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Female Clients And Male Advisors A 'Toxic' Combination, Study Says

July 10, 2019 • Christopher Robbins

Male advisors may fail their female clients without even realizing it.

For women, working with male advisors can lead to a lower tolerance for risk, a higher allocation to cash and, in the long run, lower returns, according to a U.K. study published in May.

In fact, under the right conditions, women may be more comfortable with taking investing risks than men, according to “Financial Advice, Wealth and Gender: Risk Tolerance, Knowledge and Confidence."

Though, on average, women tend to allocate five percentage points more to cash in their portfolios than men, Ylva Baeckstrom of King’s College London and Ian Marsh and Jo Silvester of City University London found in an online study of 500 investors that gender differences in risk tolerance and investing confidence go deeper than trends in asset allocation and are impacted by issues like the presence—and the gender—of a financial advisor.

All of the investors in the study, regardless of gender or sex, allocated fewer assets to cash when working with a financial advisor than they did when self-managing their investments. Among the participants, those working with an advisor had a cash allocation almost 15 percentage points lower than those with no professional financial advice. However, when female investors worked with male advisors, two-thirds of this affect was offset.

On the other hand, when women in the study worked with woman advisors, they on average held less cash and considered themselves to be more risk tolerant than men.

“Gender on its own is not sufficiant to characterise the risk tolerance attitudes of wealthy investors and needs to be considered in concert with other factors such as wealth levels and the characteristics of the advisors they hire,” wrote the authors.

The study goes on to say that for women, retaining a male financial advisor “appears particularly toxic.” Female investors working with male advisors reported “significantly lower risk tolerance, knowledge and confidence,” and held more than 10 percentage points more cash in their portfolios when compared to female investors working with female advisors.

The authors reported finding indications that working with male advisors led to more conservative cash allocations among women.

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ticktock 4 years ago

Those "toxic" male advisers suggesting 10% more allocation to cash - and more conservative leaning, are looking good in March 2020. Maybe they were listening to the clients' preferences.
JimTewalt 4 years ago

I should have clarified my remarks; if you are an asset gatherer disguised as a "financial adviser", eventually your "sins" will come to light. When I said that many women will see right through you, I spoke in haste and in error. Many women are, unfortunately, taken in by smooth talking men - and women, too. Yes, women! Simply being female does not qualify you as adviser of choice. True; women are often more thorough, but that is not always the case. Find an adviser who has taken an oath to act as a fiduciary (your needs always come first), who is knowledgeable and who has integrity - one whose definition of success is not "I make a lot of money" but rather, "my clients make a lot of money." Find a planner, male or female, who can help you construct and maintain a personal plan able to withstand the storms of life.
JimTewalt 4 years ago

Most of my clients are women and I am, of course, a man. Your study is probably accurate, but it need not be. Guys; man-up! A few years ago, I got my picture on the cover of a national industry magazine for this "marketing" idea: "Just think. Find out what your clients need or want to do, then help them do it." If you are an "asset gatherer" disguised as a "financial advisor," women will see right through you. If you take the mindset of a servant; one who is there to help and guide, women will love you, do business with you and send their friends to you.
ceseb 4 years ago

I am assuming Xenophon and ACRONYM are male. I shouldn't make assumptions, but as a female in a male dominated industry, I completely agree with the author. And where "toxic" may be over used, the truth is that in some cases it may be appropriate. There are definitely misogynistic (and toxic, commission seeking) advisors but the most dangerous ones (since they cannot be easily detected) are those with the unconscious biases against female investors. Anyone been seeing the most recent Schwab commercials with "Carl the advisor"? The industry is changing but those guys definitely still exist. I say women investors beware and why not choose a female advisor. I think they make better financial advisors anyway....just my point of view.
Xenophon 4 years ago

I agree with ACRONYM about article's inappropriate stereotyping and use of inflammatory adjectives. With physics, the word "toxic" implies poisonous or with humans - being possibly adversely malicious. In the securities industry, "toxic" has sometimes been used to imply adverse losses in certain mortgage-backed securities portfolios (to wit, "toxic loans"). Maybe the study and the journalist meant 'more conservative'?
ACRONYM 4 years ago

While I don't doubt the sincerity of the designers of this study, propagation of stereotypes is potentially dangerous to all parties. A single 500 person on-line study is hardly definitive. Especially when claiming that male financial advisors "appear particularly toxic" to female investors. Additional studies replicating this finding appear warranted, prior to making such a provocative statement.