Gender, risk tolerance, and false consensus in asset allocation recommendations

Published on Feb 1, 2018in Journal of Banking and Finance
· DOI :10.1016/J.JBANKFIN.2017.10.016
Nicolas P. B. Bollen28
Estimated H-index: 28
(Vandy: Vanderbilt University),
Steven S. Posavac27
Estimated H-index: 27
(Vandy: Vanderbilt University)
We study the impact of gender on asset allocation recommendations. Graduate business students and professional wealth managers are randomly assigned a male or female client. Participants recommend an allocation and choose an allocation for themselves. Male students choose a riskier allocation than female students, consistent with existing evidence of a gender difference in risk tolerance, and recommend a riskier allocation. In contrast, male and female wealth managers choose and recommend the same allocation, indicating that male and female finance professionals feature similar risk preferences. In both samples, a subject's allocation choice is the strongest predictor of the recommendation provided.
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