In this week’s episode of Retire in Texas, host Darryl Lyons, CEO and Co-Founder of PAX Financial Group, explores a fascinating question supported by years of research: why do studies suggest that women often achieve different investing results than men?
Darryl unpacks two key reasons – overconfidence and impulsiveness – and how humility and patience can support more thoughtful, long-term decision-making. He shares personal stories, including how his own wife’s encouragement shaped his career, and how engaging a spouse in financial decisions can foster stronger communication and perspective.
You’ll also hear how legendary investors like Warren Buffett credit their success to temperament over intellect – and why that same mindset can help individuals stay grounded in their approach to investing and relationships.
Key highlights include:
Why studies show women earn ~2% higher annual returns than men.
How overconfidence and impulsive trading can hurt performance.
The importance of engaging your spouse in financial decisions.
Lessons from the Bush family, Warren Buffett, and real-life examples.
Biblical insight from Genesis [2:18] on partnership and harmony.
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Transcript:
Hey, this is Darryl Lyons, CEO and Co-Founder of PAX Financial Group. And you’re listening to Retire in Texas. And we really want you to find a place where you can stay grounded, but also learn about finance and economics and just life in general. And if that’s what you’re looking for, you’ve come to the right place.
Also, I got to tell you, I’m a financial guy, but I don’t use a lot of numbers in shows. So, this is not a show where I’m out to impress you. I just want to help in about 15 to 20 minutes. And this information is general in nature only. It’s not intended to provide a bunch of specific to your situation, investment, tax, or legal advice.
And visit PAXFinancialGroup.com for more information. Okay, so there’s the intro and I want to jump in to talk about spouses. George Bush, I heard him tell this story. This was at a conference years ago. True or not, I don’t know. You figure it out, but him and his wife were driving back to his, I guess it was their hometown.
Maybe it was her hometown. This was George and Barbara Bush. So, it was her hometown. And she, they go get gas and she looks at the guy that’s inside the gas station attendant and looks at him and says, honey, that’s my high school boyfriend. And he laughs, George Bush laughs and says, think about that.
If you would have married him, you would have been the wife of a gas station attendant. And she said, Silly George, if I had married him. He would have been president. I really don’t know any truth about that, but I think it is funny, and I think there’s a little bit of truth to that. I can actually relate.
So, starting PAX in 2007, there was kind of a wind up to start PAX. And so, there was these couple of years that we really didn’t have any money. And so, this is my Barbara Bush story. And meaning that my spouse had a significant involvement and influence in where I’m at today. And I was completely broke trying to be a financial advisor when you’re completely broke is like a shop teacher with no fingers.
But I was doing it anyways, and I was hustling. I was working hard, but I could not get anybody to give me money, invest or anything. And I had a newborn, and so I’d have to take a cash advance check from my credit card to pay my mortgage. And so, it was just really hard. And so I remember going around the kitchen island and just sobbing like, I’m done, I can’t do this anymore, Caresse.
I’m done. It’s just too stressful and it didn’t take much. She said, this is your dream and you can’t quit. That was all it took. That was it. And my life, it’s never been the same like, if I had listened to my own inner voice. I would not be where I’m at today, which I’m so grateful I couldn’t be in a better place.
That’s uniquely designed for the way God made me. And it was because of Caresse, my wife. So, I want to talk about engaging a spouse, but I want to start out by talking about just women in general. So, this is. If I have some nuance gender biases, you just have to forgive me because I’m not going to, you know, substantiate every single claim here with some disclosures.
But, you know, the reality is that women are better investors than men. I mean, studies have shown it is kind of crazy that some studies show that women make about 2% more in returns annually than men. I mean, there’s many studies that have been done on this. Fidelity did a study in 2021, 5 million people. They looked at 5 million people over ten years.
University of California, Berkeley has done studies. Wells Fargo’s just done studies. Warwick Business School is the one I’m referencing. They said it’s about a 1.8. So yes, I rounded up to two drama. But I mean, that’s significant compounded over time. That’s significant. So, we got to ask ourselves why. Why is it that all these studies show that women are better at investing?
