We are in the midst of a massive shift in asset control. While women control only $11 trillion in wealth today, they are expected to control nearly triple that amount by the end of this decade.1
And that's a good thing. Why? Because women demonstrate well-documented success when it comes to managing money.2 3
Through meeting with thousands of women interested in investing, Tracy Bell, Director of Equity Strategies for First Horizon Advisors, Inc., helps women discover what she calls their “superpowers" — common traits that help female investors succeed in investing.
Sometimes, accessing those superpowers requires getting past a stubbornly persistent phenomenon known as the confidence gap. Back in 2014, a majority of women surveyed by Merrill Lynch said they knew less than the average investor.4 Fast-forward seven years to 2021, and only a third of women surveyed by Fidelity said they felt confident in their ability to make financial decisions.5
By asking women what would help them to a place of confident investing, Bell has discovered one simple step: “Their number-one answer is having people they can talk to whom they can trust to learn more about this."
Usually that means working with a financial advisor. Bell recalls an 80-year-old widow she worked with, whose husband's death left a complex estate, including a privately held business and multiple trusts.
“He always did this. I don't know anything about all this," the tearful client told Bell.
Working as part of a team that included a certified public accountant and a trust officer, Bell helped the client learn about her assets, piece by piece. Now 92, the client is more than simply handling her assets — she's an active and informed investor.
“This lady ended up joining an investment club," Bell recalls. “It's not that she couldn't understand it — she just never had learned about it. That was a major confidence gap, but she closed it pretty quick."
Once women get started investing, these are the superpowers that Bell's client and other female investors discover in themselves:
Superpower #1: Women Ask More Questions
While lack of confidence can make it hard to get started investing, overconfidence — which sometimes afflicts male investors6 — can be a problem too. Overconfident investors may not ask all the questions they need to before putting their money in the market.
“Sometimes lack of confidence can be a good thing because you're gathering knowledge," Bell explains. "You want to be sure you're making good, safe decisions that take care of your family longer term."
Superpower #2: Women Invest With a Cool Head
Contrary to the stereotype, research has found that women are less likely than men to let their emotions rule their portfolios. Psychiatrist and author Richard L. Peterson posited that women, being better in touch with their feelings, are more able to avoid emotionally driven investment mistakes.7
In Bell's experience, she doesn't see women using investing as a way to compete with others or feed their egos.
"Women are approaching financial planning and investing from a safety and security standpoint. They're not approaching it from the position of 'Hey, I want some stock pick I can brag about to my friends.'"
Superpower #3: Women Stay the Course
When markets are choppy, some traders instinctively want to sell their investments.
“Last year, the market at one point was down more than 20%. I had people right and left who I was talking off the ledge," Bell recalls.
But historically, women have been less likely than men to do this. A Vanguard study showed that in the market turmoil of early 2020, accounts held by female households had fewer monthly trades than male households.8
This gels with Bell's observation that the female investors she's worked with tend to invest for the long term.
“If you have really thought long term, and you understand that short-term volatility is short term, then you tend to leave it alone," Bell says.
Superpower #4: Women Think Holistically
For years, Bell has spoken with women about investing at events all over the Southeast.
“Very rarely will I have a woman come up to me and ask for a stock pick," she says.
Instead of looking for that one home run stock to buy, the women she speaks with are thinking about their family's big picture beyond the stock portfolio.
“They are planning long term for retirement and for education expenses. They are planning for a vacation they want to take five, 10 years down the road. They're planning insurance needs," Bell says. "If they have a taxable estate, they're doing estate planning and trust planning. They're thinking about how the pieces all interact together."
How First Horizon Can Help
Like Bell's widowed client, new investors do best when they work with a team. Some women who aren't involved in their household's finances may already have a team that they haven't met yet.
“If your family has a financial advisor, then you certainly need to be involved in those meetings," Bell advises. “Get yourself involved so you can start learning about what's going on and why."
For other households, maybe there is no team in place. In that case, whether you are single or part of a couple, you can take the first step, even if you feel you know nothing about the financial world. First Horizon can help you assemble the team you need and answer all your questions to get started planning.
“Time is one of your greatest allies when building wealth," Bell says. “The sooner you start, the better your outcomes are likely to be.
1 McKinsey & Co. “Women as the next wave of growth in US wealth management.” Published July 29, 2020.
2 Fidelity Investments. “2021 Women and Investing Study.” [PDF] Accessed July 12, 2023.
3 Institutional Investor. "Female Hedge Fund Managers Outperform Male Counterparts.” Published Nov. 9, 2009.
4 Merrill Lynch. “Women and Investing: A Behavioral Finance Perspective.” Published Fall 2014.
5 Fidelity Investments. “Maximizing a Major Opportunity: Engaging Female Clients.” Published 2015.
6 Brad M. Barber and Terrance Odean. "Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment.” Published September 1999.
7 ABC News. “Women Make Better Investors Than Men, But Why?” Published November 28, 2011.
8 Financial Times. “Women trade less often than men, with better results.” Published April 2, 2020.
