Gender Differences in Financial Advice

Abstract

We show that financial advisors recommend more costly products to female clients, based on
minutes from about 27,000 real-world advisory meetings and client portfolio data. Funds recommended to women have higher expense ratios controlling for risk, and women less often receive rebates on upfront fees for any given fund. We develop a model relating these findings to client stereotyping, and empirically verify an additional prediction: Women (but not men) with higher
financial aptitude reject recommendations more frequently. Women state a preference for delegating financial decisions, but appear unaware of associated higher costs. Evidence of stereotyping is stronger for male advisors.

Keywords: Financial advice, consumer protection, household finance, financial literacy, discrimination, credence goods

JEL Classification: G02, E02, D08