Financial decision-making is also influenced by gender differences, according to psychology professor Paul Greenberg. Citing the work of Dr. Shelley Taylor, Greenberg said, “We know that the classic male stress response of fight or flight is different from the female stress response of tend and befriend.” For advisors in particular, he added, “We can see gender differences in the number of trades and risk aversion. Men can be more motivated by euphoria-driven behavior.”
Wealth psychology specialist and author Kathleen Burns Kingsbury brings together gender-related findings from a number of respected brain experts in “How to Give Financial Advice to Women: Attracting and Retaining High-Net-Worth Female Clients.” We were particularly interested in Kingsbury’s quotation from “The Female Brain” by neuropsychiatrist Louann Brizendine, M.D.: “Although male and female brains are 99% the same, the 1% gender difference in brain chemistry is evident in every cell of the body.”
Brizendine continued, “There is no unisex brain […]. Girls arrive already wired as girls, and boys arrive already wired as boys. Their brains are different by the time they’re born, and their brains are what drive their impulses, values and their reality.”
This difference is clear in male and female investors. Men measure success in terms of beating a benchmark or their friends. As Kingsbury put it, winning “makes their brains happy.” To women, investment success isn’t about winning or losing, but about meeting their life goals and objectives—in other words, surviving and thriving.
Several physical differences in the brain tend to make women more relationship-oriented and more focused on caregiving, passing on legacies to the next generation and using wealth to better the community. These differences involve three areas of the brain:
- The amygdala and limbic system (center of emotion, fear and aggression; responsible for “fight or flight”). The limbic system is larger in the female brain than in males’. Scientists hypothesize that this may contribute to women feeling responsible for caring for those they love, even at their own personal and financial expense.
- The corpus callosum (connector that transmits signals between the left and right sides of the brain). Women have more connections between hemispheres, accounting for their proficiency in multitasking and verbal communication. Men’s more limited number of connections makes them less verbal, but enables them to concentrate more fully on individual tasks.
- The hippocampus (hub of emotion and memory formation and recall). This too is larger in women than in men, perhaps accounting for women’s greater ability to store and remember details.
As a corollary to the last point, Kingsbury suggested that advisors take more time to listen when women share details of their lives, choices and goals. When you refer to specifics of a woman’s situation, the perception is that you genuinely care about her and her future, which can contribute to building a stronger relationship.
This is an article that accompanies Investment Advisor's February 2013 cover story, "Double Think" on the latest findings in brain research and how advisors can use those findings to better work with their clients.