Private banks enable women to invest with confidence

Recent research by UBS Wealth Management found that women should invest more for the long term and take more long-term risk in their portfolios to meet their needs, as investment decisions and behaviours widen the gender gap, in addition to income disparity, pay discontinuity, work flexibility and longevity. 

“Women are more reluctant to take risk and are less confident when making investment decisions,” says Olga Miler, managing director at UBS Wealth Management.

The global bank has pledged to increase the financial confidence of 1m women by 2021, through a “holistic programme” including events, online assessment tools and publications, hoping to “inspire women of all walks of life”. 

It has also committed to increase the ratio of women in management roles from one-quarter to one-third.

Trigger fingers

Research supports that men tend to be more confident investors than women, which leads to more risk taking, with men trading 45 per cent more than women, reports Stephanie Luedeke, CEO Citi Investment Management at Citi Private Bank in New York. 

Paying particular attention to North America, over the past couple of years Citi has focused on training for private bankers to make sure they are fully aware of the tendencies and key traits that women display, for instance, with their investing, one of which is lower risk tolerance, she explains.

“Private bankers need to take the time to educate and inform women and build that confidence.” However, a lack of confidence does not necessarily result in a bad outcome for the female investor, she states, as overconfidence can lead to very poor investment decision making, more trading and, over time, to lower investment results.

But it is a mistake to generalise, or stereotype female investors. Many other factors, such as geography, generation, source of wealth and asset level come into play. 

While women are more sensitive to human emotions and soft issues, such as family harmony, and are more aware of the social and environmental impact of investments, they also hunt high returns, says Chingyee Yau, co-head, North Asia, HSBC Private Banking.

“Many are quite aggressive in their investment approach to the extent they are trading more than our male clients, but they are also aware of risks,” she says.

Informed decisions

Several private bankers interviewed by PWM believe women simply want to understand risk better to make an informed decision, while being more comfortable in delegating the micro-management of their portfolios. 

They are also more comfortable admitting when they do not know or understand something. 

“Sometimes, by asking questions or being more candid, women could be perceived as less trained, but in fact they have even a stronger knowledge than men, who may have less knowledge but be more assertive,” adds Vincent Lecomte, Co-CEO at BNP Paribas Wealth Management. 

But there are conversations where women often take the lead. “A good example is philanthropy,” says Adrienne M. Penta, senior vice president private banking, Centre for Women & Wealth at Brown Brothers Harriman. 

“I don’t think there has been any philanthropy family that I have worked with where women don’t have a major role,” she says.