A 2016 Financial Behavior Study by Scottrade reveals that men and women differ dramatically when it comes to investing practices and trading styles.
Men, for example, report higher degrees of confidence in their investment decisions. The study found that men are nearly twice as likely as women to believe that they are beating the current market (44% of men versus 24% of women).
In addition, men exude more confidence than women that their investments will do well in the current economy (74% of men compared to 59% of women), and most men (67%) envision further growth in 2016. Women, on the other hand, tend to be more reserved about their future returns, with about half expecting further growth in 2016.
“When reflecting on their current financial situation, women and men report similar financial performance and seem to experience about the same amount of stress,” says Mary Koomar, Scottrade’s senior vice president of client services. “However, with respect to the actual performance on their investments, men generally express a much higher degree of confidence whether or not it’s actually warranted.”
Men were also found to make decisions and changes far more frequently (often in either six-month or even one-month intervals). Forty-one percent of men change their strategy every six months compared to only 27% of women and 21% % of men change their strategy as frequently as every month versus only 11% of women.
“Frequent portfolio changes can certainly be an effective part of a strategy, but it’s also important to remember that emotions can betray you when it comes to trading,” Koomar says. “Establishing and following a plan with clear rules is critical no matter your strategy.”
Men and women are equally likely to rely on a professional adviser for investment support (65% of men and 66% of women), but that appears to be where many of the similarities end. In fact, the nature and frequency of the relationship each gender has with an adviser differs substantially.
Women have a great proportion of their portfolio (63%) handled through their broker or adviser (compared with men who handle about half of their portfolio through an adviser). This may be due to the fact that women report feeling more overwhelmed by the available investment choices (64% of women versus 46% of men), and express less confidence in their own ability to navigate any impact from the economy (60% of women compared to 43% of men).
“On the surface the survey results seem to confirm some stereotypical ideas that women are overwhelmed by investing, but it’s worth noting that the women surveyed are also taking proactive steps to take control of their finances,” Koomar adds. “Many of the women surveyed are seeking advice and building trusting relationships with advisers. While they may take a more moderate approach to investing, they are certainly not standing on the sidelines.”
Scottrade commissioned a survey of investors to explore their attitudes and behaviors regarding investing, the economy, finance and retirement. The survey, undertaken by Harris Poll, was conducted among a nationally representative sample of 1,015 adults in the U.S. aged 18 and older who are involved in investment decisions for their household and have $2,500 or more in investments with a full-service brokerage company, online brokerage company or independent financial adviser. By looking at their responses collectively, Scottrade is able to identify trends among investors.