Behavioral Investing: Men are from Mars and Women are from Venus!

Behavioral Investing

While no person falls neatly into statistical averages, as humans, we are all emotional beings and subject to all different kinds of behavioral biases when it comes to investing. There are three major ways in which men and women differ when it comes to behavioral investing.

Investment Goals and Strategies: According to the Wall Street Journal, finance professors Brad Barber and Terrance Odean, women tend to focus more on longer-term, non-monetary goals. Women generally associate money with security, independence and the quality of their life and their families’ lives. Women have a ‘safety first’ mentality. Generally speaking, women are more inclined than men to wear seat belts, avoid cigarette smoking, floss and brush their teeth and make regular doctor visits. They even have been shown to be 40% less prone than men to run yellow traffic lights. 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, incurring larger overall returns, and tend to be more risk tolerant. In contrast, women tend to be more averse to risk and are more skeptical. When it comes to investing and planning for their future, women shy away from uncertainty and will take a longer time to make investment decisions, are more methodical in how they go about research, and ask more questions.

Both men and women should make sure that their investment styles and horizons match their overall financial goals. For women, this may mean taking on more risk. As they become more familiar and understand the ups and down of the stock market they will naturally become more risk tolerant. For men, this may mean focusing more on longer-horizon goals, rather than on short-term trading track records and larger gains.

Women Risk Averse
Prudential’s study Financial Experience & Behaviors Among Women


The Learning Curve: A 2012-2013 Prudential study on women investors reveals that women are more receptive to financial research and advice than men. Women seek help more often. Men tend to enjoy learning on their own and take a more independent approach, like the internet,  while women prefer learning in a group setting. Women rely more on personal networks with friends, family, financial planners, and they take a networking approach to gathering information. They often require more of a financial advisor’s time and resources, but are looking for a trusted relationship to be established, one  they can rely on long term. Men, however,  prefer to teach themselves and are more self-directed learners, using the Internet (more often than women) to gather information and are more likely to claim they understand financial matters than women. In actuality,  knowledge levels are not high for either gender.

Thus far, evidence does not support, however, whether one source of information or learning technique is more or less effective than another.

Information Sources Used By Men Vs Women
Source: Source: Women & Investing, Gender differences in investment behavior. FINRA Report August 2006


The Confidence Factor: 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. Men veer toward overconfidence while women lean towards indecisiveness and insecurity.

Overconfidence can lead to taking too much risk. 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 investment returns makes them more likely to attempt market timing, and prone to loss when the timing is off. Women are less afflicted than men by overconfidence, or the delusion that they know more than they really do and are more likely (than men) to attribute success to factors outside themselves, like luck or fate.

Ledbury Research

Yet, taking too little risk, due to lack of confidence, can hurt your investment goals just as much as overconfidence. When it comes to investing for the long term, taking risk is not a luxury. Insecure investors can confine their results by investing too conservatively, nearly as much as their overeager counterparts could do by excessive trading and risk-taking.

Meanwhile, to help avoid rash decisions and market impulses, men may benefit from implementing a systematic investment strategy and a periodic, rather than continuous, review of their accounts and rebalancing. They may want to consider becoming even more open to professional financial advice. Women may also want to review the efficiency of their investment allocations across their portfolios to counter the negative impact of mental accounting. In addition, they may want to consider attending financial education seminars to help boost their confidence levels and ability to make timely, well-informed investment decisions.

Men Vs Women Confidence Level
Source: Women & Investing, Gender differences in investment behavior. FINRA Report August 2006


Call Brad Sherman at Sherman Wealth Management for information on what investment strategy is right for you.

Learn more about our Investment Management services.

Related Reading:

Tips for Millennials to Understanding the Stock Market

What is Dollar Cost Averaging?

5 Things Investors Get Wrong

5 Big Picture Things Many Investors Don’t Do

Why and How to Get Started Investing Today

Mitigating Your Investment Volatility

The Psychology of Investing

Rebalance Your Portfolio to Stay on Track With Investments


YOLO (You Only Live Once) So You Need A Retirement Goal

Yolo Retirement Goal

When you read through blogs or scroll through hashtags and memes on social media, there is a recurrent theme among millennials regarding the live-for-today sentiment. Whether it’s the acronym, #YOLO (You only live once) or the older, maybe not-so-cool phrase, ‘Carpe Diem,’ we are constantly reminded that we should stop worrying about the future and focus on today. But when it comes to your finances, is society sending us a detrimental message?

When addressing one’s plans for retirement, it is sometimes difficult to find a happy medium between the avoidance of financial responsibilities and the overwhelming, anxiety-inducing worry over one’s financial future. Below are two very common thought processes that I see often.

1) I am not worried about the future now, I’ll deal with it later

Unfortunately, our day-to-day pressing needs and our live-for-today goals become the priority and we cannot focus on or visualize what is not right in front of us. We tell ourselves, ‘I’ll do it tomorrow.’ Whether it’s not participating in a 401K because the extra monthly money is needed for utility bills or prolonging the start of a college savings fund for your child because you have mortgage payments to make, you are setting yourself up for a worrisome retirement.

