Do Women Receive Worse Financial Advice?

Abstract

Trained undercover men and women posed as potential clients and visited all 65 local financial advisory firms in Hong Kong that cater to retail investors. Each auditor was assigned to an “avatar” consisting of a specific combination of attributes. We find that women are more likely than men to receive advice to buy only individual or only local securities. This effect is significant for financial planners, but not for securities firms. Women who signal that they are highly confident, highly risk tolerant, or have a domestic outlook are especially likely to receive dominated advice. Our theoretical model interprets these patterns as an interaction between statistical discrimination and advisors’ incentives. However, the data do not allow us to rule out taste-based discrimination.