Financial risk tolerance within couples of retail bank clients

This paper examines gender differences in spouses’ financial risk tolerance in a large sample of 10,231 couples of retail bank clients. Our measure of risk tolerance is self-assessed at the bank, in the presence of a financial advisor, through a mandatory risk-profiling survey, the Markets in Financial Instruments Directive questionnaire. On average, husbands have a higher financial risk tolerance than their wives. However, positive and negative gender gaps are both observed between spouses. We find that the gender gap in risk tolerance is less likely to be observed among spouses who visit their financial advisor together than separately, underscoring the role of intra-household social interactions in the “risk tolerance battle”. In contrast, it is positively associated with the gap in stockholding, and its direction depends on the gender of the sole stockholding spouse, highlighting the important role of the gendered asymmetry in stockholding experience in couples. Our results control for the usual determinants of risk tolerance and the bargaining power between spouses and remain robust across several specifications. Our research highlights the need for financial advisors to consider spouses separately to better address the intra-household gap in risk tolerance. Highlights • We analyze the self-assessed financial risk tolerance of couples of bank clients. • We observe an average gender gap in favor of husbands. • The gender gap is lower in spouses visiting their financial advisor together. • Yet, it is positively associated with the stockholding gender gap within couples. • The direction of the gap depends on the gender of the sole stockholding spouse.