Anyone who’s familiar with John Gray’s book, “Men Are From Mars, Women Are From Venus,” is familiar with the premise that distinct differences exist in how men and women communicate. Some may credit these differences to the theory that men tend to be left-brain dominant and women tend to be right-brain dominant. However, these differences can also be influenced by traditional gender roles.
According to Kathleen Burns Kingsbury, a wealth psychology expert and author of several books on women and investing, “the financial services industry was founded by men for men.” This is because historically men have controlled the wealth.
In my 20 years as a wealth manager, I’ve noticed four clear differences that impact how men and women approach financial decisions. For women seeking a financial advisor, it’s helpful to recognize and understand these differences.
1. Communication and Learning Styles
Eleanor Blayney’s book, Women’s Worth: Finding Your Financial Confidence, points out that women and men absorb and process information differently. Fundamentally, women learn through interaction with others.
While an advisor’s knowledge level is critical, communicating that knowledge to women can be a challenge for some male advisors. I’ve found that even highly accomplished and intelligent women may feel uneasy amidst complex projections and financial jargon. Most would prefer an advisor who can find a way to communicate in “plain English.”
Men also tend to be more interested in charts and graphs that illustrate a point, while women tend to prefer financial advice that connects real life examples that are relevant to her situation.
2. Financial Confidence
The greatest challenge many women face is their lack of confidence in making financial decisions. Kathleen Burns Kingsbury defines financial confidence as “a mix of basic financial know-how, a can-do attitude, and a belief in one’s worth.”
In their 2012-2013 survey, “Financial Experience and Behaviors Among Women,” Prudential found that only 23% of female breadwinners described themselves as “very well prepared” to make financial decisions compared with 45% of men.
Again, this can be due to the fact that old-fashioned gender roles have designated that men are responsible for financial matters, so the role that money played in your early life is important for an advisor to understand.
3. Risk Tolerance
Women are more likely to view money in terms of security, which is often reflected in a lower tolerance to financial risks. I frequently see this in potential clients who are holding large amounts of cash in money markets or bank accounts. Although intuitively they know that investing their money is far more beneficial in the long run, the fear of making a bad decision and losing the money has greater influence.
For some advisors this low risk tolerance may be puzzling, so it’s critical to find an advisor who will validate these fears and explain the consequences of not keeping up with inflation.
4. Life Expectancy
Women have different financial needs than men that are driven by their longevity. Women have a 70% chance of outliving their husbands. In fact, the median age for a woman to be widowed is 59. This combined with a high divorce rate means that 80-90% of women will be solely responsible for their finances at some point in their lives.
Identifying an advisor who wants to do more than just manage your investment, but wants to listen to you and understand your goals and priorities, educate you on important concepts, and encourage you to ask questions can be very reassuring. This leads to a greater sense of security, helps you focus on what matters most in life, and helps you to reach your long term goals.
Maria Cornelius is a financial advisor and Executive Vice President of Burt Wealth Advisors in Rockville, MD. Ms Cornelius works with a diverse client base including owners of privately held businesses, doctors in private practice, charitable trusts, family foundations as well as individuals and couples. Over the years, she has gained significant experience in the issues faced by widowed and divorced women. www.burtassociates.com