Having worked in the male-dominated field of finance for over 10 years now, I’ve seen many positive changes take place for women.
Today, Australian women are attending university at record levels, making their earning potential higher than ever. More of us are also entering the workforce and remaining there for longer than previous generations of women, meaning our superannuation balances are on track to leave us in much better stead for our retirements.
We’re also seeing women from all generations improving their financial literacy and confidence around money, which is translating into very real and tangible benefits when it comes to growing personal wealth.
After all these years though, one thing that I still so often see is that when it comes to seeking advice on big decisions or long-term financial strategies, women are still deferring to the men in their life – be it their fathers, their brothers or their partners.
Of course, this isn’t a bad thing if these people happen to be qualified to give you advice tailored for your goals and that works for your strategy, but that’s rarely why it happens.
While women seeking advice from men no longer surprises me, what does still leave me shocked is just how rarely I still see the reverse happen. And in failing to realise what an incredible financial asset a woman’s opinion can be – especially when it comes to long-term financial decisions – men are seriously missing out. Let me explain why.
It’s easy to forget that until relatively recently, it wasn’t uncommon for Australian households to see mums work part-time or not at all.
For starters, men tend to have a much greater appetite for risk. When money is involved, that plays out in a few ways. We know that men are more than twice as likely to invest in cryptocurrency, a highly volatile market that some economists say is perhaps the biggest Ponzi scheme of our time.
We also know that men are much more likely than women to engage in all forms of gambling, and are twice as likely to become gambling addicts.
When it comes to the stock market, which is historically famed for its hypermasculinity and volatility, men tend to trade more frequently, while we see that women are generally much more confident in staying the course.
This calmness in maintaining their share allocations is proven to pay dividends eventually – so much so, that research from the US-based Fidelity Investments that looked at 5.2 million accounts over a nine-year period from 2011 to 2020 found that female investors beat men by 40 basis points when it came to their returns.
But despite this and countless other studies showing the same patterns of risk, and how women’s tendency to be more aware of risk can be extremely complementary to long-term investing strategies, we still see the same old patterns playing out across heterosexual relationships when it comes to who makes the “big” decisions.
Last year, YouGov polling found that while more than half of all Australian women (55 per cent) say they maintain the household budget, fewer than one in five (19 per cent) are engaged in their home’s management of investments when it comes to stocks, bonds or mutual funds – despite the fact that we are now financially contributing more to the household than ever before.
So why is this still happening? In 2024, researchers from the University of Essex set out to try to understand why, despite all the social and economic changes we’ve seen for men and women in recent times, decisions around finances have remained stubbornly similar over the decades.
They did this by looking at how bargaining power – that is, whose influence holds more sway and power to get a preferred outcome over the line – works in heterosexual couples from Australia, Germany and the United States. In Australian households, they found that men hold 60 per cent of the bargaining power, compared to women holding 40 per cent.
Now, instead of just surveying couples and asking a series of questions, researchers looked at each couple’s investment portfolios and analysed the choices made and how this paired with risk tolerances.
Here, they found that men consistently justified their over-representation by saying they were better at managing investment portfolios because they were more adept traders than women. This assertion would be fine if it were true, but unfortunately, research consistently shows that it’s not, and that women’s ability to stay the course is literally paying dividends.
The reason for this enduring gender divide, the researchers found, came down to two major factors being at play.
First, men are still more likely to be the higher earners in their households. They’re also on average likely to be older than their female partners. Women are also likely to be less confident about their financial literacy, even when their knowledge matches or supersedes their partners.
When you combine all of these characteristics, subconscious assumptions can easily develop over time. Women, for example, might believe that because their partner is older they know more about the way the world works, and because they earn more they are a savvier negotiator.
In turn, men might perceive their female partner’s uncertainty about a topic to mean that they aren’t interested and are therefore happy to outsource the decisions to him.
The second factor is one that explains why these dynamics are so stubborn and persistent – and that is the role that traditional gender norms still play in modern households.
It’s easy for us to forget that until relatively recently, it wasn’t uncommon in Australian households for mums to work part-time or not at all, or for women to take prolonged breaks out of their careers during core child-rearing years.
A byproduct of that is a lot of us grew up in households where mums ran the day-to-day budget and managed administrative money duties like paying for groceries and swimming lessons, while their dads were the primary breadwinners who made the “big” decisions – something the YouGov polling highlighted perfectly.
While there’s nothing inherently wrong with that experience, the early displays of financial dynamics are important to recognise, because our foundational understandings tend to be a lot harder to unlearn once we get older.
But if men can help women develop their confidence and literacy, and women not only participate in wealth building decisions, but actively participate in the strategy, the truth is that everybody has a much better chance of ending up financially better off in the long run.
Victoria Devine is an award-winning retired financial adviser, a bestselling author and host of Australia’s No.1 finance podcast, She’s on the Money. She is also founder and director of Zella Money.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.
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