Let's bust the myth that women don't like risk: It's confidence, not appetite for risk, that women lack

Annabelle Williams
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The great divide between risk-taking men and risk-shy females is a myth (Source: Getty)

Among the most patronising, persistent myths about women is our supposed dislike of risk. It’s all over the world of business and finance – and is especially pernicious when it comes to looking at women and their financial security.

An abundance of personal finance articles chide women for their risk aversion. “Cautious women risk running out of money in retirement”, reads one piece of research from investment firm Sanlam.

An academic study analysed the findings of 28 papers on female attitude to risk. It found most studies blew small discrepancies out of proportion, using a lot of hot air to reinforce deep rooted beliefs about gender.

“The results are considerably more mixed than might be expected... [The belief] merits reconsideration,” said author Julie Nelson at the University of Massachusetts at Boston, in her paper Are Women Really More Risk Averse Than Men?.

It’s untrue for many women, and like any trope it has the potential to become self-reinforcing. But the myth is also problematic as it fails to take account of the socio-economic circumstances females find themselves in.

There’s the pay gap for starters – still at 19 per cent, according to the Office For National Statistics – and even in industries where salaries have been equalised, bonuses and pensions provision can still be more generous for male staff.

Read more: Women's confidence in fair pay plummets

Many women are counted on as the primary caregiver in their families, and have to be acutely aware of their short-term outgoings. Females are also more likely to be in part-time work or reliant on their partner for income.

Pension provision for women is a contentious area, and many get a raw deal when it comes to retirement. The Conservatives are raising the starting age for female state pension eligibility at a pace which means those born in the 1950s suddenly have years more to work, and too little time to prepare.

This comes on top of the fact that people must make national insurance contributions for three decades to qualify for the full rate – but many women lose their eligibility after taking time out of work to raise children and falling behind on payments.

Indeed, a Europe-wide study of 30,000 people from asset manager BlackRock found that over a third of UK women think government pension changes pose a risk to their future security, and less than half feel confident about their financial future. Meanwhile, campaigners say the government’s austerity measures and cuts to welfare have a disproportionately negative effect on females.

The bottom line is, many women live more financially precarious lives than men. Battling that, and prioritising financial security for females is crucial, says Leslie Bennetts in her brilliant book The Feminine Mistake.

Read more: Women in the boardroom make companies better

Separating economic status from risk appetite paints a different picture. Wealthier women are happy to put their cash into the stock market, research shows.

“Women were more likely to hold risky assets if expecting an inheritance, employed and holding higher net worth... Gender did not appear to be a critical determinant of investment choice,” say Lori Embrey and Jonathan Fox at Ohio State University in their study Gender Differences in the Investment Decision Making Process.

In other words, if they’ve got the cash, they’ll take the plunge.

“It’s nothing to do with women being less keen on taking risk – this again is an investment myth,” says Gina Miller of MoneyShe. “What is abundantly clear from our experience is that women lack financial confidence and time. Although these issues are not exclusive to women, just that women are more open and honest.”

Evidence points to an education gap too. The BlackRock study found that when women are shown a chart of stock market returns, seven in 10 want to invest.

We know the poison is women having too little money invested. But we also have the antidote, and that’s busting the myth that females can’t handle stock market risk and helping them tackle investment head-on.

Read more: Our savings slump is lowering productivity

This article appears in the March edition of City A.M.'s Money magazine, which will be distributed with the paper on Thursday 31st March.