Women self-report a more cautious, conservative and less confident attitude toward investing and maintaining their current financial situation than do men, according to a new paper that examines the mindsets of high net worth investors.
A new Spectrem Group white paper called “High Net Worth Men Vs. Women” examines gender differences to determine how financial advisors can best engage high-net-worth clients.
“This research indicates there are important gender implications for financial advisors when determining how to most effectively offer services to wealthy men and women,” the paper states. “Advisors must consider these implications to best engage male and female investors when they approach investment conversations.”
Spectrem defines “high net worth” as investors with $100,000 to $25 million net worth, not including primary residence. The white paper is based primarily on research conducted by Spectrem Group with 3,152 respondents from HNW households across the United States. Of these, 1,875 were men and 1,277 were women. Here are four major differences they found:
1. Women are more conservative.
Spectrem’s research finds that both HNW men and women forecast their likeliest investments in the coming year will be in short-term investments and equities, such as stocks or stock mutual funds. Men, however, are more likely to be focused on equities than women, with 44% of the men surveyed indicating they’ll likely invest in individual stocks in the next year, compared with 37% of the women surveyed. Meanwhile, the survey found that HNW women will beleaning more heavily on checking or savings accounts (56% vs. 52% of HNW men).
“Advisors may need to encourage wealthy women to be more aggressive in their investment philosophy,” the paper states. “Because women are generally more conservative, advisors must carefully review their portfolios, and when appropriate, encourage women to invest more aggressively.”
2. Men are more likely to be self-directed investors.
According to Spectrem’s research, HNW women are significantly less likely than HNW men to be self-directed investors (31% of the women surveyed, compared with 39% of the men).
The paper finds that men are much more likely to enjoy investing than women (48% compared with 32% of women), as well as express a significantly greater interest than women in being hands-on with their investments (50% vs. 36% of women).
When it comes to taking on risk, the paper finds that women, again, are more conservative-minded. According to Spectrem, HNW women (30%) are significantly less likely than men (44%) to take risk on a portion of their investments in order to gain a greater rate of return. More than half of the women surveyed (55%) said they would prefer a guaranteed rate of return on the majority of their investments, compared with 46% of men.
3. Women are more likely than men to seek professional advice.
The paper reports that women are slightly more likely to consult with an advisor for specialized needs (34% vs. 31% of men) and regular consultations (21% vs. 18% of men). More women than men also report being completely advisor-dependent (15% vs. 13%), according to the paper.
Overall, HNW women are much more likely to use an advisor – whether that be an accountant, attorney, banker, independent financial planner, insurance agent, investment manager or another type of professional – than HNW men.
“The most popular type of advisor for HNW investors is the full-service broker followed by independent financial planners,” the paper states. “Women are more than twice as likely to use an accountant as their primary advisor compared to men.”
Of those surveyed, 39% of men and 22% of women reported they do not use any advisors.
4. Men’s and women’s perception of their financial knowledge, and of their advisor’s performance, differ greatly.
HNW women are more likely overall than HNW men to self-report a lack of financial knowledge (34% vs. 15%). HNW men are significantly more likely to rate themselves as very knowledgeable (29% vs. 11% of women).
Perhaps this is why the survey finds that more women are satisfied with their financial advisor (76% vs. 74% of men).
According to the paper, women are more satisfied than men with their advisors’ responsiveness to requests and their knowledge and expertise as well as their performance. According to the paper, 66% of HNW men are satisfied with their advisor’s performance, compared with 74% of women.
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