Financial advice, wealth and gender: risk tolerance, knowledge and confidence

We examine gender differences in investment risk tolerance, knowledge, confidence, and portfolio cash allocations among a sample of advised and self-directed wealthy individuals. Our results demonstrate that gender effects are more complicated than previously assumed. First, while even wealthy women consider themselves more conservative and hold more cash than men, previous findings of lower confidence and knowledge do not extend to our sample wealthy women. Second, having an advisor matters. Advised investors perceive themselves to have a higher risk tolerance and hold 15% points less cash than self-directed investors. Finally, the investor-advisor gender combination matters, but only for female investors. Women with male advisors are more risk averse, and feel less knowledgeable and less confident about investments. They also hold 11% more cash than women with female advisors. Indeed, female investors advised by women report the highest risk tolerance and make the lowest portfolio allocation to risk-free assets across the full sample, including men.