Female investors are less likely than their male counterparts to be confident about long-term opportunities in U.S. financial markets, about their own investment knowledge and about making investment decisions.

That’s according to “Mind The Gap: Women, Men and Investment Knowledge,” new research conducted by the Financial Industry Regulatory Authority’s Investor Education Foundation and George Washington University’s Global Financial Literacy Excellence Center.

The research results—based on a 10-question survey that might also be good for advisor clients—underscore the large difference in confidence between male and female investors and how it impacts decision-making.

“When you have more knowledge and confidence, you are more likely to be doing things like planning for retirement, feeling less anxious about your finance, emergency savings,” said Gerri Walsh, Finra’s senior vice president of investor education, in an interview with Financial Advisor.

“We’ve seen there is a lag among women, and the questions in this survey allowed us to dig a little bit deeper into confidence, investment knowledge and investing,” Walsh added.

Female investors did not perform as well on the survey when asked questions about investments—about the nature of common stock, for instance, or whether investments that are riskier also provide higher returns over time.

Out of 10 questions, male investors correctly answered 5.2 questions while female investors correctly answered 4.1 questions. Only 8% of female investors (compared with 21% of male investors) answered eight questions or more correctly, demonstrating high investment knowledge.

Furthermore, 40% of female investors (but only 26% of male investors) answered fewer than three questions correctly, which indicated low investment knowledge.

Beyond investment knowledge, the research revealed several things:

  • Female investors are less likely to be confident about long-term opportunities in the U.S. financial markets, their own investment knowledge and making investment decisions.
  • Women investors were more apt to answer "don't know" to investment knowledge questions than their male counterparts.
  • While nearly half of all men feel comfortable making investment decisions, only 34% of women feel the same.

"Our research shows that there is a strong link between investment confidence and knowledge, so investment confidence may influence the investment knowledge gender gap,” said Andrea Hasler, assistant research professor of financial literacy at the Global Financial Literacy Excellence Center.

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