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Canadian women among most risk-adverse investors: survey

Office workers walk during morning peak hour in central Sydney October28, 2009. REUTERS/Daniel Munoz/Files

It’s been nearly a decade since Kelly Jansen of Ottawa took her first tentative steps into the world of financial investment.

She was, at the time, admittedly cautious. Overly so.

Fresh out of a marriage where she took a backseat on financial matters, Jansen didn’t know how to build a portfolio, nor did she have much confidence in her ability to make the right decisions around money and her future. She tended to drift towards the safest options, earning the lowest returns.

“I just couldn’t imagine losing what I put into an investment,” Jansen, 49, said in an interview with Yahoo Canada Finance.

Sound familiar? If you are a woman, and a Canadian at that, chances are you share a similar attitude towards investing.

According to a global survey issued by the wealth-management firm BlackRock, women are far more cautious with their money compared to men, and Canadian women, in particular, are among the most risk-adverse investors in the world.

Among the survey’s findings:

  • More than half (55 per cent) of women globally (compared with 47 per cent of men) said they were unwilling to take any risks with their money. In Canada, the gap widens to 61 per cent of Canadian women versus 41 per cent of men.
  • Only 21 per cent of women worldwide (19 per cent for Canadian women) said they are comfortable investing in the stock market, compared with 33 per cent of men globally and 37 per cent of Canadian men).
  • Just 7 per cent of Canadian women allocate take-home income to investing, compared to 12 per cent of Canadian men.

There is nothing wrong with being careful with your money. Next to your home, your investment portfolio is probably your most significant asset and certainly worth protecting. Add to that the welfare of your family, your kids and maybe even your parents, and women have much to consider.

Women have made considerable strides over the past two decades, particularly in managing household finances and advancing on a professional level.

But, as we celebrate International Women’s Day on March 8, it’s worth a closer look at why women remain generally hesitant to expand into investing, missing out on critical opportunities to meet whatever financial objectives they’ve set for the future, most notably, their retirement years.

Education and planning are key

“It’s a risk trade-off,” Mary Anne Wiley, managing director and head of iShares at BlackRock Canada, wrote in an email.

“Women run the risk of limiting their financial security in the future by standing on the sidelines.”

That rings particularly true when you consider trends in life expectancy that have us all potentially living longer, and Canadian women living an average of four years longer than men.

Without adequate financial planning, said Angela Iermieri, a financial planner with Desjardins Wealth Management, you run a genuine risk of “living longer than your savings.”

Desjardins has done its own studies on gender differences when it comes to investment only to find similar results to those in the BlackRock survey.

A recent poll, conducted for Desjardins in December, found 61 per cent of women in Quebec with savings and investments have a conservative or moderate investor profile, compared to 46 per cent of men. Only 7 per cent of women savers considered themselves aggressive or dynamic investors, versus 19 per cent of men.

Iermieri said women generally lack confidence in their investment knowledge and are less comfortable with the language of finance.

She said working with an advisor can help close the gender gap, noting women typically become less risk-averse as they understand more about the markets.

“Sometimes the reasons women seem to be so cautious is because they don’t know what is out there,” she said.

Wiley agreed that education is important, along with the recognition that women approach situations differently than men.

“They (women) want information delivered to them in a different way, but they’re eager to learn,” she said. “They’re interested, there’s an appetite for it, but the follow-through step just isn’t happening.”

Jansen said her own investor confidence has dramatically increased over the years as she understands more about the available options. She credits largely her relationship with her advisor, John Saikaley, for the transformation.

“Through his help and knowledge, I’ve been able to take greater risks and see greater returns,” she said.

Jansen’s big regret is she didn’t find an advisor sooner. The delay will mean she will be working longer than she had planned, but said she’s otherwise on track to meet the financial goals she’s set out for herself and her family.

She said other women can learn from her past – whether single or married.

She recommends they find an advisor they like and trust with their money, and that they get involved in their own financial planning, go to the investment meetings, and review the investment reports with their significant other.

“I wish I would have had a broader understanding of where I was (financially) when I was married,” she said.

Even with an advisor, you're responsible

Eric Kirzner, professor of finance at the University of Toronto’s Rotman School of Business and author of several investment books, said seeking professional help from a financial advisor can be beneficial.

But, he cautioned, it’s important to maintain the ultimate responsibility of managing a portfolio yourself.

"How do you know whether your advisor is giving you good advice?” he asked.

Kirzner said as investors, male or female, we owe it to ourselves to become as knowledgeable as we can about our financial future. That can mean taking a course, joining an investment group or simply tracking down some solid reading material on the subject.