Iowa State University

GETTING PERSONAL: NASD Awards Grants To Study Women

794 words
25 April 2005 14:03
Dow Jones News Service
English
(c) 2005 Dow Jones & Company, Inc.

By Colleen DeBaise
A Dow Jones Newswires Column

NEW YORK (Dow Jones)--The National Association of Securities Dealers announced three grants to study women's investment behavior, part of its first efforts to steer money collected from fines into investor-education programs.

The three grants, which total nearly $375,000, come at a time when Wall Street firms are seeking to tap the affluent women's market. The three universities that received the grants this month must produce education materials that can be used by financial-services firms as they work with women clients.

At Iowa State University, personal finance specialist Tahira Hira will attempt to pinpoint why men and women have different attitudes about finances. She plans to survey both sexes, asking what emotions motivated them to invest.

"I would like to do some digging," she said. "My goal would be to establish what are some of the factors that contribute to a behavior -- to a personality -- where people are more comfortable in making financial decisions."

While there's been an onslaught of material in recent years about the differences between men and women when it comes to investing, "I don't think it's been very effective," she said.

For instance, financial advisors still are unable to hook the majority of women who attend investment seminars, Hira said. She hopes to put together a brochure for financial advisors on how to "communicate with your women clients so you can truly get them to take the next step," whether that's investing or creating a financial plan.

A team at the Camden, N.J., campus of Rutgers University will study whether a large assortment of mutual funds in a 401(k) plan can negatively affect investor choices, especially among women.

"What we speculate is that ordinary investors have kind of a naive definition of what diversification is," said Maureen Morrin, an associate professor of marketing at Rutgers who will lead the research.

For instance, some investors might interpret diversification as the number of funds, rather than the number of different types of funds. "Having four growth funds, rather than one equity index and one bond fund, is probably not more diversified but the perception is, 'Because I have four funds rather than two I must be more diversified,"' she said.

The team will examine whether attaching a Morningstar-style box, a tool for evaluating mutual funds, to the list of choices makes diversification clearer to investors.

Morrin also plans to study whether "type A, high-powered career women" are more susceptible to the negative effects of a large assortment of funds. "It would be counter-intuitive," she said. "It's almost like a little knowledge is a dangerous thing."

Boston College received a grant to develop a computer game designed to help women better address their retirement income needs. The game, which targets women between the ages of 45 and 60 with at least $75,000 in assets, would be marketed to financial-services firms, and presented at workshops in the workplace.

Women face particular challenges because they live longer, step out of the workforce to raise children, and often make less money than men, said Steve Sass, an associate director at the college's Center for Retirement Research.

"Women tend to be often less-focused on long-term financial issues," he said. "They are the major pocket of poverty in our retirement system -- older widows in particular, and older, single women."

The computer game is designed for a group setting, where members of the audience can play along and help a simulated couple, Sally Savings and Norm L. Guy, make retirement-planning choices. "We want to make it fun," he said. "We want women to feel more comfortable."

The grants -- $150,000 to Iowa State, $73,000 to Rutgers and $150,000 to Boston College -- were announced this month as part of the first 11 grants made by the NASD Investor Education Foundation. The foundation was created in 2003 with $10 million that came from fines from enforcement actions.

"We try to look at areas that we think are underserved," said Elisse Walter, NASD executive vice president. A 2003 survey conducted by the NASD identified women, the elderly and novice investors as the best targets for education initiatives.

The NASD awarded a total of $1 million in grants, including funds for the creation of a securities arbitration clinic, and the development of educational materials on investing for American Indians.

(Colleen DeBaise is one of four Getting Personal columnists who write about personal-finance issues ranging from new tax proposals to education-funding strategies to estate planning.)

-Colleen DeBaise, Dow Jones Newswires, 201-938-4381, colleen.debaise@dowjones.com [ 04-25-05 1503ET ]