Financial Advice and Gender JCF 18-Dec-20 Baeckstrom et al accepted.pdf (469.8 kB)
Financial advice and gender: wealthy individual investors in the UK
journal contributionposted on 2021-01-11, 16:50 authored by Ylva Baeckstrom, Ian Marsh, Joanne SilvesterJoanne Silvester
We examine how gender differences in investment risk tolerance, knowledge, confidence and portfolio cash allocations relate to the gender mix of investors and financial advisors among a sample of wealthy individuals in the UK. Our results demonstrate that gender effects are more nuanced than previously assumed. First, while even wealthy women consider themselves more conservative and allocate a higher proportion of their investable assets to cash than men, previous findings of lower investment knowledge and confidence do not extend to our sample. Second, having an advisor matters. Advised investors perceive themselves to have a higher risk tolerance and invest 10.6%-points more than self-directed investors. Finally, the investor-advisor gender combination matters, but only for female investors. Women with male advisors are more risk averse, feel less knowledgeable and less confident about their investment decisions. They also invest 11%-points less than women with female advisors. Indeed, female investors advised by women report the highest risk tolerance and make the lowest portfolio allocation to risk-free assets across the full sample, including men.
- Business and Economics
Published inJournal of Corporate Finance
- AM (Accepted Manuscript)
Rights holder© Elsevier
Publisher statementThis paper was accepted for publication in the journal Journal of Corporate Finance and the definitive published version is available at https://doi.org/10.1016/j.jcorpfin.2021.101882.