Why Women Make Better Investors and Family Stewards
- Robert Dunn, CFP®
- 3 days ago
- 4 min read
Key Takeaways
Research shows women investors outperform men, albeit slightly, thanks to behavioral discipline rather than stock-picking skill.
Key wealth-protecting behaviors include patience, diversification, emotional stability, and discipline vs. reactive decision-making.
Overconfidence, excess trading, and emotionally driven decisions are the greatest threats to long-term wealth — especially for affluent families.
Couples (and sometimes their advisors) tend to defer to the husband when it comes to making important financial decisions. But research shows that women, on average, outperform men as investors and as family stewards. The margin isn’t huge, but it’s worth noting. Women aren’t necessarily better stock pickers or forecasters. Instead, they’re more likely to demonstrate rational behaviors that protect and compound wealth over time. When looking at very large data sets, women, on average, tend to be more patient, more disciplined, better diversified, and less reactive than men when it comes to money matters.
I know plenty of successful couples in which both partners share these attributes. I know other couples in which the husband is more patient, disciplined, and less emotional about financial matters. So, let’s not get hung up on gender differences. I just want to stress that couples should be very honest with each other about which partner is more likely to possess these traits and ensure that their financial plan remains well diversified and not subject to short-term, emotionally driven decisions during times of stress.
In families managing significant wealth, behavior is often the greatest risk to and the greatest opportunity for their assets and legacy. For affluent families, the greatest threat to wealth is rarely market volatility. It is behavior, overconfidence, impatience, concentrated bets, or reactive decision-making. We have a handful of couples who struggled at first to transition from speculative investing to a fundamental structured investment strategy. In these particular cases, the women were more likely to admit they didn’t know something; the men were more likely to say they understood even if they don’t. In one case, a client came to us with massive carry-forward losses and a portfolio filled with penny stocks and no apparent structure. In another case, a client wanted to change their allocation constantly from more conservative to more aggressive based on the daily headlines or their emotional state. Neither of these clients would be able to generate meaningful wealth if they were left to their own investment thesis.
It can be a struggle to get clients to listen, but we do not give up. It would be easy to bend to the emotions of these clients, but our team knows they must use their knowledge of the markets and help educate clients in a way that is clear and never over their heads. Even after years of evidence, some of these clients still struggle with old-school beliefs. The wives ask a lot of very good questions and are often grateful that their husbands are not alone in the couple’s investing and wealth-building endeavors. Some clients come to us after years of being do-it-yourself investors and planners. They were not terribly confident, but hesitant to come to a professional because they had been told, “It is so easy a baby can do it.” Frankly, this messaging is very damaging. It looks at one aspect, the ability to execute on a trade. It doesn’t explore the research, complex planning, and behaviors that contribute to the decision-making process. The clients who are in this situation are often the most grateful for our help. They had an inkling there was more to it, and now that it’s being managed by Novi, the gaps start to fill in, and the confidence is restored.
Interestingly, decades of data suggest that women investors, on average, modestly outperform men — largely because of behavioral discipline. For instance, Fidelity Investments’ 2021 Women and Investing Study found that women investors achieve positive returns and, on average, surpass men by 40 basis points (0.4%) annually. According to Fidelity, which studied 5.2 million accounts over 10 years, it wasn’t because women were savvier stock pickers or better market timers; it was because they traded less frequently and were more disciplined.
Likewise, a 2001 Barber & Odean study of 35,000 brokerage accounts found that men, on average, traded 45% more frequently and that excess trading reduced men’s returns by approximately 1.4% annually. These differences appear modest for one year, but consistent exposure can be very damaging and driven primarily by behavior, not by access to information.
Still not convinced? Women outperformed men by about 1.8% per year, according to a 2018 Warwick Business School of 2,800 investors. Like the Barber & Odean study, they found women were much less likely to trade actively than men. And a Vanguard study found that women, on average, log on to their trading accounts half as much as men do. The lesson isn’t about gender. It’s about stewardship.
Why This Matters More for Affluent Families
Affluent families often have access to certain investment opportunities that the general investing public does not. That’s because they can satisfy the “Accredited Investor Rule.” Basically, it means they can afford to lose their entire investment, and it won’t impact their lifestyle or their ability to meet their financial obligations.
The feeling of exclusivity can be a draw for high-net-worth families, but it doesn’t always result in the best outcomes. Due to some of the following additional factors, high-net-worth families can face even larger differences in potential success:
Overconfidence fueled by prior success.
Pressure to “do something” during volatility.
Generational disagreements about risk.
By contrast, let’s look closer at positive behavioral traits that help compound family wealth across generations:
Patience. Resisting unnecessary action preserves tax efficiency and long-term compounding.
Discipline. Following an investment policy statement instead of reacting to headlines.
Diversification. Avoiding overexposure to a single company, sector, or idea even when it feels familiar.
Emotional Stability. Staying invested during downturns and avoiding panic decisions.
For families stewarding significant capital, these behaviors protect not just portfolios but legacy.
The Broader Insight for Family Governance
Research suggests that humility and process consistently outperform conviction and activity. Families that sustain and grow their wealth over generations tend to:
Prioritize governance over impulse.
Emphasize education over speculation.
Reward stewardship over bravado.
I have found that the best investors — and the best family stewards — regardless of gender, are patient, disciplined, diversified, and less reactive. In multi-generational wealth, temperament is strategy.
Conclusion
If you and your spouse are finding it difficult to come to a consensus about your investing, wealth-building, or retirement decisions, contact us anytime to discuss. We’re happy to help.
ROBERT B. DUNN, CFP® is the President and Managing Partner of Novi Wealth
