, Newburyport, MA

June 7, 2011

Gender differences in investing

Donald E. Askey
Money Matters

The worlds of Venus and Mars could not be farther apart than when matters of money and finance arise.

My observation over decades of serving both genders in our work as financial planners and investment advisers is that generally women make better long-term investors, but they regularly miss opportunities by protracting their decision making. I don't mean to suggest this is necessarily good or bad; it is what it is.

I make no judgments here about what should or should not be, rather a brief explanation of behaviors that, when recognized, may give us a clearer understanding about our reaction to money-related issues. My observations in the field have recently been confirmed in a study by MassMutual's Retirement Services Division.

Women tend to be more apprehensive or hesitant about making money decisions and, therefore, are likely to take more time to decide or to fail to act altogether. We can speculate about the origin of this behavior. It may be a male-dominated society has pushed women aside, especially regarding bigger-ticket, investment-oriented decisions in family finance. Perhaps women are uninterested in some of the competitive sports-like aspects to investment discussions. Wherever this apprehension or hesitation comes from, women take more time to decide.

Men, on the other hand, can be more impatient and impetuous about money decisions. Men will frequently shoot from the hip.

Taking too much time to decide may lead to missed opportunities. Taking too little time to decide may lead to failed choices. But men are less concerned about making a "bad" decision than women. Men are willing to take a shot and reverse course later, if necessary. Women take a longer view and tend not to easily change course. Women are a little more cautious.

Women worry more about not having enough money in retirement than men, according to the MassMutual study. Women have commonly earned less, will receive less from Social Security and will live longer.

Men have greater confidence that a down market will rebound than women do. This probably influences the desire for most women to invest more conservatively. Again, women are less likely to view investing as a competitive sport. They prefer to arrive where they're going safely and soundly and not outperform others on the same course.

In couples, women may frequently defer to their husbands. Women may manage the family checkbook and day-to-day money, but husbands oversee the bigger-ticket investments. Women, therefore, focus more on income, whereas their husbands focus on longer-term accumulation. An income-oriented focus will naturally be more conservative.

More often than not, women are willing to admit what they don't know and, sometimes, are unwilling to make decisions until they feel they know absolutely everything about a subject. Women naturally gravitate toward investment education.

We see more and more women wresting control of investments, but the gender behavior gap remains significant. Working with an adviser keenly sensitive to these differences is a way to ensure our gender-based behaviors and prejudices don't get the better of us.

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Donald E. Askey, a Certified Financial Planner professional and president of Provident Advisory Group, is a registered fee-only adviser, headquartered in Newburyport. For questions, visit