Clark at Large: Venus Rising

A woman's financial perspective is truly different. Blayney compared a 65-year-old man and woman, both of whom have had similar careers. Say, the man retires with $1 million, conservatively allocated into 60% stocks and 40% bonds. Using a Monte Carlo simulation, for our working man to have an 80% likelihood of not running out of money before he dies, he can spend up to $4,300 a month.

Now, because the woman is likely to live at least 5 years longer, with the same $1 million portfolio at an 80% certainty, she'd have to live on $3,800 a month, 12% less. But if she, like many women, didn't save as much, due to lower pay, and time off to raise children and/or care for parents, she might have only $700,000, which means she'd have to live on $2,660 a month, or 38% less. What's more, women tend to be less comfortable with risk: If she only put 25% of her portfolio in stocks and 75% in bonds, she'll have to live on only $2,520 a month, or a little more than half of what the man retires on. Which of course, means that she'll have to have almost double the AUM to enjoy the same lifestyle as her male counterpart.

Now, Eleanor calls this differential a "gender tax," which, from my male perspective, is an odd way of describing the "cost" of living longer than men (if I'd gone to Mount Holyoke, I might have a more feminist view, too). I can only speak for myself here, but I'd take the bonus years in a heartbeat, and happily worry about a way to pay for them.

Still, these divergent perspectives call for alternative solutions. "Clearly, financial planning for women requires different assumptions and different analysis," Blayney concludes. "Traditional financial planning does not pay enough attention to these uniquely female circumstances."

Women want more context and less absolute. "When women hear that their portfolio out performed a benchmark, such as the S&P," Blayney writes, "they are likely to respond; 'so what does that mean?'" It's no secret that men tend to be more competitive than women. Sociologists tell us that's because we need to know where we fit in the "pecking order" of rivals. So, being "one up" or "one down" tells us what we need to know, and out performing a benchmark is exactly the kind of thing that makes our day.

Women, on the other hand, prefer to see things in a larger context: What does this financial performance mean for my lifestyle today, tomorrow, or in retirement? How will it affect where our kids go to school, where we go on vacation, or that second home in Santa Fe? Consequently, Blayney puts her advice to women in a context that men are usually impatient with: "I preface my counsel…with the phrase: 'It depends.' It depends on your risk tolerance; it depends on your family situation; it depends on where you want to live."

Women learn differently than men. Research shows men prefer to learn independently, while women learn in "collaborative environments." Men like to learn by doing, while women "prefer to stand back, listen, and observe." That's why she's built her company around creating group situations for women to talk about finance. "Learning about money in a community of women makes the work seem easier and even enjoyable," she writes. "It's also a safe place to discover one's financial identity and to find answers to what women may fear are dumb questions."

Women think about investing differently. A 2005 Merrill Lynch study showed a majority of women vs. a minority of men said they wanted to spend "as little time as possible managing their investments." Ironically, the same study showed that when they do it, women are actually better investors: they make fewer mistakes, sell losers sooner, are more concerned about concentrated holdings, are less impulsive about "hot" stocks, trade less, and are far less likely to repeat their mistakes. In fact, female investing prowess is become so widely observed that according to Blayney, a soon to be released book about the great investors will be titled Warren Buffett Invests Like a Girl.

Blayney appears to be an indexer, relying heavily on the Efficient Market theory. She writes: "The realization that markets are efficient keeps us realistic and grounded: trying to beat the market is a loser's game." And it's also a man's game. Rather than trying to "beat" the market, it seems far more consistent with the female psyche to simply take what the markets give. And as many independent advisors have discovered over the years, it also yields better returns with lower risk.

Blayney's book also covers how to handle such feminine issues as chronic overspending, maximizing your working potential, finding the right advisor, and why women need to be especially knowledgeable about estate planning (hint: they end up with all the money). Taken together, it's a virtual library of the latest research and the best thinking on how to position an advisory practice to tap into the hottest client niche of the 21st century. There's so much good stuff here that I'll bet even a few of the more "sensitive" male advisors could make a go of it.