Risk tolerance between genders not so big
Despite many studies concluding that men have a bigger risk tolerance than women, the difference is less than what may be perceived, according to FinaMetrica.
The risk profiling firm found the average risk tolerance level of males is 53.44, compared to 46.82 for females. In couples, men scored 52.75 and women 47.26.
FinaMetrica's co-founder, Paul Resnik, said advisers need to test the risk tolerance of all investors and to not superimpose their own preferences.
"It's also important to note that the difference in male and female risk appetite isn't as great as some people might think," he said.
"Both men and women on average sit in the same risk group, so what we are seeing are slight differences. Individually, however, males and females may vary widely in their risk tolerance levels."
Resnik said before making financial decisions, each person should have their risk tolerance objectively measured through scientific testing.
"People are far more likely to stick to their financial plan through market highs and lows if they are comfortable with the risk levels they have taken, and understand at the outset their financial plan, and the risk it entails, because they have been fully informed by their adviser," he said.
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