Remember Mars and Venus? Apparently, men and women are still living on different planets when it comes to personal financial planning, according to Kimberly Foss, CFP, founder and president of Empyrion Wealth Management. Foss, whose book, Wealthy by Design: 5 Steps to Financial Security, comes out this spring says there are vast difference in the way women and men regard financial advice and make financial plans.
Statistics tell us that women are better investors than men. Foss points out that in various studies, women's portfolios outperform men's over time by 11-18%. "There are many reasons. Women are more patient and we're more in touch with our emotions. That gives us an ability to separate emotions from decision making," Foss says.
On the flip side, women can be intimidated by investing because they lack confidence, or the knowledge of the field that can build confidence. "We haven't been doing it as long as men," Foss says. "It's not woven as deeply into our DNA."
Men have more ego invested in their portfolio than women do. "Men view wealth as a means of getting richer. They equate it with power," Foss says. "Women see wealth as security. That's why we don't have as much ego involved. Men are never satisfied. They want more more more. Women ask, 'Do I have enough?' To put food on the table, pay for college or fund a comfortable retirement."
Generally, men look at investing as a competitive game, while women don't tend to make decisions trying to do better than the next guy. Patience pays off; slow and steady wins the race. In a Harvard study, women doctors had 1-2% highter portfolio returns than men doctors.
Women have more discipline, a marked advantage when the going gets tough. "When the market is at crisis, women stay the course, they stay with their plan. Men bail out, trade more," Foss says, noting that male investors dump stocks at a 49% higher rate than women in a crisis situation like 2008.
Women are information gatherers, constantly asking questions. This can be a negative if it causes paralysis – you don't make decisions or even get started because you never feel you have enough information. Conversely, men may be over confident and do irrational things, but right or wrong, they make a decision.
"One of biggest detriments for women is they can't get started because they feel overwhelmed," Foss says. "They have a career and they're running a household. They don't have the time or energy to take on investing too. I have a client who's an anchor on TV. She told me she hasn't looked at her 401(k) in five years. 'My husband takes care of it,' she says."
Women have the raw materials – patience, self-control, discipline – to become crackerjack investors, if we can just get started. "Women control $14 trillion, over next seven to 10 years it will become $22 trillion. We have the keys to wealth and we have to act." Foss says. Step one is to get familiar with the terminology to conquer feeling overwhelmed. "You can go on the website LearnVest, which is great for learning the basics of investing. Feed the Pig has great personal financial planning videos that are funny but get the point across." If you don't want to pay attention, hire a professional who can help educate you and offer sound financial advice. Whichever route you choose, the important is to get yourself launched.
Read more about women, men and investing on Foss's company's website.