A consultation appointment at a bank or savings bank should provide customers with recommendations that are tailored to their individual financial needs and goals – that is the expectation. But what if gender has an impact on the financial products offered? What if women are offered worse conditions and more expensive products? That this idea is reality is shown by a study of the Leibniz Institute.
According to the study, women receive fewer discounts on sales fees during consultations than men. In addition, they are up to nine percent more likely to be recommended more expensive financial products. An inequality that inevitably leads to higher costs for female customers.
The study evaluated data from 27,000 conversations between financial advisors and customers of a large German bank from 2010 to 2017. The authors have now supplemented the study with further surveys of customers and advisors. The new data shed light on the background to the unequal advice. The decisive factors are self-confidence, negotiating skills and prior financial knowledge. In all three areas, women performed worse than men – and the advisors know this.
Women often underestimated their actual understanding
But the conclusion that financial advisors “systematically rip off” female customers is too simplistic, says Tabea Bucher-Koenen, study author and holder of the chair for financial markets at the University of Mannheim. The study does not aim to question the quality and usefulness of the advice. On the contrary: women would not invest at all without advice due to a lack of financial knowledge.
Why is that so? One explanation for the lower level of financial knowledge is as follows: women are less concerned with their finances than men. To be precise, 38 percent of women are regularly concerned with their financial affairs. For men, however, almost every second person does so, according to a Survey by the Association of German Banks out.
Although women have less financial knowledge than men, they often underestimate their actual understanding. Almost 40 percent of the gaps in knowledge identified can therefore be explained by a lack of self-confidence. This uncertainty could also be due to the ongoing disadvantage faced by women in all financial matters. Not only do women earn less, but they are therefore also less able to save for their retirement. They are also less likely to invest in risky investments and do not always have access to their own bank account worldwide.
In order to offer women the same opportunities for financial success and independence as men, a faster and more comprehensive adaptation process is necessary. “Women could benefit from improving their financial knowledge and becoming more self-confident,” says financial expert Bucher-Koenen. This could also help to balance out the inequalities in the range of advice available. According to the bank survey, there are already positive developments in terms of financial knowledge: although men are still more optimistic about their financial knowledge, women are becoming increasingly self-confident. Last year, the proportion of women who are more confident in financial matters rose by nine percentage points to 52 percent.