Are Women Investors Too Conservative?

A recent survey by Desjardins Wealth Management found that 61% of women have a conservative investor profile.  The results suggest that women take less risk than men and tend to prefer safer investment portfolios.

Are women wired differently as the financial experts suggest?  Do they lack confidence and knowledge?

Related: 10 ways for women to take control of their finances

Or is it that life circumstances can significantly affect risk tolerance?  Look at the facts:

  • Most women STILL earn less than men for the same work.
  • They find themselves in traditional female jobs (what we used to call “pink-collar”) that pay lower wages.
  • Women are more likely to leave the paid workforce, work part-time, or take on a less demanding job in order to raise their children and/or care for elderly parents.
  • Divorced women can have their standard of living reduced by 50% or more.
  • Women live longer than men and, as such, more likely to be widowed.
  • Older women are less likely to have the university education that could give them more earning power.
  • Although women take on the day-to-day household financial management, many choose not to assume responsibility for managing investments.

Lower pay – longer life.  Is it any wonder that preservation of capital is of the highest priority?

Targeting female clients

In the past financial service providers tended to ignore women investors.  They were considered a minor secondary market with a perceived lower level of interest in money matters – more interested in spending than investing.

Related: How women view money matters

However, more and more investment professionals are now placing new emphasis on targeting female clients.  Times have changed and a growing demographic of affluent single women, business owners, and primary breadwinners that have increased earning, spending, and investing power is seen as a ripe opportunity for the industry.

According to Financial Planning magazine:

  • Women (in the US) will inherit $30 trillion in inter-generational wealth transfers from their husbands and parents.
  • Women make approximately 80% of family buying decisions.
  • 28% of homeowners are single women.
  • 22% of married women earn more money than their spouse.
  • 49% of female survey respondents rely on advisers.
  • 9 out of 10 women will find themselves with sole responsibility for their finances at some point in their lives – through death of their spouse, or divorce.

Yet, a study done by Fidelity Investments found that 70% of widows fire their financial adviser within one year of their spouse’s death.  Why?  They had no trust in their adviser, felt they were condescending to them and expected them to trust their advice unquestioningly, and were dismissive of their (the client’s) concerns and needs.

Related: Why a fiduciary standard for investment advisers is needed in Canada

So, what do women want?

This coaching for advisers comes from Financial Planning magazine:

  • Women want an adviser who is a good listener, who understands her unique financial concerns and who is willing to coach her over time.
  • They want advisers who have expertise and use it to achieve positive results – together.
  • They want to discuss their options and understand potential outcomes.
  • They want the information required to make an informed decision, including transparency of fees.
  • Women want to learn financial skills and get clear explanations of various products and strategies – and no sales pressure.

There is obviously a need for reliable advice and information.

The bottom line

One adviser suggested that communicating with female clients takes too much time.  There is a bias toward steering women into more conservative investments that are easier to explain.

He said that male investors tend to agree more with their suggestions and like to move forward right away.  They are more likely to churn their portfolios on a regular basis to chase returns.

Related: When the market goes down do you buy, sell, or ignore?

It’s time to lose these stereotypes about gender, money, emotions, and risk.  Life circumstances can significantly affect investment styles and risk tolerance, regardless of gender.  Differences between male and female investors may not be all that great.

Each investor should be treated as an individual with his/her own unique goals, experiences, and attitudes about investing.

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  1. Potato on February 11, 2014 at 11:12 pm

    For those looking for the context to the first figure, the survey found 46% of men were in the conservative investor profile category.

    • Boomer on February 12, 2014 at 9:02 am

      @Potato: Thank you for pointing that out. Doesn’t that prove my point that there is little difference between the genders when it comes to investing?

      However, the finance industry suggests that men are more conservative now because of the 2008 market downturn and they are now merely regrouping, but women are unfairly stereotyped as shoppers not savers.

      • Cory Papineau on February 12, 2014 at 11:31 am

        I think the better reference would be Savers rather than Investors. My experience has been that women tend to be less greedy (more conservative is the result) than men. Men tend to be more aggresive which is a detriment to them when markets correct.

        • Lickety on February 12, 2014 at 8:24 pm

          and it’s also been men who’ve done irreparable damage to the banking system. Not one woman was ever implicated in the massive mortgage fraud in the US. It was all men CEOs, CFOs. Do we see a pattern with greed, fraud and pocketing billions?

