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Women and investing: Knowledge is power

Is wealth management a short-term competition?

The answer could very well depend on whom you ask.

Men may be more likely to view their financial planning as an event within a finite timeframe—taking a “we-need-to-win-now approach”—while women may be more willing to look far into the future and not so much at the current score.

“Setting goals is the key, and if you’re working with a woman, as long as she understands what the end goal is, she’s more apt to follow the process,” said Becky Gillette, co-founder and chief compliance officer at LynnLeigh & Co., a Pittsford-based wealth management firm.

Considering women control 51 percent of personal wealth in the United States, according to a BMO Financial Group study cited in literature by Wilmington Trust, their approach to the market definitely matters.

Ela Hakiel

Ela Hakiel

“I don’t like generalizations, but women tend to be a little less speculative and tend to have the patience,” said Ela Hakiel, vice president at Wilmington Trust wealth advisors in Rochester.

“Something we often see: women are really exemplary at being goal-focused, and they tend to be very good decision-makers at determining long-term goals.”

Women understand it’s a marathon, not a sprint, wealth advisers say. A downturn today usually doesn’t prompt a knee-jerk reaction of panic.

“Men want to fix it now; ‘What can we do?!?!’ ” said Kelly Olczak, co-founder and managing partner at LynnLeigh. “For a woman, it’s more, ‘What’s the money for?’ She’s got a very definitive ‘What does retirement look like?’ approach.” If I keep saving the way I’m saving:

  • Will my house be paid for?
  • Can I travel to see my grandbabies?
  • If there’s a market downturn, how will it affect my spending?

“Women are less focused on investing and more focused on life,” Olczak said.

That bigger-picture outlook often leads to investment in stable entities. A potential 12 percent return this year would be great, but what are the chances of that actually happening? That’s one reason why, for years, women were considered more conservative investors. They eschewed risk-taking.

When new clients complete their risk-assessment analysis at LynnLeigh, “a man’s risk profile is typically higher than a woman’s risk tolerance,” Gillette said.

Heather Goodbody

Heather A. Goodbody

But that general gender assessment is changing, according to Heather A. Goodbody, senior vice president at The Goodbody Group, the private banking and investment group at Merrill Lynch in Pittsford. Women are finding more opportunities to discuss investments with private wealth advisors and family members, she said. Knowledge is power.

“As one learns, and the more one learns, the more apt you are to take on risk,” Goodbody said. “Understanding (all aspects of wealth management) will ultimately lead to the level of risk you’re willing to take.”

While women may be less risk-averse today compared with the past, there is a more distinct way to differentiate between the genders when it comes to specific funds or stocks. Women are much more inclined to participate in socially responsible investing, Olczak said.

“They’re saying, ‘If I’m going to invest my money, I want to know it’s going to do good,’ ” Olczak said. “They don’t want their money in cigarettes but they may want it in alternative energy or in something that will help women businesses.

“Women realize the leverage they have. We’re mothers; we’re inherent nurturers. You can’t always do it based on goals, but for some women, socially responsible investing is still more important.”

Something that is also extremely important for women: who manages their money. They have no intention of jumping from advisor to advisor or firm to firm, so they want the right person from the start.

“Women tend to want a long-term relationship, they are exceptionally loyal,” Olczak said. “They want their advisor to know and understand their story, so women take longer to make a decision on who should be their advisor.”

Family relationships and situations also impact investing for women, since they at some point may end up being the caregiver for a parent or relative. The Institute on Aging says of caregivers in a family, around 75 percent are women.

“If women assume the role of caretaker for an aging family member, it will bring on more responsibility and probably more stress into their life,” Goodbody said. “The added responsibility can lead to reduced hours at work or leaving the profession all together.”

Thus, astute financial planning is critical so the stress regarding money is alleviated.

“And I do think the caregiver needs a support group and wellness resources,” Goodbody said.

What also happens during the time spent caring for a member of an older generation: you begin to think about your own life.

“Oftentimes, both men and women, when they go through an experience of caring for elder parents or a family member, it clarifies what they’d want to see as they age,” Hakiel said. “There are many dynamics of financial planning that oftentimes clients aren’t ready to focus on.”

That’s why regular conversations with a wealth advisor are so important for men and women, professionals say. It’s important to determine ever-changing needs and discuss what-ifs.

“Your goals evolve with your life and you will change your mind on things–and that’s OK,” Goodbody said.

“You’re not going to be able to plan for every single, solitary situation, but if you have a baseline and are setting achievable goals, if some of these unforeseen situations occur, then you’re prepared.”

[email protected]/(585) 653-4020

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