Sound familiar? The line comes from a duet between sharpshooters Annie Oakley and Frank Butler in Annie, Get Your Gun! This immortalized musical focuses on the age-old competition between the sexes. Believe it or not, one of the topics frequently brought up in the finance world relates back to this very song: which gender is the winner in the investment world?
A lot of studies done over the years to try and answer this question. Shows like AMC’s Mad Men have us primed to believe important financial decisions have always been expertly decided by a group of men in suits, chain-smoking their way to a better bottom line all the while women’s role in the marketplace. Things have advanced quite a bit since those days. According to a survey by Fidelity (1), modern women believe their male counterparts outperform them when it comes to investing. But when Fidelity then did a study on the growth of financial accounts and divided it by genders, it was women that generated a far greater return.
This then begs another question: what are women doing to put themselves ahead of the financial curve?
I’ve been thinking about this for a while, and from my experience in the industry, there are a few clear reasons.
For one, women tend to be planners. Not a big surprise here. Your average female retiree has likely juggled two full-time jobs: being a mother/wife and being an employee. Whether it’s planning a birthday party or nailing down deadlines at the office, they’ve honed themselves to become experts in looking ahead.
Women want to know details: how does this work? How will we get income? How much risk is this product compared to that one? How is the money being invested? Rarely have I ever met a woman willing to “wing it” with her family’s security in the financial realm.
On the other side of the coin, men tend to operate completely different. They’re far more likely to fly by the seat of their pants. A plan might sound great to them in theory—until then they realize how much time and details it requires. Men typically want a high return rate and don’t want to get bogged down in the little things; therefore, just show a guy growth in the account and that is all he needs.
Unfortunately, this means men are far more likely to be unsure how to correct things if all that risk they took on goes south. Or how to strategize if they placed all their eggs in a basket completely wrong for their end goals.
Anything he did, she could do better, but what is the key difference: patience.
Men want to see a fast return on investment. They are more likely to jump from stock-to-stock if it gives them a leg up. They are willing to take risks (and the trading fees that come with them), in the name of getting ahead. “Staying the course” isn’t a game plan and they can often get left behind.
Women are the complete opposite. They’ve put so much effort into planning that they know they’re going to come out ahead. In a shaky market, they’re far less likely to get cold feet or make rash decisions all because they remember they have the long-term outlook. They trade less and tend to invest more upfront. Thus, yielding a higher return from saving on trading fees, and also putting more into their base principal amount. The Street (2)
Women were often treated like second-class citizens in the finance world up until the latter half of the 20th century. Many of the worlds successful female business leaders were born into a society not willing to allow them into a male-dominated industry. Instead of accepting this answer, women have shown they will keep pushing to learn more. If I have a husband and wife team who aren’t sure about an annuity product, 9 times out of 10 the wife is going to voice her concerns first to start getting answers. The husbands are often hesitant to admit they either don’t know something or worse, need help understanding a financial concept. Women don’t share that fear and are often the first to admit they don’t know something but want to know more — and they mean it.
From the data we’re seeing right now, a congratulation has to be given to the ladies!
Just always be sure to remember that it takes two to tango. A combination of both traits from female and male investors perspectives makes for well-built plans, with each view balancing the other between growth and protection of retirement nest eggs. Even though studies show women might be winning the competition now, I encourage everyone to continue educating themselves in financial matters and to always work towards improving their retirement game plan.