Are Women Investors Unique?

Hoover Financial AdvisorsApril 16, 2015


Forgive me, but I am going to tell you something you already know and have likely experienced for yourself: men and women are different. In general, men and women tend to view and frame the world differently, a fact that is driven largely by the composition of our brains. Published in the Harvard Business Review, one study sums up these differences nicely:

…men’s brains have approximately 6.5 times more gray matter than women’s, and women’s brains have nearly 10 times more white matter than men’s. Because gray matter characterizes information processing centers and white matter facilitates the connections among those centers, scientists theorize that those differences might explain why men tend to excel in tasks that depend on sheer processing while women show relative strength in tasks that call for assimilating and integrating disparate pieces of information.1

One direct result of this biological difference is how women approach financial planning and investing.

There are a handful of challenges women face in successfully attaining their financial goals, though they have also begun making tremendous strides in their ability to respond to these specific concerns. With uniquely desired outcomes and approaches on how to achieve them, the services, advice, and solutions financial advisors provide to women should reflect and directly address these varying needs and thought processes.

Habits and Thought Process

Numerous studies have shown that women are getting more of what they want in today’s financial and investment realm, but not quite what they need.2 While the increased access to financial services is encouraging, advisors should pay close attention to the handful of factors influencing this need versus want disparity. One of the most difficult items to address accurately – but arguably the most important – are psychological barriers. While 92% of women want to learn more about financial planning, only 47% say they would be confident discussing money and investing with a financial professional on their own.3 Most shockingly, 50% of women who use an investment firm have not spoken with a representative there and are less likely to discuss financial topics in general with family, friends, or an advisor than traditionally “taboo” topics (e.g., health and parenting issues, spending habits, etc.).4 Some of this hesitation is a product of feeling intimidated, desiring more knowledge, and believing the topics are too personal to discuss openly.

According to Pershing’s Women: Investing With a Purpose study, women investors on average have preferences and behaviors that differ from their male counterparts. Generally speaking, women tend to be less confident in their ability to make successful investment decisions and are more conservative than men. Furthermore, while the overarching financial goals for men and women rank similarly in terms of order, women tend to place higher importance on maintaining current lifestyle and covering health care costs for themselves and others than men by a fairly wide margin.5 Women investors also tend to prefer structuring savings and investments into buckets for specific purposes that relate not only to their own security, but also to the well being of others (think legacy funding and college savings).

Gender-Specific Hurdles

In addition to personal preferences and views, women must also plan for a variety of unique external challenges that men generally do not face. Despite some improvements in income parity, women make nearly one-third less in total compensation than men over their lifetime. Both men and women tend to see the same growth in income until the age of 30, at which point women’s income growth rate begins to slow. On average, women’s pay peaks at age 39, while men continue to see salary growth until age 48.6 Part of this income inconsistency can be explained by gaps in employment and career choices. However, this income gap becomes troublesome when one considers the impact on total savings and how long funds must last in retirement. The bottom line: reduced lifetime earnings leads to lower total savings.

When women retire they are projected to spend 15% more time in retirement due to their longer life expectancies (2.3 years more than men), placing a heavy burden on already constrained savings levels.7 Compounding the considerations posed by increased longevity are increased tax rates and higher medical costs. Since 80% of women are expected to be single in their final years, it is likely that they will have a higher tax rate during this time than during their married years.8 The impact of chronic or terminal illnesses may also be more pronounced for women as a result of this increased life expectancy. One study found that while 27% of investors have a long-term care policy, only 18% of women with high income have such a policy.9 These two factors result in added pressure being placed on financial resources for an extended period of time.

Encouraging Data

Now, for some good news…while it is true the average woman still earns less than the average man, the trends are positive. Women are closing the gap, garnering 93% of the hourly earnings of men (between ages 25 to 34).10 Perhaps most interestingly, single, childless women are now out-earning men by 8% in metropolitan areas.11 Women also manage nearly one-third of all businesses and control roughly two-thirds of annual spending in the U.S.12 This marks very good progress indeed!

On the accumulation side, a recent study supported by Fidelity Investments found that women at every income level contribute a higher percentage of their salaries toward workplace retirement savings plans than their male counterparts.13 This same study found that there appears to be a huge desire for additional involvement and education, with three in four women indicating interest in learning more about money and investing and 70% of women motivated to work with a financial professional.14

Finally, the financial services industry has seen a marked increase in its awareness of women investors. This direct attention bodes well for future shifts in industry practice and understanding.

Change on the Horizon

As financial professionals, we should be engaging every client on a regular basis to ensure they feel comfortable and are getting what they need and want from their advisory relationship. It is important (and ok!) to acknowledge that women’s purpose for and approach to investing may be different from that of men. By thoroughly understanding goals, setting realistic investment expectations in relation to risk tolerance, and accepting that the metrics used to evaluate success may vary between men and women, we allow ourselves to build more meaningful, successful relationships. Working to place care and thought into tailoring advice and solutions to meet the distinctive needs of women investors will help to bridge these differences and produce exceptional outcomes.

It is our hope that all clients and prospective clients of our firm feel empowered to bring their questions and concerns to the table. We are here to help all investors define success on their personal terms, not ours.



1 – Benko, Cathy, and Bill Pelster. “How Women Decide.” Harvard Business Review, 1 Sept. 2013. Web. 13 Apr. 2015.

6 – Faulkner, Craig. “Targeting Female Clients? Read This First.” Financial Planning, 5 Mar. 2015. Web. 26 Mar. 2015.

3, 4, 13, 14 – Fidelity Investments. “Money FIT Women Study: Executive Summary.” Fidelity Investments, 2015. Web. 18 Mar. 2015.

9 – Perkins, Maddy. “6 Planning Differences for Female Clients.” Financial Planning, 19 Mar. 2015. Web. 25 Mar. 2015.

2, 5, 7, 8, 10, 11, 12 – Pershing. “Women: Investing With A Purpose.” Pershing, 5 Mar. 2015. Web. 25 Mar. 2015.