come with a playground for kids, or a beach.
Rates vary, but I’ve seen some great selfcontained cabins at a campground right on the beach for $145 per night off-season, sleeping up to five. That makes for a cheap weekend, particularly if it’s a family, and way cheaper than a hotel or an Airbnb, even if there’s just two of you.
If you’re an outdoors type, a tramp to one of the Department of Conservation’s 950 huts could be for you.
They’re rudimentary, and you do need to take extras such as food and good clothing and other gear, but they’re cheap. A rough guide is $15 a night for adults, $7.50 for teenagers, and children free. Half the fun is getting there, half is staying there, and there’s no better way than to blow away those workday cobwebs.
If you really aren’t into driving far, and have your eyes on a more distant destination for your weekend, then flying it is.
But right now, with demand very high, airlines struggling to get staff, and the price of fuel soaring, fares are getting as high as the flight plan, so it pays to shop around, even though there are just three airlines going to most main centres and provincial cities.
To give you a chance at the lowest fare, book as far in advance as possible. And always choose which days you fly, though this might mean changing your plans.
In the US it’s called ‘‘making your own weekend’’, where you book to travel Saturday through Monday, rather than Friday through Sunday. Air fares will often be lower (as will hotel and motel rates). Or make it a Tuesday-Wednesday-Thursday break and look for an opportunity to overlap your stay a day before or a day after most people travel (Thursday and Monday).
Other tips to help keep costs down are to avoid the school holidays (when rates for accommodation and flying are always higher). Avoid going somewhere when big events will push up accommodation rates – even if you can get an air ticket.
Or simply treat yourself to a firepit, a blow-up spa, or a paddling pool and have a holiday in your backyard.
Our weekends away are now about where we can explore, which normally involves a walk or a bike ride somewhere new. Someone once advised me to take only photos, leave only footprints. Wise words.
As my financial adviser would say – value rather than cost is always the best guide.
Katrina Shanks is the chief executive of Financial Advice New Zealand.
To release the embedded lie, you take the official statistic of 9.2 and divide it by the result of 100 minus 9.2. Expecting every woman and every employer to recalculate the pay gap is nothing short of cheeky.
Back in 1998, when New Zealand’s gap was 16%, things were worse. The bigger the gap, the bigger the error with the equation. Women needed a 19% pay rise to achieve parity.
The presentation of statistics is important and should be designed to be useful for the audience. I’m sure those in charge of methodology will claim we need to adhere to an international standard to make the lie comparable.The male lens is hard to unwind once it’s entrenched.
In some ways, other statistics suffer the same issues. A 25% fall in the sharemarket requires a 33% recovery to recuperate losses. If house prices fall 20%, it takes a 25% recovery to square up.
In the case of these stats, investors physically lost the amounts being reported. With the gender pay gap, women were never at the level of men, and the only statistic that matters is the climb to parity.
Janine Starks is a financial commentator with expertise in banking, personal finance and funds management. Opinions are a personal view and general in nature. They are not a recommendation for any individual to buy or sell a financial product. Readers should always seek specific independent financial advice.