Four Reasons Women Aren't Investing Well and Four Ways to Fix It

For years there's been plenty of talk — and research — on the role of women in the business world and as investors. The latest findings still point to a gap between the needs, attitudes and involvement of men and women in investing. Yet, at the same time, women are making more progress than ever as professionals.

So, especially for those who follow principles in my book, "The Millionaire Zone," I wanted to share my current thoughts on why the gap still exists and what you as an investor can do about it.

According to research organization Catalyst, women now occupy some 50.6 percent of workplace managerial and professional positions. Yet, as investors, women still don't get involved or they invest too conservatively, leaving money on the table.

From extensive research on the topic published by the Oppenheimer Funds, the Allianz AG banking and insurance group and others, there are, in a nutshell, four factors:

Education. Women growing up are simply not socialized as investors. According to Oppenheimer, 76 percent of women wish they had learned more about investing while growing up.

Experience. Most women don't take the investing helm when married.

Fear. According to Allianz, some 90 percent of women fear "losing it all," and even 48 percent of those with incomes exceeding $100,000 annually cite that fear.

Adviser disconnect. Most financial advisers are men, and they're still geared to talk to men. According to Sacha Millstone, a founding financial adviser for the Millstone Evans Group at Raymond James, most advisers still talk in jargon. "'Basis points' still don't mean as much as percentages." And there's still a "tendency to tell women what they want to hear, to comfort them — instead of talking about the opportunities in a situation."

It's obvious: women need to "connect" with investing because we live longer. Through death or divorce we are more likely to spend more time in control of our financial destiny. Some 80 percent to 90 percent of women will be solely responsible for their finances someday, according to the National Center for Women and Retirement Research.

And with no defined benefit pension to count on.

And I'll bet you didn't realize this: Allianz found that 96 percent of men think that financially secure women are sexy.

The good news

Current trends and research point to some good news too.

First, Allianz found that more women than ever describe themselves as "confident, analytical and disciplined savers." Further, according to Oppenheimer, 46 percent of women now consider themselves "very or somewhat knowledgeable about investing."

Second, women have always had less "ego" in their investing approach. As a result they often outperform men, particularly those taken by short term, aggressive investing styles.

Finally, women also are willing to network and use the investment-club approach. Some 70 percent of investment-club members are women.

My advice

I think the following points will help all investors, but especially women who may still be reluctant to wade into investing waters:

Think like a business owner. Business owners understand how businesses work and how to handle the ups and downs. Women are good at this in the business world. According to Millstone: "Women can handle negative news in a business setting, but it brings fear in investing. There's no reason for it."

Buy businesses you understand. If inclined to buy individual stocks, this is a fundamental Warren Buffett value principle. As a woman, you probably understand some businesses better than your male counterparts — play this to your advantage.

Get the right advice. Research shows that women still prefer the help of advisers. Some 75 percent of women who rely on advisers are "more comfortable with investing." That said, finding the right one is important — one tuned in to the needs of women.

Follow role models. In business — and in investing — it always helps to find good role models and study their actions and response to business and market stimuli. Buffett, an investor role model for years, is a good place to start.

And a new newsletter

By the way, speaking of role models and investing, I've just launched a new newsletter called "QualityStocks for Women." The purpose is to introduce readers to the great women leading our nation's public companies and give them information to help them make smart investing and other financial decisions.

Interestingly, a study of the Fortune 500 companies by Catalyst found that companies with more women at the top delivered a higher return — 34 percent higher — than companies with the fewest women — another reason women might find a greater connection to investing in the market.