New Insights into Advising Female Clients on Investment Decisions

Loibl, Cäzilia; Hira, Tahira K.
March 2007
Journal of Financial Planning;Mar2007, Vol. 20 Issue 3, p68
Academic Journal
• A large number of professional and academic studies have indicated that, in general, women are less knowledgeable, less risk tolerant, and less confident about their investment decisions than men are. This paper applies a model for change and suggests augmenting techniques for financial planners that can help women investors improve their investing behavior. • The model is called the transtheoretical model of change, which only recently has been applied to financial behavior. Instead of trying to get adults to change their behavior instantaneously, the model takes a person through five successive stages of change: precontemplation, contemplation, preparation, action, and maintenance. Planners can learn to identify which stage the female investor is in and help her move to the next stage. • In the precontemplation stage, the female client has either avoided reassessing her past investment decisions or has tried and given up because of the complexity and difficulty. • In the contemplation stage, the client intends to take action in the next couple of months and is weighing pros and cons. • In the preparation stage, she's considering imminent action and they need a plan of action. • In the action stage, she makes specific investment decisions. • In the maintenance stage, she is increasingly confident about her investing abilities and commits to regular investments. • The paper recommends techniques for planners to help their female clients successfully move from one stage to the next. • A person may not successfully stay on course on the first attempt. Relapse and recycling during stages occur frequently.


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