Have you ever invested a large sum in a risky investment mainly for the “thrill” of seeing whether it went up or down in value? Have your clients?
I have never done that and wouldn’t even dream of doing it. Back in the days when I was a practicing advisor, I would never have asked my clients that question for fear of offending them by suggesting that they might just have done something so unwise.
But you might be surprised, as I was, by how many people actually answer “Yes.” We ask that very question in our FinaMetrica risk tolerance questionnaire which half a million investors have now completed over the past 13 years.
Have you ever invested a large sum in a risky investment mainly for the “thrill” of seeing whether it went up or down in value? |
||
Male |
Female |
|
No. |
72% |
87% |
Yes, very rarely. |
15% |
9% |
Yes, somewhat rarely. |
10% |
4% |
Yes, somewhat frequently. |
2% |
1% |
Yes, very frequently. |
0% |
0% |
So roughly one in four clients has made a “thrill” investment, with males being roughly twice as likely to do so as females. The gender disparity here illustrates the more general risk tolerance disparity. Males are, on average, marginally more risk tolerant than females but this difference becomes magnified in the riskier activities.