  2. Northmoon on February 12, 2014 at 7:43 am

    I’ll tell you why this woman investor does not have a financial advisor. In the distant past I had some RRSP investments, and was advised to purchase Nortel stock – that promptly dropped into oblivion. So much for the professional advice. A few years later I told a different investment advisor that I would like my portfolio to be in ethical stocks. That idea was po-po’d and I was told I couldn’t make money that way. Thanks for listening to what I want to do with my money, and goodbye. I also see articles from time to time that say throwing a dart at the stock listings gets just as good results as a careful choice of stock. Then there are the fees and stock churning to consider.

    I recently set up part of my TSFA to allow stock purchases, and I hold stock in two companies, both chosen for their dividend returns. I’m an intelligent woman, I’m not greedy and I don’t want complicated deals; therefore I see no need to hire an advisor who after all is just guessing where the stock market might go.

    • Boomer on February 12, 2014 at 9:06 am

      @Northmoon: I’m disappointed, but not surprised, to learn that you have had bad experiences with your advisers.

      That is why many of us decide to DIY and can be successful at it.

  3. ljh on February 12, 2014 at 10:41 am

    Throughout my career as a teacher I invested my money in mutual funds with a financial adviser. I had no interest in a RRSP account because I was also a mother and a landlord with little time for market investments. I am now retired, still a landlord but I now have more time to study how to invest in the market. I am no longer with the financial mutual fund adviser even though he figured I was making a mistake by withdrawing my money from his company (I now know more about MERs and realized how much I was actually paying for his advice). I know I am doing a better job with my investment portfolio as I spend time learning the DIY type of investing. After all it is my money and therefore it means more to me than to him.

  4. KC on February 12, 2014 at 11:29 am

    This is part of the reason why I would like to DIY. As much as my advisor was knowledgeable, I never really felt like he had my full attention because I was a woman. I do have another FA, who happens to be a woman, and has no problem listening to my concerns, having a little debate why certain investments would not be in my best interest and if I decided to do it anyway, we started off small to minimize my risk and went from there. Sometimes, you do have to seek out a female FA to meet your needs because she understands exactly what your fears and goals are since she is in the same shoes as yours!

    • Lickety on February 12, 2014 at 8:21 pm

      I have a male advisor. I removed my investments from RBC because of their deplorable attitude towards women (are you listening RBC?) and went to Edward Jones. The advisor, coincidentally was offering free classes on investing specifically for women and I learned quite a bit. My investments have grown under his care over the years.

  5. Kathy waite on February 12, 2014 at 1:29 pm

    It’s a sad fact that in every industry there are good and bad. I have had men tell me they prefer a female planner because they can ask basic questions without feeling stupid and women who say they were sick of being talked down to and brushed off. I like Ljh comment her money so means more to her so is learning. It comes back to good questioning skills listening to clients and respecting their opinions not dismissing them even if they come from a misunderstanding.
    Education education education!

  6. Tahnya Kristina on February 12, 2014 at 2:27 pm

    I am 33 and I’m not a high risk investor for retirement, I am a balanced growth investor. I know statistically I should be taking more risk becuase of my long time horizon but I just can’t do it. I am not sure it’s because I’m female, I just think it’s because risk-adversity is a part of my personality. I am a planner and unpredictability really freaks me out. I read an article in Marie Claire magazine that said women still earn significantly less than men and that’s crazy to me. Income should be based on performance not on sex.

    • Lickety on February 12, 2014 at 8:19 pm

      I’ve learned over the years to take small risks with my investments and they have paid off. And yes, it is deplorable that women still make less than men in this day and age. We’ve learned nothing over the decades.

  7. Lickety on February 12, 2014 at 8:18 pm

    I refuse to put my money in any of our banks. I belong to a credit union and years ago I removed my money from a major financial institution and moved it over to a private advisor. I left the bank because they treat their female clientele like dirt and I got fed up with the attitude. I may not have a lot of money but the money I do have I expect to have invested properly and not by patting my head. My investments have done amazingly well over the years and my advisor talks to me on a regular basis which is more than I can say for the bank I belonged to.

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