And I’m going to suggest to you that there’s two reasons. And so, let’s unpack those two reasons. One is overconfidence by men. I guess a polite way of saying it is that women are not as confident. And there’s something to it. You know, there’s something to be said for that. But I’d also maybe categorize this in a, maybe more technical way.
And that’s we look at risk tolerances. So, you have conservative, modern, aggressive. And so rather talk about confidence or overconfidence or under confidence. We can say women are categorically, Wells Fargo did these studies, more conservative in the, when they do these risks tolerances. And so, it would imply and I think there’s plenty of other studies to support this, that men are just generally more confident.
Generally speaking, that’s changing. There’re generations that are that are kind of changing that narrative or at least closing the gap. But, you know, when it comes to investing, men tend to be more confident. You know, most men are out there buying Bitcoin. It’s not the women. And it’s not just cryptocurrency. In 2018, the same Warwick School of Business, did some studies and found that female investors were very much less likely to indulge in like lottery type of investing or speculative investing.
So, we do know that there’s this confidence element that is helping women. It’s this, another way of saying is a degree of humility. And or maybe, you know, from a men’s perspective, overconfidence that’s hurting them. So that piece right there is a, I would say 50% of I’ll talk about the other 50% in a second, 50% of the reason behind women having better performance.
I’ll give you an example. This guy is named Richard Fuld. He was the CEO of Lehman Brothers. You remember Lehman Brothers? They collapsed in 2008. And he repeatedly refused offers from big institutions like Warren Buffett or a Korean bank. And he was making these decisions just kind of unilaterally, just not consulting people, not consulting his family.
And so, Lehman Brothers, you may or may not remember, collapsed. And I mean, that triggered a whole financial crisis. So later, though, interviews revealed that his wife, Kathy Fuld, had urged him to take the deal and to protect their family’s wealth and reputation, advice he ignored because he was overconfident. Now the second reason why, by the way, there’s a lot of research that makes the case why women are better investing.
These are the two reasons I’m giving you is one is overconfidence of men. An overconfidence risk profile, a lack of humility. I mean, there’s a lot of different ways you can phrase that. I think you get my point. But the second way is impulsiveness. Women are not as impulsive. And, yeah, these two are connected and kind of, another way of saying it is women are more patient.
And studies have shown that men are more likely to make moves in their trading, in this idea of controlling. And I’ve seen it over the years where I’ll get phone calls from men that say, get me out. You know, I don’t want to be here anymore. And especially when the markets volatile, 90%, it’s the men calling me.
They want to increase, you know, when the market’s going up, they want to put more money in. They want it. They get excited. Look, I’m a man, I can relate. But this is not helping men. They sell at the wrong time. They pull money out of the wrong time. Women trade less frequently. And Vanguard actually said that.
And this is huge. By the way. This is huge. When I saw this, Vanguard actually said that women look at their accounts half as much. And the reason that that’s important is because there’s this study that I’ve referenced. I think it’s in my book 18 to 80. I’m pretty sure it’s in there, a study that I’ll never forget.
Prudential did this study and said that people who look at their accounts more often have poorer returns. So here we are, Vanguard saying that women look at their accounts half as much. And so, this impulsive nature that men have, and I know it can be used for good. But it’s problematic, in the 90s, as an example, in the 90s, Mark and Julie Ellison, they were running a bakery in Dallas and profits dipped.
And just like I had mentioned earlier, I was really scared about, you know, my situation in not being able to provide for my family. And I was going to impulsively sell or get out of the industry altogether. I don’t know what I was going to do. Well, this guy Mark, when the profits dipped and I know that feeling, he’s like, I’m out.
I need a fresh start, Julie. Like what my wife did for me. She urged him. She said, hold on. You got to do this. Just give it one more year. Give it one more year. And they reinvested some of the money back into, like, this espresso machine, and they expanded the breakfast menu. And then, within 18 months, 18 months, this was in Inc magazine.
