Women get worse money advice from financial advisors than men: study
37% of women were directed to undiversified investments resulting in less profits compared to 14% of men
Bad money advice is another hurdle women face that could potentially be widening the gender investing gap.
Financial advisors often push women into making riskier financial investments compared to men with a similar appetite for risk, according to a study by researchers at Hong Kong University of Science & Technology.
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The two-year academic study featured trained undercover men and women posing as potential clients visiting all of the 65 local financial advisory firms in Hong Kong. Each participant was told to have a high- or low-risk tolerance for investing, have high or low confidence and be interested in investing domestically or internationally.
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The study found that 37% of women were told by financial planners to make undiversified investments domestically in things such as real estate investment trusts, individual stocks or insurance products, resulting in fewer profits, while just 14% of men were prompted towards riskier investments. Researchers suggested that financial planners looking to make big commissions were more likely to convince female investors compared to men.
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“Women who signal that they are highly confident, highly risk-tolerant, or have a domestic outlook are especially likely to receive dominated advice,” researchers wrote in the study.
The findings could contribute to an already alarming gender investment gap.
Just 8% of investors are women, and they hold 71% of their assets in cash, instead of investing to build on their wealth, compared to 60% held by men, separate data shows. What's more, fewer women have started saving for retirement compared to their male counterparts, leaving them behind financially in the long run.
But financial advisors trying to pull a fast one on female clients may only hurt their own career opportunities. A separate gender-bias survey from Bank of America Corp. found that wealthy women who have bad experiences with financial advisors were more likely than men to fire them.