Men and women differ in their investment decisions. In this article, we review the main differences in risk aversion, portfolio choices, venture capital investment, and socially responsible investing, as well as their causes: genetic and social factors, financial education, advice, etc. Gender differences raise important questions for public policy, particularly regarding women’s financial adequacy in retirement. Recent developments in Artificial Intelligence and the associated new financial services (fintechs and robo-advisors) can now offer promising tools to reduce inequalities.
Introduction
For decades, wealth management has been a male-dominated activity. Not only has wealth long been predominantly held by men (women today control only one-third of the total financial wealth of households worldwide), but within a household, financial decisions are more often made by men than by women. Similarly, the majority of financial advisors are men (in the United States, for example, the representation of women is only 30%). However, this situation is changing. An unprecedented amount of financial assets is gradually passing into the hands of women. Demographic and social factors are at play.
With the passing of male “baby boomers,” the control of financial assets of older households is shifting to their wives. Furthermore, younger and wealthier women are now more inclined to manage their wealth themselves. Today, married women are 30% more likely to make financial and investment decisions than they were five years ago (Baghai et al., 2020). While wealth management remains predominantly male (65% when examining assets under management), the growth rate of assets managed for women now exceeds that of men (6% vs. 4%). Understanding the needs, preferences, and differentiated behaviors of women when it comes to managing their money is therefore essential.
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