Bridging the Gender Gap

This article was provided from the May/June issue of CFA Magazine. A few of the key points in the article are:

  • Women control a growing percentage of the world’s investable wealth.
  • As investors and wealth management clients, men and women tend to have different attitudes and behaviors, according to research and the anecdotal experience of advisers.
  • A recent survey by Boston Consulting Group found that a significant percentage of wealthy women were dissatisfied with the wealth management services they receive.

Bridging the Gender Gap

With women’s share of investable assets growing, are advisers meeting their needs?


The book Men Are from Mars, Women Are from Venus, published in 1993, helped popularize awareness of the differences between men and women. Given the media coverage of that topic over the ensuing years, it’s tempting to assume that the topic would have been exhausted. But for investment advisers, differences in men’s and women’s attitudes toward investing may remain a frontier in need of further exploration.

Even though research and anecdotal evidence show that male and female clients have dissimilar views on financial matters in many cases, the variations involve broad generalizations and more differences may occur within the same gender than between different genders. Still, advisers who ignore the differences risk overlooking important elements in their client relationships.

Is Biology Destiny?

William Suplee IV, CFA, with Structured Asset Manage- ment in Paoli, Pennsylvania, notes that biology both favors and penalizes women. The good news is that they live roughly five years longer than men on average. The difficulty for many married women, however, is that this longevity advantage often results in living a substantial part of their lives alone. Consequently, women need a full understanding of family finances and investments, says Suplee. Suplee discusses long-term care insurance with female clients and explains the coverage’s risk-manage- ment and wealth-preservation benefits because a longer life expectancy means women also have a greater risk of living for longer periods with degenerative diseases.

Such conditions are not limited to women living in the United States. Rita Martenson at the University of Gothenburg in Sweden reviewed studies conducted in the United States and Europe of women’s retirement finances. In addition to having longer life expectancies and poten- tially greater medical expenses, she found that women generally earn less, have fewer funds to invest, and more frequently lack pensions. They also have less investing experience and knowledge, conditions that cause women in the United States to have significantly fewer retirement resources than men.

Cultural factors play a role. In the past, according to Martenson’s study notes, both men and women viewed investing as a primarily male task, but that attitude is changing. A 2010 survey by the Boston Consulting Group (BCG), “Leveling the Playing Field: Upgrading the Wealth Management Experience for Women,” estimates that women controlled 27 percent of the world’s wealth in 2009. Some of the highest percentages are in North America (33 percent), Australia and New Zealand (31 per- cent), Asia ex-Japan (29 percent), and Western Europe (26 percent). These percentages are expected to grow, particu- larly in the high-net-worth market, which BCG defines as clients with US$1 million to US$20 million in wealth.

In 2007, Caezilia Loibl and Tahira Hira published “Gender Differences in Investment Behavior,” a study that was funded by the NASD Investor Education Foundation. Among their findings: “Women are still not as comfortable with making investment decisions as they are with han- dling many of the financial tasks (budgeting, bill paying, etc.), if we may separate the two that way.” The study also uncovered a role for socialization. “We find a difference between men and women (in terms of) how they are socialized to do financial tasks or financial responsibilities as they are growing up,” wrote the researchers. “When we ask them the question, how early did you get involved in investments and saving in investments?, male respondents get involved very early compared to females.”

Men’s experience and higher comfort level don’t always translate into better investment decisions. A pattern of more active trading among male investors — with resultant higher costs and lower returns — was first reported in a 2001 study by Brad Barber and Terrance Odean (“Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment,” Quarterly Journal of Economics [February]). More recently, Vanguard Investment Counseling & Research studied its IRA investors’ trading patterns during the 2008– 09 market crisis and found that male investors were more likely to trade by selling shares during market troughs.

Risk Tolerance

Women are widely believed to have lower tolerance for investment risk relative to men. Research indicates that this perception is generally true but with an important qualification. Eleanor Blayney, co-founder of Direction$ in McLean, Virginia, and author of Women’s Worth: Finding Your Financial Confidence, has found that women tend to favor safe investments because they focus primarily on providing for family and the quality of their lives. Attitudes change, however, as women learn more about investing. “As you educate women, their risk tolerance tends to increase,” she says. “With education, they become less risk averse. Men, on the other hand, they’re more comfortable with risk, but as you educate men, their risk tolerance goes down.”

Martenson’s research supports Blayney’s experience. She found that knowledgeable, experienced male and female investors tend to behave similarly. When Sweden’s public pension plan allowed investors to allocate part of their accounts to mutual funds that were riskier than the default option, the participation rates were almost identi- cal — 66 percent of men enrolled versus 68 percent of the eligible women.


Susan Hirshman, CFA, is president of SHE, a consulting firm in New York City focused on enhancing the financial literacy of women, and the author of Does This Make My Assets Look Fat? She points out that men and women often differ on money’s meaning in their lives. In 2008, for example, she found that women could live with their port- folio losses provided they were still able to achieve their goals. In contrast, male clients tended to focus more on money as a result or a score. “Money is much more, I think, of a lifestyle to women; what I found with men, it was much more about the number,” she says. “They [men] were like, ‘Well, I had US$10 million; now I have US$5 million. It doesn’t matter that I could still meet my goals; it’s really the number that’s important as the mark.’”

These gender differences are widely recognized, but at least some financial services firms appear to be overlooking them. Among the roughly 500 women who participated in the BCG survey, each with at least US$250,000 in investable assets, 27 percent were very or somewhat dissatisfied with their wealth manager. For those respondents with US$1 million to US$5 million of investable assets — the sweet spot for many advisory firms — 34 percent were very or some- what dissatisfied. Fifty-five percent overall responded that wealth managers could do a better job servicing women.

Wealth managers, according to the BCG study, “tend to alter their advice based on stereotypes they should ignore — while overlooking material differences between men and women as wealth management clients.” These findings include four main traits: (1) women focus more on understanding the risk–return trade-offs of investments as they relate to their overall goals and financial security; (2) most women want straightforward advice and product information without unnecessary details; (3) women want empathy and customized advice in their advisory relation- ships; and (4) women generally want to learn about investments and wealth management through seminars and other events.

Women’s growing control of wealth means those advi- sory firms that don’t treat women as a distinct market seg- ment risk losing their business. Female advisers are cer- tainly aware of their cohort’s potential. Blayney’s website ( bills the firm as “a financial advisory firm designed to speak to women in and on their own terms.” Catherine Maniscalco Avery’s firm, CAIM, which co-sponsored the “What Women Want: Understanding the Modern Female Investor” survey (see sidebar), lists women as one of its two major markets. The firm’s website ( states, “At CAIM we under- stand the psyche and the needs of the American woman and can craft investment portfolios specific to those needs.”

Given the gender differences, should men stick to advising other men or, alternatively, have only female col- leagues work with women clients? Not according to the sources for this article or the BCG survey, in which 85 per- cent of the respondents said they were indifferent to their adviser’s gender — only 11 percent preferred working with another woman. BCG’s summarized advice for working with female clients: (1) Cater to the client, not the gender, and (2) show empathy and build trust.

The message is not a new one, Hirshman notes: “It’s the advice that we’ve been getting for years. Basically, it’s the relationship, and it’s not only about the number. What I hear from people all the time is that as long as performance is OK (in-line with what it should be) it’s really about the comfort level they feel with their adviser. It comes back down to knowing who the person is sitting in front of you.”

Ed McCarthy is a freelance financial writer in Pascoag, Rhode Island.