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 percent of the men surveyed indicating they’ll likely invest in individual stocks in the next year, compared with 37 percent of the women surveyed. Meanwhile, the survey found that HNW women will beleaning more heavily on checking or savings accounts (56 percent vs. 52 percent 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 percent of the women surveyed, compared with 39 percent of the men).
The paper finds that men are much more likely to enjoy investing than women (48 percent compared with 32 percent of women), as well as express a significantly greater interest than women in being hands-on with their investments (50 percent vs. 36 percent 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 percent) are significantly less likely than men (44 percent) 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 percent) said they would prefer a guaranteed rate of return on the majority of their investments, compared with 46 percent 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 percent vs. 31 percent of men) and regular consultations (21 percent vs. 18 percent of men). More women than men also report being completely advisor-dependent (15 percent vs. 13 percent), 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.