Women have long been described as more cautious investors, believed to keep more in cash and favour stability over growth. This picture, however, may no longer hold, as almost half of Gen Z and Millennial women say they have grown more comfortable with financial risk.

This single label on every woman has never actually worked, as the difference between men and women was almost insignificant. The generational gap may be more important. Younger women learn about money differently, and they approach risk with more discipline than the old stereotype allows. To test this view, Drofa Comms asked three women leaders in wealth management and investing what they see in their own practice.

How The “Cautious Woman” Stereotype is Reinforced

Much of the industry's cautious reputation was created by the products it offered women. When an adviser assumes a woman mainly wants to protect her money, they start with a conservative portfolio. As a result, women have few options and choose what they were suggested, reinforcing the stereotype. 

This assumption, however, does not match reality. When BlackRock surveyed affluent women and financial advisers, the women named growing their wealth as their top priority. The advisers expected preservation to come first and ranked growth only eighth. This gap is confirmed inside the industry, as Kelly Ann Winget, Founder and CEO of Alternative Wealth Partners, has watched it for years. "Women were never cautious by nature. The products built for them were cautious, and for a long time there weren't many alternatives," she says.

Her own clients show that everything changes when women are offered different products. Those who invest with her put capital directly into private energy, defence manufacturing and real assets. They ask about the downside before the return and want to know exactly how they can exit. This careful behaviour may be mistaken for a lack of confidence or knowledge, but it rarely is. Asking questions before committing only shows that an investor understands what is at stake.

Why There Is No Single “Woman Investor”

The problem is that no single "woman investor" has a consistent caution level. A woman at the start of her career and a woman approaching retirement have different views and different risk tolerance. The same is true for men, actually, which suggests that age and life stage shape attitudes to risk far more than gender does.

Christina Mehltretter, Financial Advisor and COO at Carolinas Financial and Retirement Planning, makes the same distinction in her conversations with clients. "Being cautious is not necessarily the same as lacking financial confidence or financial knowledge," she explains.

In her experience, life stage and individual goals all shape a woman's investment profile. This change is also driven by the availability of financial information. Christina believes that social media and online educational resources have made financial knowledge far easier to find. In her view, that brings more familiarity with investing and more curiosity about financial conversations.

This leads to more differences between younger women and their mothers. The new generation sees money as a resource to build with, which shapes the investments they choose. They want to own something they understand and to know why it is in their portfolio. This mindset was confirmed by Kelly Ann Winget younger clients. "Younger women in particular don't think about money as something to preserve. They think about it as a tool for building things," she says.

In practice, Kelly Ann notes, they will choose a concentrated position in a company they understand over a ready-made portfolio they are told is stable enough. "Their mothers often worked around a system that wasn't built for them. This generation would rather build the system," Kelly Ann explains. Many are doing so with their own capital, networks and research.

The Real Barrier for Women Investors

Despite these generational changes and new ways to learn, women can only show up where they have a chance to act. Much of the gap still remains in how opportunities reach them. This is especially true of private markets, where deals usually spread through personal networks.

According to Julie Castro Abrams, CEO of How Women Lead and Managing Partner of How Women Invest, women now tend to enter the investment conversation earlier. "Women are becoming more intentional about where and how they deploy their capital, and increasingly recognising that investing is a way to build both wealth and influence," she says.

The latest research by How Women Invest and How Women Lead shows that women are actually ready to take risks. Among the senior women surveyed, 70% invest in private markets and 65% are accredited investors, while only 5% said private markets' risk level does not fit their goals. However, the invitation holds them back. More than half of women who work with an adviser have never had one bring them a private-market opportunity, even though many said they would be interested.

"That tells me the story is more about access. Women have the capital, experience and appetite to make sophisticated investment decisions, but they have not always been invited into the conversation," Julie explains. In her view, women want relevant opportunities and trusted relationships, and they especially value experienced women investors as a source of new ideas.

Conclusion

Women investors now have more information and more options than ever before. As a result, they are far less willing to accept advice based on assumptions about them. Firms that keep such defaults risk losing these clients. “Younger women in particular don't think about money as something to preserve. What they've stopped accepting is anything that assumes their answer before they've been asked,” says Kelly Ann Winget.

The cautious woman investor was always a stereotype. This label covered a highly varied set of investors, but an industry-wide approach is changing. However, replacing it with a new stereotype of the risk-taking woman would also be harmful in the first place.

Women of every generation have their own goals and risk tolerance, and financial advisers need to know this. But they all want to know what they invest in and have the opportunity to participate in a much wider range of investment projects.

Acknowledgements: Drofa Comms would like to thank Christina Mehltretter, Julie Castro Abrams and Kelly Ann Winget for sharing their insights and contributing to this Women Leading the Way article.