Probably not, but they bring different perspectives, and that could be beneficial for some clients.
Some studies have shown that women are better investors than men — they’re typically more patient and conservative, which can translate into better results.
But does that mean female financial advisors provide different investment advice than their male peers? According to top female advisors, the answer is no. When it comes to things like picking stocks or building a well-diversified portfolio, there is no gender gap. Says Meg Green, CEO of Meg Green & Associates in Miami: “Asset allocation has nothing to do with what’s under your skirt.”
That’s not to say that women interact with clients in the same way men do, she adds. Female advisors, says Green, are more likely to understand and appreciate the full tapestry of their clients’ financial lives.
“Some of my male peers will shoot me for this,” she says, “but I think a woman has a tendency to look [at financial advice] a little bit more holistically.”
A study by Barclays Wealth and Ledbury Research, released last year, essentially suggested that female psychology is better suited to investing than is male psychology. Female investors, the study found, are more likely to enjoy long-term success because they are more conservative and disciplined, and thus likelier to embrace buy-and-hold investing and to shy away from excessive risk.
Other studies back up the report. In 2001, for instance, economists Brad M. Barber and Terrance Odean examined records from a major discount trading firm and found that men were 45% more likely than women to make trades. The result: Women’s annual risk-adjusted returns were nearly 1% higher.
Those studies didn’t focus on female financial advisors, however. Female advisors interviewed for this article say that established investment theory drives their decisions, period. But Adri Miller-Heckman, the owner of Your Pink Office, a consulting firm to advisors, says there are certain situations in which investment advice from a woman may indeed differ from that of a man. “The nature of a female does not stop at the door of her office,” Miller-Heckman says. Women’s communication skills enable them to pick up nonverbal cues from clients, which may help them to make more suitable investment recommendations, she maintains.
This phenomenon can often be seen in advisors’ dealings with female clients and with couples, she adds. Suppose that a husband and wife are meeting with an advisor. The typical husband may be inclined to take charge in the conversation, perhaps to the chagrin of the wife. Because she’s adept at reading the wife’s body language, the advisor may be better able to maneuver her into the conversation. And adding the wife’s perspective may result in different investment guidance for the couple.
“When a female advisor listens to a couple, she is picking up more data and understanding more than the typical man,” says Miller-Heckman.
If the ability to see a bigger, richer picture of clients’ needs really is an advantage for female advisors, then Mary Deatherage, a managing director for wealth management with Morgan Stanley Smith Barney in Little Falls, N.J., probably exemplifies it.
Deatherage says she prides herself on taking time to deeply understand not just her clients’ goals and risk tolerance, but also their family dynamics. “They may have a disabled child, or be concerned about a bad marriage,” she explains. “A lot of times, all of this drives how the investments work.”
Deatherage allows that women are probably wired to think differently from men about money because of their eons of experience running homesteads. “I think that makes them more cautious about the choices they make,” she says, “and it’s why they see the broader picture, rather than having a laser focus.”
When it comes to serving female clients, female advisors walk a fine line between disregarding gender and acknowledging that women and men may have different priorities and concerns.
For example, Michelle Smith, co-founder and director of wealth management at Alexandra & James Advisory Services in New York City, recommends to female clients that they set aside extra cash. That’s an acknowledgment of many women’s awareness that family responsibilities might limit their long-term earnings potential.
“Men don’t lose their earning power,” she explains. “For women, it’s a survival thing.”
But investment advice itself is another matter, says Smith. “We have a more conservative planning approach to keeping a little bit of extra cash for women clients, just in case,” she says. “But our underlying capital-market assumptions are not conservative.”
Likewise, Smith points out, female clients generally want more in-depth, plain-English explanations of investment concepts, and they want to see the connections to real life.
“They don’t want to hear a macroeconomic concept without hearing what it means for their money,” says Smith.
Traditional gender roles continue to be a major factor in determining female clients’ needs, says Smith. Investing “is still, generally speaking, not [women's] strong domain,” she says. “Even if they went to business or law school and handle cash flow and pay the bills, it’s still not their 100% comfort or desire zone.”
When women are thrust into the role of overseeing investments, in the wake of, say, a divorce or a husband’s death, they want to make sure they really understand things like investment risk, Smith observes.
But Green says that she strenuously avoids generalizing about clients’ skills or inclinations based on sex.
Female clients can be sophisticated students of investing, eager to take on risk, she says, “and the most virile CEO might not know squat about investing.”
- STEVE GARMHAUSEN is a free-lance business writer based in Austin, Texas.
Posted by Steven Maimes, The Trust Advisor
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