Since January of this year, when Lawrence Summers, president of Harvard University, declared in a speech that women may be genetically less capable in mathematics and the sciences, I have wondered whether women are concerned about possibly being genetically unsuited to deal with their finances, whether they feel capable of handling their own money, and whether most advisors fully understand how best to engage women and assist them in achieving their financial goals.
In remarks at the National Bureau of Economics Research (NBER) Conference on Diversifying the Science & Engineering Workforce, in Cambridge, Massachusetts, Summers said, “It does appear that on many, many different human attributes–height, weight, propensity for criminality, overall IQ, mathematical ability, scientific ability–there is relatively clear evidence that whatever the difference in means–which can be debated–there is a difference in the standard deviation, and variability of a male and a female population.” While only a small percentage of women (and men, for that matter) may wish to be scientists and mathematicians, many if not all women should be concerned with doing well in another numbers-related area, their own finances. Summers’s remarks caused me to revisit what I’ve learned over the years about women and money.
I believe that an exploration of how women feel about their own financial prowess–and how others treat them–can provide important clues that can enable planners to more effectively understand women as clients, gain their trust, and better meet their needs.
Women are often given short shrift in financial folklore. Recently I told a successful real estate investor (male) about a woman in a financial planning class I teach, who told me about her considerable wealth and asked my opinion on some decisions she had made. His response? “Well, of course, her husband left her that money.” Why did he assume that to be the case? Most likely he was ignorant of the fact that more than half of the small businesses in this country are founded by women (as this woman had done with her very successful business and, yes, she had earned her millions herself). Certainly he did not consider the many highly accomplished women professionals and businesspersons. He probably assumed that business and professional opportunities do not exist for women and that large accumulations of money are possible only for men.
Assumptions like this may inspire a few women to set out to prove their capabilities, as a student of mine said, just “to show them.” Yet many more women are hindered by others’ scornful attitudes, putdowns, and negative assumptions. Negative remarks that are gender based can be meant to keep women in their place and generally have some success. Many women I meet tell me they are tired of fighting the prevailing attitudes, and revert to acceptable gender roles rather than continue to fight.
Several studies done in the early 1990s by financial media, including an article in Money magazine in June 1993, “What Every Woman Should Know About Stockbrokers,” by Penelope Wang, showed that just a decade ago men and women were treated differently from each other in the financial marketplace. Male and female actors of similar ages met with stockbrokers and told stories with identical financial profiles, risk tolerances, goals, and dollar amounts, yet they experienced gender-biased attitudes from both male and female brokers. Male clients were given choices, explanations, and considerable time, while female clients were offered one choice, told it was the right one, and advised to take it, quickly.
Women are now much more knowledgeable about investing, but there has been little change in their treatment by financial professionals. According to an article in Money magazine in June, 2002, “Women and their Money,” by Jean Sherman Chatzky, most women still feel that they are treated as “stupid” and “second-class citizens” by stockbrokers and financial planners.
Women who feel they are not being taken seriously are not imagining it, but are picking up on subtle or overt discrimination. Further, women often suffer in silence since those who “tell” are often deemed complainers or paranoid. In other words, the blame shifts to the victim of the biased and inappropriate behavior.
To see what women are thinking and feeling about their ability to take control of their financial lives, I created the Women and Money Quiz and submitted it to the women who attended two recent events where I was a speaker. My financial planning and investment advisory firm hosted one event. The other was a two-session class hosted by The New School, a university in New York City. Although my total sampling was about 30 women, not a statistically significant number, I felt that was enough to discern the level of confidence some women had in their financial decision-making capability as well as areas in which they believed they could improve.
The Women and Money Quiz
Question one: Do you feel capable of managing your own financial affairs? Why or why not?
One-half of the women said Yes, they feel capable; one-quarter said No, they do not; and another quarter gave a justified Yes response, but with an explanation, or No, but with an explanation.
One of the insights I had from these answers was that women did not take credit for managing their financial affairs if they had help from a professional, even though choosing the right professional is part of taking charge of a situation, just as choosing the right physician can mean you are managing your health concerns appropriately, or choosing the right school can mean you are educating your child properly. Accepting responsibility for being in charge can be a matter of confidence or of semantics. As advisors, we need to listen carefully to what our women clients are really telling us, repeat back to them what we think we’ve heard to be sure, and discuss areas that are unclear or in which we have differing opinions. Some women related their skill to furthering their financial education. Many suggested they could do better if they learned more.
Question two: What do you wish could be different in your financial life?
Most women wished they had more money, and as a reason gave their goals, such as buying an apartment, retiring, or having additional disposable income.
Question three: Are you familiar with what Harvard’s president, Lawrence Summers, said about women in science?
Only one woman had not heard of Summers’s remarks; several commented on the “ridiculousness” of those remarks and on his “Neanderthal” qualities.
Question four: Do you believe there are innate differences between men and women in science abilities?
About half the women surveyed felt that men and women had different science abilities. Many women said that while different, neither gender had better abilities. One woman said that different aptitudes gave women an advantage.
Question five: What do you think about women’s ability to handle financial matters?
This answer was unanimous. All participants in the Women and Money Quiz said that, in the words of one woman, “Women are just as capable as men.” A few expanded their responses, suggesting men seem to be more competent because they have more professional contacts in this area, or that women are as capable as men “if trained.”
Question six: Do the men in your life play any role in your financial life? If so, what type of role?