Risk tolerance and investments of business owners


Wong, C. & Hanna, S.D. (2007). The risk tolerance and stock ownership of business owning households. Financial Counseling and Planning, 18(2), 3-18.

Brief Description: This study examined the risk tolerance and stock ownership of three types of households: non-business owners, those that own and manage a business, and those that own but do not manage a business. Non-manager business owners were more likely than others to take risks and hold stocks, and manager owners were significantly less likely to hold stocks than non-owner households.

Implications: The fact that business owners had a higher risk tolerance level than non-owners should be taken into account when discussing investment topics with financial advisers. In addition, these individuals might be best served with comprehensive financial planning advice, including insurance and estate planning, than advice about investment alternatives alone. The adequacy of their investment diversification also needs to be reviewed.