A century ago, E. H. Rollins & Sons, then one of the foremost investment houses in the country, put out a book whose stated purpose was to educate women about investing. The title alone speaks volumes about an era when women had yet to gain the right to vote: "A Financial Courtship."
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The firm — whose campaign was the subject of a Sept. 14, 1912 American Banker
"Almost all women have some general knowledge of investment matters, just enough indeed … to be a source of danger rather than of safety," the ad said. "This may explain why so many women are the victims of fraudulent finance."
Today, generalizations are still made about women investors, but they are grounded in observation rather than stereotype.
Dune Thorne, managing director at Silver Bridge, a money management firm in Boston, says she does not find women to be any more risk-averse than men — but they generally do not want to invest in something they don't understand.
"Women first want to know that they have enough" to live on, says Thorne. "There's the 'bag lady' syndrome that so many women have." The next priority, she says, "is understanding what to do with what they have left. If they're invested in stocks, they want to know the companies and understand what they do; if invested in bonds, they want to understand the municipal issues."
Thorne, who prior to joining Silver Bridge was director of investments for Circle Financial Group, a network of women working in finance and wealth management, describes female investors as masters of compartmentalization. In her view, women tend to consign finances to "a safety bucket, a market bucket, and an aspiration bucket."
Sharon Oberlander, a wealth management advisor at Merrill Lynch, sees a hands-on tendency among women investors.
"Women really like being paid while their funds percolate in investments. [They] also understand that it is not what you make, but what you keep… so tax efficiency and minimizing taxes is also important," she says. "They also like investments that they can add to periodically by dollar cost averaging or by reinvesting dividends. They like benchmark ETFs because they diversify the single-stock risk."
Other examples of investments favored by women today include high-quality growth stocks, corporate and municipal bonds, dividend-paying stocks for total return, CD's and savings accounts, and fixed-income instruments of all kinds. But the same thing that makes them educated investors can sometimes also hold them back, Oberlander says.
"Women often have the desire to get enough information that confirms they are making the 'right' decision. That is often not possible since so often the best opportunities do not have absolute guarantees" and that can be a cause for procrastination.
For all of these reasons, women "crave" trusted advisors who share their views on investing, says Thorne. "Since 2008 so many families lost so much money so quickly, that a lot of smart women who were not financially savvy realized they need to have their own perspective at the table."
Still, one of the underlying assumptions in the ad from 1912 — that "economy, thrift and buying ability are native qualities more highly developed in women than in men" — may have some validity today (well, at least the "economy" and "thrift" parts).
According to a recent Fidelity Investments study of 648 married couples with at least $100,000 in investable assets, 21% of wives said they are more interested in preserving wealth than in increasing it, and are willing to settle for lower returns, compared with 16% of husbands who said so. Further, only 5% of wives described themselves as investors rather than spenders or savers, compared with 20% of husbands. The
Gergana Koleva is a freelance writer in New York.
