Gender, risk tolerance, and false consensus in asset allocation recommendations

Abstract

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.