Women are more risk averse than men, although the traditional gap between the sexes is shrinking, according to research by Henley Business School, using data provided by investment risk profiling company Dynamic Planner.
Having examined more than 500,000 UK cases involving financial advisers and their customers, the research found that men are more tolerant than women concerning their attitude to investment risk – but revealed that the gender gap is closing and is likely to close completely within 20 years.
Henley Business School Professor Chris Brooks, one of the authors of the study, said: “As well as living longer, women have traditionally tended to invest less and in lower risk funds than men, which typically provided them with lower returns. If women are becoming more risk tolerant over time, this will hopefully bolster their pension pots in the long run.”
The research also found that self-assessed levels of investment experience primarily explain the difference between men and women’s comparative attitude to investment risk.
The study showed that women - when they are more risk tolerant and are highly risk averse - are more influenced by financial advisers when they select a level of risk for their investment portfolio. In comparison, men, after taking professional advice, are more likely to select funds at a level of risk closer to their attitude to risk.
Among married couples, the research stated that when one partner has a higher risk tolerance, the final risk level selected is most likely to reflect that. However, when the woman is more risk tolerant, she is more likely to have to compromise than when the man is more risk tolerant.