Their revenue tripled, and eventually it tripled. And then they franchised their entire restaurant and what we know now as the Corner Bakery. And so, Mark later admitted, look, if it wasn’t for Julie’s patience, I would have sold it for pennies. So, what do we do with this information? We know these things are true anecdotally, and we see that research supports it.
And we know, through various studies that women are better investors. So, what do we do with this information? I mean, obviously I’m talking to a mixed crowd, both men and women. But so, if you’re a man, you just have to engage your spouse or your wife or your significant other. I mean, it’s so important even Warren Buffett said this.
I did not know Warren Buffett. His quote that I’ve always loved. And it makes me feel good because he says when it comes to successful investing, it’s more about temperament than intellect. I believe he goes on to substantiate it. It says something about like, there’s a minimal level of intellect. But he says temperament, not intellect, is what makes the difference when it comes to investing.
But what I didn’t know is that quote was inspired by his wife, who told him oftentimes to cool off and to think long term. He credits his wife Susie for encouraging him to have some temperament because he said he lacked it. You know, as a financial advisor, the advisory business often discounts the female voice. New York life did study in 2019 and said that 40% of women said that their advisors are not likely to listen to their ideas.
That’s just foolishness. And so, one of the things that we did at PAX is we recognize that we’ve got to as advisors, we all have these biases. And, you know, even as advisors, we may listen to the man by default and not knowing that we have these biases. And then also the man may just talk over the woman.
And then before you know it, we’ve finished an hour and a half meeting and didn’t even hear her voice. So, what we did is we incorporated an actual process and a methodology. And you’ve probably experienced it before called Honest Conversations. And we’re refining that as we speak because we just want to have another level of it.
But it’s an actual system where we engage. We don’t just try. We actually have a process of engaging what we call the non-CFO spouse, because sometimes it is the man, but oftentimes it’s the woman, the non-CFO spouse, the CFO means chief financial officer, the one who’s not in the numbers, who doesn’t care what and I’m using air quotes doesn’t care about this stuff.
She doesn’t know it. She’s just not interested in it. But we created a process where we could extrapolate her voice because we know how important it is to, because you’re creating a plan and seeing it through. We know. And so, we have to figure it out.
We have to have an intentional, as advisors. We have to have an intentional process of somehow hearing from that non-CFO spouse, extrapolating that vision and those ideas into the dialog and that non-CFO spouse has to be present in all facets from the planning stage to if there’s a business being sold. You know, I’m a spiritual guy, so I’m not just going to kind of tie a bow in this with the spiritual considerations. In Genesis [2:18] the Lord said, it is not good for man to be alone.
Do you remember that? It’s not good for man to be alone? And he said, I will make a helper suitable for him. Genesis [2:18]. Helper. So, I mean, we could make the case. I’ve actually wrestled with the word help in a lot of the scriptures because, it’s important to understand that word help has a couple different ways to understand it.
And one of them is if you look at the Hebrew, which is, these are kenegdo. No, it doesn’t mean helper. It means like a corresponding partner. And it does not imply some subordinate in any way, complementary. Another way to think about it as a complementary person, an equal, a shared identity in the image of God.
So yes, women are better at investing, it’s the reality. And so, we have to figure out a way to make sure that this complementary relationship is working together to guide the family. To be patient. To have some humility and to be the calm oftentimes in the storms, this is not independent. It’s interdependent. It’s harmony. It’s complementary.
So, men, gentlemen, engage your spouse. She’s wise and you’re not tongue in cheek, but it’s important. It’s important even if she doesn’t know all the data and the formulas. It’s very important to engage her in the conversation and to hear from her. And there’s a long track record of successful, successful men who’ve done very well because they engage their spouse in the financial conversations.
So, thanks for listening today. I hope that helps you guys. And remember, as always, you think different when you think long term. Have a great day.
Resource:
https://www.fool.com/research/women-in-investing-statistics/
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