It doesn’t take a Y chromosome to manage money.
So says multimillionaire entrepreneur Nina McLemore, who at the age of 57 is about to launch her own high-end fashion business for businesswomen.
“Women can and should be actively involved in their finances,” said the partner and founder of New York-based Regent Capital Partners. “In fact, the best investor I know is a woman.”
McLemore began building her personal fortune when she founded Liz Claiborne Accessories in 1980. She later quit to get her MBA at the age of 48 and then went into the venture capital business before deciding recently to return to the apparel arena.
As active as she is in building her personal wealth, McLemore is just as active in managing and preserving it, describing herself as a “hands-on, decisive” investor.
If that sounds more like a male than a female approach to investing, you’re thinking in outdated stereotypes. McLemore’s style of money management is typical of high-net-worth women, according to a recent study by the Center for Women’s Business Research in Washington, D.C.
In fact, there is little difference between high-net- worth women and men–those who have at least $5 million in assets–when it comes to investing strategies, expertise and goals, according to the study.
“This study busts a lot of myths about high-net-worth women as investors,” said Sharon Hadary, executive director of the center, whose mission is to support women business owners worldwide.
“The trend, which has gained momentum over the past two decades, of women moving into leadership positions in business and entrepreneurship continues unabated,” Hadary said. “They have created both business and personal wealth and have become increasingly financially sophisticated. Now they want to carry that leadership into managing their wealth.”
According to the study, “Active and Engaged: The Investment Goals and Strategies of High Net Worth Investors,” 53 percent of both women and men said they are the primary decision-maker when making investment decisions and they spend similar amounts of time on investing activities: about 11 hours a month.
All ages represented
The 107 women surveyed represented all age ranges, including 26 percent age 65 and older. They were well-educated and almost two-thirds were working at the time of the survey. A third of the women (compared with 16 percent of men) were either current business owners or had been business owners sometime in their career. More than half were married and 71 percent had children.
As for confidence in their investment knowledge, women appear to be a shade more confident, though the numbers again are nearly identical across the sexes.
Forty percent of women surveyed said they know almost everything they need to know, compared with 37 percent of their male counterparts. The remainder of respondents were at the opposite end of the confidence spectrum, saying they only know some or very little of what they think they need to know.
Even when it comes to risk-taking, there is little difference. Seventy-four percent of the women surveyed and 79 percent of the men described themselves as moderate risk-takers.
The study results didn’t surprise Diahann Lassus, a certified public accountant, certified financial planner and co-owner of Lassus Wherley & Associates, a wealth management firm in New Jersey and Florida.
The findings mirror what Lassus sees in her practice.
“Most women who are actively involved in building their wealth want to be actively involved in investing and preserving it,” said Lassus, whose average client has financial assets of about $1 million.
“In the last 10 to 15 years, more and more women have been recognizing that they are capable of making decisions and have been taking charge of their finances.”
Despite this trend, Lassus pointed out she still sees some women and even some men who don’t feel comfortable with their investment abilities. Her advice to them: “You are capable. This isn’t rocket science. It’s a matter of making the commitment, taking the time to learn and working with advisers to help you.”
“The biggest mistake women make is not getting involved in their finances, not trying,” said New York entrepreneur Deann Murphy. “The first step is believing you can do it–and everyone can–and then doing it.”
Ask lots of questions
Murphy built her own wealth “step by step,” starting a craft and hobby manufacturing business in her basement with a girlfriend. By the time they sold the business in 1998, it had sales of more than $12 million.
“I wasn’t a sophisticated investor in the beginning, but I worked hard to learn,” said Murphy. “I wasn’t ashamed to ask questions, lots of them.
“I don’t love managing my money. But I realize it’s a responsibility I have to myself and my family.”
Still Murphy said she learned about investing by going to seminars, reading newspapers and financial publications and attending community college classes. She also hired an investment adviser, whom she found through a personal reference. And all the while she asked questions.
The steps Murphy took, anyone can take, Lassus said.
“You don’t have to be a millionaire to learn about investing. In fact, investing is very similar to managing a household budget,” she said.
Hadary of the Center for Women’s Business Research agreed. “What all women, no matter what their net worth, can take away from this study is that they can and should be actively involved in their finances and investing.”
Rich or not, taking charge of finances is your duty
Investing is all about attitude, says entrepreneur Deann Murphy. “You have to believe that you have the right to, that you can and that you should manage your money.”
And, Murphy adds, investing isn’t a sport just for the rich. “It’s really a responsibility and a part of life, no matter how much money you have.”
For the novice investor who wants to become more confident, Murphy recommends reading magazines like Money, taking a college class, joining an investment club or group, and attending financial seminars, many of which are offered free through banks or investment houses.
Money coach Marcia Gerzan, who owns Bridgeway Life Ventures in Glen Ellyn, echoes many of Murphy’s recommendations.
For 12 years, Gerzan, who does not sell financial products, has educated her clients about basic financial terminology and investment alternatives. She also teaches a course on money at College of DuPage.
“Somewhere along the line, we in the business have projected a sense that investing is complicated,” she said. “It’s really not that complicated. Just break it down into simple steps.”
Frequently one of those steps is to hire a financial adviser. Gerzan and Diahann Lassus, CPA and certified financial planner, offer these suggestions for choosing an adviser:
– Obtain recommendations from family, friends and professional organizations, such as the National Association of Personal Financial Advisors or the Financial Planning Association.
– Interview face-to-face at least three advisers whom you have already prescreened for their basic qualifications, such as a certified financial planner designation.
– Find out what their services will cost and how their fees are determined. The most common types of compensation are fee-based and commission-based; each has its benefits and drawbacks.
– Ask how often they meet with clients and how they handle phone calls. Lassus tries to meet with her clients at least annually and personally responds to phone calls.
– Get a sense, during the interview, whether the adviser is really listening to you and understanding your financial goals.
– Ask whether they have a bias for or against particular financial products, and why.
– Find out the line of succession for handling your account. “You want to know if they get hit by a car or are ill, who is going to be watching your money,” Lassus said.
– Finally, ask why you should hire them. How will their services make a difference in your finances?
