By Nelli Oster, PhD, Director and Investment Strategist, BlackRock Multi-Asset Strategies Group

A meme widely available on the Internet parodies the differences in how men and women approach shopping decisions:

Shopping Parody

Decisions about buying pants, however, aren't the only decisions that the genders generally approach differently. Behavioral finance researchers have found that the genders tend to differ in how they approach investment decisions as well.

In this post, the latest in  my series on ways women and men investors behave differently , I drill down into the research behind gender-related differences in investment decision making, answering three key questions.

Q: Why do women and men make different investment decisions?

A: There are three broad ways in which men and women differ when it comes to financial decision making:

  • Women tend to focus more on longer-term, non-monetary goals. As this  Fidelity investment guide  lays out, women generally associate money with security, independence and the quality of their and their families' lives. According to a 2010  Boston Consulting Group study  examining women's experiences with wealth management providers, women tend to focus on longer-horizon planning, like college savings. Men, on the other hand, who tend to be more competitive and thrill-seeking by nature, often focus on the short-term track records of their portfolios.
  • Women tend to be thorough and take more time to make decisions than men.  Several studies, including a national survey by LPL Financial, show that women tend to research investments in depth before making portfolio decisions, and the process, as a result, tends to take more time. Women also tend to be more patient as investors and consult their advisors before adjusting their portfolio positioning, whereas men are more prone to market timing impulses. To gather information, women often prefer group discussions to men's more independent learning approach.
  • Women seek help more.  A 2012-2013  Prudential study  on women investors reveals that women are more receptive to financial research and advice than men. They often require more of a financial advisor's time and resources, but once trust is established they are also more loyal clients with their focus on lasting relationships.

Q: What impact can these different investment decision making styles have on portfolios?

A: There are some potential pitfalls both men and women can watch out for. Women's tendency to think in terms of qualitative longer-term goals (known as ' mental accounts ') can lead them to separate money earmarked for different purposes into different investment accounts. This, in turn, can result in inefficient portfolio allocations overall. Similarly, women who are overly concerned about financial security may predominantly focus on downside protection and not take enough risk in their portfolios, subjecting them to insufficient income in the future.

While women risk missing out on some investment opportunities in taking more time to make decisions, men's generally higher impatience when it comes to seeing good investment returns makes them more prone to attempt market timing, and to get hurt when timing is off. For example, a  Vanguard study  on individual investor behavior revealed that during the financial crisis of 2008 to 2009, women were less likely than men to sell out of equities.