Even today women are misunderstood and underrepresented in the financial world. We discuss the issues facing women with Diane Bourdo, president of The Humphreys Group in San Francisco, who has written a book about it.
Light: In your book Rewriting the Rules: Telling Truths About Women and Money, you take a deep dive into myths that permeate the financial world regarding women’s roles in managing money. What motivated you to tackle these topics?
Bourdo: One of the main reasons I wanted to write this book, along with my colleague Hallie Kraus, is that women are often underrepresented and misunderstood in the financial world. Despite the progress we’ve made, stereotypes about women and money still persist. These myths not only limit women’s potential but also the advice and services they receive from financial professionals. Our mission at The Humphreys Group has always been to challenge these outdated assumptions and offer financial strategies that align with women’s values and strengths.
Light: Speaking of myths, one of the more prominent ones you discuss is the idea that “men are better investors than women” Could you break that down for us?
Bourdo: This myth has been around for a long time. Many people assume that men are naturally better investors because they are supposedly more aggressive or more confident in their decisions. The reality, however, is very different. Numerous studies show that women are actually better long-term investors than men. Women tend to take a more patient and measured approach, which results in fewer risky, short-term decisions. In fact, a Fidelity study found that women’s investment returns were slightly higher than men’s because they trade less frequently, which reduces transaction costs and avoids market timing.
Light: A related belief is that women are more risk-averse than men.
Bourdo: It’s true that women are often labeled as risk-averse, but what we found in our research is that women are not necessarily averse to risk—they are just more discerning about the types of risks they take. Women are more likely to allocate their risk budgets prudently, which means they are mindful of potential losses and how those losses could impact their long-term goals. For example, women tend to prioritize financial security and are more likely to seek advice before making major financial decisions. This isn’t about avoiding risk. It’s about taking calculated risks that align with their values and life goals.
Light: Another idea you discuss is that women aren’t as knowledgeable about finances as men. How do you address that?
Bourdo: This myth is particularly harmful because it discourages women from engaging with their finances. The truth is that women are just as capable of understanding financial concepts as men, but they’re often not given the same opportunities to learn. What we’ve found is that when women are provided with the right resources and support, they quickly become confident and competent in managing their finances.
A key part of our work is empowering women to take control of their financial lives and recognize their innate ability to make smart financial decisions. We also emphasize that women don’t need to know everything to get started—sometimes it’s about building confidence one step at a time.
Light: In your book, you focus on how money and emotions are intertwined. This flies in the face of the traditional advice to keep emotions out of investing. Why do you believe it’s important to consider emotions in financial planning?
Bourdo: The idea that we should separate our emotions from financial decision-making is not only unrealistic but also counterproductive. Money is emotional. It’s tied to our sense of security, our values and our goals for the future. Ignoring that emotional component means we miss out on important insights about what drives our financial behavior. We encourage our clients to embrace their emotions as part of their financial journey. By doing so, they can make more informed and aligned decisions.
Light: You also touch on the topic of estate planning in your book. Can you share why this is such an important area for women to focus on?
Bourdo: Estate planning is crucial for everyone, but it’s especially important for women, given that we tend to live longer and often take on caregiving roles for both children and elderly parents. Many women also outlive their spouses, which means they will eventually be solely responsible for managing family assets.
Estate planning is about more than just deciding who gets what. It’s about making sure that your wishes are carried out and that your loved ones are taken care of in a way that aligns with your values. This includes creating a will, designating powers of attorney and making sure you have the right documents in place for medical and financial decisions if you become incapacitated.
Light: You mentioned earlier that financial literacy among women is often underestimated. How can women take steps to increase their financial knowledge?
Bourdo: The first step is recognizing that you don’t have to know everything all at once. Start with the basics and build from there. One of the things we advocate for at our firm is finding a trusted financial advisor who listens to you and respects your personal financial goals. We also encourage women to join financial literacy programs or groups, where they can learn in a supportive, non-judgmental environment. Books, podcasts, and online resources can also be great tools for building financial confidence.
Light: Your book discusses the gender wealth gap. How does this differ from the gender income gap, and why is it important?
Bourdo: The gender wealth gap is actually more significant than the income gap, and it’s one of the least understood aspects of gender inequality. The wealth gap refers to the difference in assets between men and women, which accumulates over time due to factors like pay inequality, caregiving responsibilities and differences in financial risk-taking. While income is important, wealth is what allows individuals to weather financial storms, retire comfortably, and pass assets on to the next generation. Closing the wealth gap requires not just earning more but also making smart investment decisions and planning for the long term.
Light: The last year has been challenging for many people financially. What advice do you have for women who may be feeling anxious about their financial future?
Bourdo: My advice would be to take things one step at a time and focus on what you can control. If you’re feeling overwhelmed, it’s okay to seek professional advice. A financial advisor can help you assess your current situation and create a plan for moving forward. It’s also important to remember that financial setbacks are a part of life, but they don’t define your financial journey. Building financial resilience means staying flexible and open to adjusting your plans as needed.