Are wealth firms doing enough to support women investors?

We are on a mission to get everyone invested, which of course is by definition a very inclusive goal, because it includes the young and the old, the less financially literate and the more financially literate, and yes, men and women.   

At everyoneINVESTED, we place the relationship between the investor and the investment in a digital context.  From investor onboarding to investment proposal and portfolio reporting, we focus on technology that addresses the emotional component of investing without the need for human encouragement or advisor assistance.  This not only reduces operational costs and improves the scalability of investment services, but also includes a relentless focus on client needs and preferences across the board.  After all, only when client preferences and investment outcomes are aligned will the client start investing and stay invested. 

When it comes to investor preferences, there are of course regulatory requirements that need to be met.  In this context, we talk about suitability assessment in general or refer to the MiFID regulation in Europe.  Many may see this as just another regulatory requirement.   We see it as an essential part of building a long-term relationship with investors.  Our innovative solution is based on user interaction and draws on behavioral finance insights to quantify multiple, complementary aspects of investor preferences when it comes to balancing risk and reward.   

Our solution has been user-tested at large scale in multiple markets, see our website for a glimpse at the results: 

• In France: French banking clients prefer personalized, behavioral risk profiles  

• In Italy:  Are Italians less emotional about investing then the French?  

• In the United Kingdom: UK Market Research: Digital Profiling Success  

And yes, we do find that, on average, women balance risk and reward differently than men.  Of course, we should be careful about making strong statements based on averages (“you can drown in a river that is 1 meter deep on average”).  However, our research in different countries confirms academic findings that women are more risk-averse than men.  In other words, men tend to be more risk tolerant and even overconfident. 

At everyoneINVESTED, we encourage partner banks to build an investment offering that addresses the different dimensions of client preferences.  When it comes to balancing risk and reward, we do see meaningful differences in the averages between men and women.  However, within each group there is a large dispersion around the average, so there is a lot of diversity within each group.  Therefore, again focusing on investor profiling, our advice to partner banks is to install an enhanced and refined profiling tool that captures client preferences in detail, rather than making a priori statements simply because the investor is a woman or a man.