Advisors: Clients’ Gender Clue to Understanding Financial Behavior

Women, on the other hand, tend to be driven by emotion. They are more emotionally connected to the entire investment journey, Davies says, and although they express a greater need for guidance and discipline, they actually need it less than men do. However, in times of market stress, women are more likely to act upon their emotions than men are, which can also be detrimental to their investment goals.

"This kind of data is useful for advisors to put clients into perspective," Davies says. "We know that people relate well to seeing themselves in peer groups that they identify with, and this is where gender traits come in useful. Advisors can use this kind of information to bridge the gap with their clients and start the conversation."

But while research—including a recent study undertaken by Barclays Wealth, entitled "Risk and Rules: The Role of Control in Financial Decision Making"—has found clear differences between the investment behavior of men and women, Davies nevertheless believes it is important not to generalize and fall back too much on stereotypes.

It's no secret that gender is a tricky subject to bring up, and that some people will always defy gender stereotypes. But more importantly, while research on gender and personality traits can help advisors better relate to their clients and better guide them, the overall benefit of psychometrics is to help provide a better understanding of an individual. So ultimately, an advisor should be relating to his or her client as an individual, and not as a member of a particular group, gender or otherwise, Davies says.

Nevertheless, financial advisors like Vivian Groman, senior finance specialist at Starmont Asset Management in San Ramon, Calif., pay close attention to the way men and women clients behave. Groman believes that knowing her clients first as men and as women, and understanding them and relating to them in that context is an important part of cultivating solid and lasting client relationships.

"When I evaluate new clients here, I've noted differences between men and women and the way that they are looking at us," Groman says. "I have noted, for example, that women are more focused than men on the relationship they are going to have with us, whether they can trust us and whether we have their back. Women also ask the same fact-based questions as men, but they want to get to know us more and rely more on intuition, reading us and wanting to know 'are you looking me in the eye when you say something, does your tone make sense?'"