Gender, Risk Tolerance, and False Consensus in Asset Allocation Recommendations

44 Pages Posted: 27 Oct 2017

See all articles by Nicolas P. B. Bollen

Nicolas P. B. Bollen

Vanderbilt University - Finance

Steven S. Posavac

Vanderbilt University - Marketing

Date Written: October 18, 2017

Abstract

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.

Keywords: Risk Tolerance, Gender, Asset Allocation

JEL Classification: D14, G02, G11

Suggested Citation

Bollen, Nicolas P.B. and Posavac, Steven S., Gender, Risk Tolerance, and False Consensus in Asset Allocation Recommendations (October 18, 2017). Vanderbilt Owen Graduate School of Management Research Paper No. 3059896. Available at SSRN: https://ssrn.com/abstract=3059896 or http://dx.doi.org/10.2139/ssrn.3059896

Nicolas P.B. Bollen (Contact Author)

Vanderbilt University - Finance ( email )

401 21st Avenue South
Nashville, TN 37203
United States

Steven S. Posavac

Vanderbilt University - Marketing ( email )

Nashville, TN 37203
United States
615-322-0456 (Phone)

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