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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