Editors' pick: Originally published Jan. 27.
While the differences between men and women may be many, is patience the key when it comes to why women see a better return in investing than men?
“In one word, yes,” said Rebecca Schreiber, a certified financial planner and co-founder of Pure Financial Education. “I have seen first-hand that women are more successful investors than men, because they are less driven by impulse when making investing decisions. Women are more interested in seeing their investing strategies as part of their entire personal finance picture, while the men are more interested in the short-term ‘win.’”
In the 2015 release of its latest investing results, investment site SigFig showed women once again did a better job than men of investing, with a median return of -2.2%, while men showed a -2.5% return. One possible cause according to the study was men turned over their portfolio 44% more than women. Overall, portfolios where 10% or less of its entire value was turned over fared much better — -1.8% return — compared to portfolios that saw 100% turnover, which saw a -5.6% return.
Breanna Reish, a certified financial planner with Tricord Advisors, said she has seen firsthand in her years of experience the difference between men and women.
“In meetings, men tend to be the lead on the topics of investing, they show more confidence on the subject and they are the trigger-puller,” Reish said. “When the market is volatile, we get the most pull-back from men, and it's mostly men that call and want to sell.”
Reish added that while female clients are informed and educated and often know a lot about their finances, they often seek a professional’s advice to keep the details in order and to coach them along the way.
“A lot of our female clients are the data keepers, they bring together all of the detailed numbers and papers we need in order to build comprehensive plans,” she said. “Our male clients are a little detailed oriented about what is in their accounts. Women do worry about market volatility and the economy, but we often don't rush to make a change. A majority of the women that I have encountered, including myself, do our best to remember the long-term goal and the big picture.”
Schreiber added she doesn’t believe that this is an intrinsic, DNA-driven difference, but that the investing industry has taught men to invest this way, pitching individual stocks and short-term solutions.
“One of the main reasons that the financial industry is faltering in reaching women is that they aren't used to communicating investment strategies in a long-term, big-picture way,” Schreiber said. “Once the industry catches on and men get to benefit from this approach, they will also enjoy more personal investing success.”
There also may be a difference in what the two sexes are seeking, said Richard Reyes, a certified financial planner with Wealth & Business Planning Group. Reyes said women strive for security and comfort more than their male counterparts.
“They seem to analyze the future better maybe not from an analytical stand point but a feeling of security,” Reyes said. “Men are more about survival and get very emotional and anxious about things. Women are more calculating and less emotional about investing, because their goals are different.”
Reyes also said he believes when it comes to money, women tend to educate themselves and get a good overall understanding.
“They have a good grasp, but they don’t really have the desire to get deep down in the weeds about it,” Reyes said. “Men on the other hand love to get into details that don’t even matter and in their efforts to outdo themselves.”