It is important that you stop and visualize, in vivid detail, a big retirement goal. Are you visualizing being able to enjoy the finer things in life or are you just hoping to maintain the lifestyle that you are living today? What details do you see when you make this visualization?

Consider these important factors while you are visualizing:

If I continue at today’s rate-of-saving, what will my savings be at retirement?

Do I have children? Do I plan to have more children?

Do I plan to send my children to college?/Can I afford college tuition?

Do I own a home? Do I have a mortgage?

Have I planned for rising health concerns as I get older?

If something should happen to me, will my family be taken care of?/What kind of debt will they incur?

2.) I worry so much about my future financial position, that I sacrifice my daily happiness

Studies have shown that intense worrying about money or financial situations can affect many aspects of your life from mental health, to relationships, to career. When consumed with worry over your finances, it can inflict on your ability to focus thus creating a distraction and inability to enjoy the present.

While it is important to plan for the future, it should not be so overwhelming that it interferes with one’s day-to-day abilities. Ask yourself:

What am I really worried about?

Is it something in my control? If so, am I taking the necessary steps?

If it is not in my control, what steps can I take to ease my anxiety?

Do I have a financial advisor that can help to address financial concerns and alleviate unnecessary worry?

Whether you identify more with the first or second way of approaching your finances, or possibly somewhere in the middle, it is important to address your financial concerns with a trusted financial advisor. Unnecessary worry can cause you to feel paralyzed, out of control, and unable to make the right financial decisions concerning your retirement. However, failing to address future financial responsibilities, and avoidance altogether, can prove to be counterintuitive, creating anxiety and worry at a later date. Suddenly financial responsibilities show up at your door and you no longer have the option to ignore or put off. In taking small steps along the way, you can gain control of both your finances and your worry.

Call Brad Sherman at Sherman Wealth Management today and set up a no-cost financial consultation.

Learn more about our Retirement Planning services.

Related Reading:

Four Things Entrepreneurs Can do Now to Save for Retirement 

Finding Financial Independence

Your 401K Program: A Little Savings Now Goes a Long Way

How Much Money do you Need for Retirement These Days?

The Benefits of Saving Early for Retirement

Advantages of Participating in Your Workplace Retirement Plan


Millennials: The Fiscally Conservative Generation

Millennials Investors-Fiscally Conservative

As the Millennial Generation continues to get more work experience under their belt, statistics from a UBS Wealth Management survey show that this generation is the most fiscally conservative generation since the Great Depression. With most recent generations, the advice that has served them best is to invest their money. With this generation, more and more people are listening to the advice that tells them to save their money in CDs or bank accounts.

Because interest rates are at nearly rock-bottom, investors who play it too safe will very likely lose money due to the effects of inflation. According to Judy Martel in her recent blog “Cash is King for Millennials”, Millennials allocate an average of 52 percent of their portfolio to cash, compared with 23 percent for investors of other generations.
Many companies are promoting the merits of starting a 401(k) program and giving their clients tips on 401(k).

Tips for the fiscally conservative

• Don’t opt out, opt in

• Don’t reduce your company match, find out how to potentially maximize it

• Adjust your investment allocations as you age• Do not borrow or withdraw money from your 401(k) until you are retired

and, most importantly…

• Start saving and investing now

Informative data at your fingertips.
Sherman Wealth Management


Financial Strategies for Individuals with Brain Injury

Investor Biases

By Brad Sherman, President of Sherman Wealth Management.

Individuals who have sustained a traumatic brain injury (TBI) often have difficulties that can affect all aspects of their lives and, more specifically, can impair their ability to manage financial affairs. Navigating your finances after a TBI can be overwhelming and intimidating when there are different directions to take and so much information to digest.

Finding the right financial professional to assist you and guide you on a path unique to your specific needs is important. The right partner will help individuals with TBI create a strategy to cope with the anxiety that often comes with managing one’s finances. With access to the right assistance, information, and tools, one can address financial concerns and develop a path to achieving financial stability. The assistance that is required depends on the distinct needs of the individual and can range from providing management of day-today financial affairs to creating and addressing goals to obtain present and future financial security and well-being.

When looking for a money management professional, it is important to seek a collaborative partnership with someone who specializes in a fully customizable, personalized approach to managing finances, not a one-size-fits-all approach. Together, you can establish a tailored plan that is right for your financial situation.

A money manager can provide you with the most relevant resources and tools to fit your unique goals, whether you need guidance to make your own financial decisions or a trusted partner to do so on your behalf. In doing so, a money manager can help you understand the information given to you so you can make the most informed decisions regarding your personal finances.

The right money management professional can provide assistance with the following:

What to expect when awarded a financial settlement:
How to manage a lump sum of money while protecting and maintaining your lifestyle;
How to communicate with family and friends after you’ve received a settlement while keeping the monetary value confidential.

