Gender differences in investing are more complicated than previously assumed.

A study found that even though women investors, as a group, tend to exhibit lower risk tolerance, investment knowledge and confidence than men, the differences are not large enough to be statistically significant. Furthermore, gender is only one of the attributes influencing judgment and preferences. Being wealthier is associated with higher risk tolerance, higher levels of confidence and being more knowledgeable about investing. These findings contradict previous studies that found a link between risk tolerance and gender.

One area where gender does play a role is which adviser a woman works with. Female investors with male advisers reported significantly lower risk tolerance, knowledge and confidence. They also held 10.6% more cash than women who worked with female advisers. Female investors benefited from advice augmenting their self-perceived risk tolerance, knowledge and confidence “only if their adviser is female.” For male investors, the gender pairing of investor and adviser was found to have no significance.

One reason for this disparity could be communication. Financial advice is culturally male gendered. To the extent a conflict exists between the cultural expectations of female investors and the communication style of organizations and their male advisers, risk tolerances among women may be affected.

The findings come from a study of wealthy investors and their financial advisers. The study analyzed the self-perceptions and portfolio allocations of 500 British investors. These investors had portfolios worth between $65,000 and $3.2 million USD.

In addition to the aforementioned conclusions, the study found that advised investors—male or female—hold almost 15% less cash in their portfolios compared to self-directed investors. Receiving financial advice contributes to higher levels of self-perceived risk tolerance and lower cash holdings.

Source: “Financial Advice, Wealth and Gender: Risk Tolerance, Knowledge and Confidence;” Ylva Baeckstrom, Ian W. Marsh and Jo Silvester; SSRN, May 11, 2019.