Women and Money

Are men or women better at investing?

“This is not only a fun question but it is of great practical value,” says INSEAD Assistant Professor of Finance Lily Fang, who hosted a Women and Money forum at INSEAD recently.

Some studies suggest that women are better investors than men. Dig a little deeper and the picture isn’t so clear.

What is clear is that too few women take an active role in investing their savings. Since women on average live longer and have lower life-time income than men, it’s important that they learn more about investing, Fang says.

In a large number of academic studies of investment gains, men and women actually come out about the same on a net basis. Women do better in the end because they trade less frequently, so they don’t run up expensive trading costs.

“(Men) take higher risks and higher risk is rewarded with higher returns, but after you take out the transaction costs … men are slightly worse than women,” she says.

In fact, Fang says both men and women tend to under-perform the major market indexes when they trade as individuals. “The more you trade, the more you lose out against a passive index, so compared to men, women might lose out a little less,” she says. Surprisingly, men trade almost 50 per cent more than women.

The statistics are the same if you compare women and men who are professional traders, but the sample size of women professional traders is so small that Fang is reluctant to draw conclusions.

She’s much more confident about the obvious conclusion: “The evidence should give women the confidence that they are perfectly capable of taking advantage of their financial well-being and we need to get that message out there so that people can start doing the planning and then it’s a matter of educating yourself,” says Fang.

Unfortunately, the bad news is that the bigger picture indicates that 80 per cent of women actually don’t actively engage in a financial plan.

Long-term financial planning is a particularly important issue for women, Fang says, because people are living longer and women have longer life expectancy than men, often by 10 years or more, and in old age women tend to be afflicted with long-term illnesses such as osteoporosis and arthritis.

“If you don’t have a financial plan in place that you started thinking ahead of time, once you get (older), a lot of people are quite shocked” by their financial status, she says.

Women should know that it’s never too early to start planning. Fang says women should start saving and investing when they land their first job.

Women shouldn’t fight their instincts. Fang lists some important attributes that women employ when investing their money:

• They trade less frequently to keep costs down
• They tend to hold more diversified portfolios than men
• They're more ready than men to acknowledge that they need to find resources
• They tend to have a longer-term perspective when investing
• They tend to seek personal financial advice, instead of relying on adverts and advice found on the internet

These attributes should serve investors well. But as a lot of women are busy with careers and family, some don’t want to think about their long-term financial future and tend to leave financial planning to their husbands, Fang says.

Fang believes it’s very important for the family, both the man and the woman, to come up with a financial plan together and to invest together. Research evidence shows that as a partnership, men and women together make better decisions. Now it’s up to women to take greater control.

How to Find and Hire the Right Employee?

Putting an ad in the paper and hiring an applicant based solely on resume credentials is a guaranteed formula for failure. Here are some useful tips for finding and hiring the perfect person for your job.

Just a few decades ago the process of finding and hiring the right employee for the right job was, surprisingly, easier than it is today. Back then, an employer would put an ad in the paper or contract with an employment agency; resumes would be reviewed, several candidates would be interviewed, and an offer was made. But today with the Internet, a steadily burgeoning population, and a global economy with hundreds more job categories than ever before, navigating the employment minefield for both job applicants and employers can be a tricky business.

Before simply making an offer to the person with the most impressive resume, it is very important for managers to take the time to search for the best employee because some industries are plagued by high turnover for various reasons. Employers should carefully screen candidates to be sure they are going to be happy with the duties, responsibilities, work environment, and advancement opportunities (or lack thereof). A satisfied employee will be more likely to stay in a job longer. And the ability to minimize turnover will keep an organization running smoothly and efficiently. It is more beneficial to have a candidate with a good attitude and a willingness to learn than a skilled but unmotivated one.

The strongest strategy for regularly attracting and retaining quality employees is to implement a thorough recruiting and behavioral-based hiring process to ensure you are selecting the best candidates for the job. Develop a recruitment plan and then track all results so you can clearly evaluate the cost per candidate, per recruitment process. Document the sources that bring applicants to you, so you will know where to invest recruitment funds and where to network to attract the most diverse set of candidates.

As you begin evaluating applicants, use a variety of established pre-hiring assessment tools to determine their knowledge, skills, and abilities. For example, employment agencies usually conduct a brief telephone interview, a behavioral assessment, hard and soft skills testing, and finally a behavioral interview. While screening an applicant, use standard questions and consistent scoring methods to keep the results objective and measurable so applicants’ qualifications and results can be compared easily.

It is important to select candidates who exhibit predefined behavioral traits appropriate for your organization and are comfortable working in the environment or your organization. Study the traits of your current top performers and determine what makes them fit well with your organization. While there is no one specific formula that defines the "perfect employee," certain key behaviors will serve as a guide to finding a diverse pool of candidates with similar traits:

- Works well under time pressure.
- Able to handle emotionally stressful situations.
- Can be adaptable/flexible.
- Internally motivated to achieve goals.
- Able to perform well when engaging in repetitive tasks.

In addition to focusing on hard skills such as data entry and listening skills, assess cognitive abilities such as multitasking, problem solving, and attention to detail. Personal characteristics such as conscientiousness, honesty, integrity, and emotional maturity help determine whether a candidate is a reliable and focused worker.

If you feel that a candidate is the right person for your job, be sure to hire quickly. Statistics show that a temporary worker is usually on the market for only about five days before they have found employment. Hiring and retaining quality employees will have a positive impact on all aspects of an organization, including customer satisfaction and. Selecting the right people and managing them well can not only reduce turnover and increase retention, it can also help a company harvest its next generation of executives.