The options available to support yourself if you are unable to work due to TBI:
Budget planning
Income-producing security investments

Day-to-day assistance:
Opening and closing accounts
Making large or small purchases and transactions including household needs, property, and automotive

Financial planning including:
Low-fee and tax-efficient investments
Life insurance
Retirement planning

A network of trusted professionals:
Legal professionals who specialize in estate and trust planning, guardianship, power of attorney, and beneficiary rights
Accounting professionals

An inviting, objective, and trusted environment where you can express your financial concerns:
If you are living with TBI, it is important to have an advocate you trust to help you avoid being exploited

Face-to-face, personalized attention, unique to your specific needs
A collaborative partnership

There are enough difficulties and roadblocks if you or a family member are living with TBI. Managing your finances does not have to be one of them. A money manager can help address the concerns you feel surrounding your finances. With the right professional assistance, your goals and wishes will be the top priority. You will have access to expertise and experience as well as a network of financial professionals and resources to assist you in managing your finances efficiently. With a collaborative partnership, you can create a present and future that you are comfortable with and can enjoy.

Transparency on Both Sides

Financial Advisor Transparency on Both Sides

According to a recent survey, only 40 percent of investors indicated that their financial advisor(s) clearly explained how they are compensated. In this same survey – the Envestnet Fiduciary Standards Study – 52 percent of investors did not believe that all financial advisors were bound to a standard requiring them to act in the client’s best interest. In the post-Great Recession era, these findings are exceedingly troublesome.

Brad Sherman, president of Sherman Wealth Management, serving clients in the greater Washington, D.C. metro area, has built his practice around improving those statistics.

Sherman is a big believer in full disclosure and complete transparency for his clients regarding his fees and how he works with their accounts. He’s also a big believer in total transparency from the client. “For the relationship to fully benefit the client, there has to be transparency on both sides of it,” Sherman said. “I have to provide a completely transparent structure so everyone knows what they are paying for what they are receiving – so that there are not any surprises to the client. On the other hand, the client has to fully disclose to me what their financial situation and goals are so I can make appropriate recommendations for them.”

He doesn’t have a firm minimum for his clients and in reality, most of his clients wouldn’t fit into the advisor marketplace niche requiring a quarter of a million to start. The bulk of his clients are his peers – people ranging in age from 25 to 40ish – who are starting careers, marriages and families. They are at the beginning of the accumulation phase of savings plans and many are buying their first homes.

“They are comfortable with me and with taking my advice, because I either have been just recently in the same situation or am still doing the same things they are,” Sherman said.

He started Sherman Wealth Management in January 2013 after spending 12 years working in financial services for other firms. He also had just completed his master’s degree in quantitative finance from American University, and it seemed like the appropriate time to hang out his own shingle. Since then, Sherman has taken on 50 clients and and wishes to develop relationships with additional clients seeking affordable, tax-efficient and customized advice.

Sherman said that his decision to become a registered representative with Lincoln Financial Securities Corporation Member SIPC gives him the flexibility to craft portfolios specifically matching the individual needs and goals of each client.

“Not all clients are the same,” he said. “That is why we customize every solution. Some of the bigger companies get into trouble by putting people into cookie cutter molds that may not be right for them. By representing Lincoln Financial in a fee-based model, there is no pressure on me to sell something that is not suitable for any of my clients.”

Learn more about our Financial Advisor services.

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Top 10 Questions to Ask a Financial Advisor


What’s your credit score?

What is your credit score

Ok, while it may not be the most romantic pick-up line, there is something to be said for wanting to know a potential partner’s credit score. It’s the number that seems to follow you wherever you go and rears itself way more often than your SAT scores or your IQ score. While it’s something you may not think about often, it is always there. So you should be always be thinking about how to maximize your credit score. Your credit is a doorway to many aspects of your life. And if its not where it should be, those doors may remain locked.

Why Your Credit Score is important

  • With a higher credit score, you will be able to take advantage of lower interest on loans, pay less for credit, better deals on services and insurance and the opportunity to obtain better jobs and living spaces. Essentially, the higher your credit score, the less obstacles you will face in your day-to-day life.
  • Renting or buying a home First things first, you need a place to live, right? Well, before you rent, a landlord will often pull your credit report before allowing you to sign a lease. If you are looking to buy and need a bank loan, mortgage lenders will not only run your credit report, but will put a great emphasis on it in order to protect themselves from possible default. You will also need insurance on your home. Insurance companies are likely to check your credit score to predict the likelihood of you filing insurance claims. Your credit score can affect your eligibility and your rates.
  • Setting up utility accounts Once you have moved, now what? You need a phone, right? And cable? Well, what about electricity, garbage collection, and water? Yes, these are all accounts you will need to establish. If your credit score comes back too low, the utility companies may require a deposit in advance, or even a co-signer.
  • Finding a job In some states, employers are allowed to pull credit reports. Although they need your consent, wouldn’t it take some of the pressure off of the interview process and finding employment if you knew your credit score was at a decent level?
  • Financing a car Leasing a car is similar to leasing an apartment. Lenders want to be sure you will be able to pay your monthly bill. Not only will your credit report be checked for the lease, but also, again, for the auto insurance.
  • Opening credit cards You are planning an upcoming vacation and want to open a credit card that allows you to earn miles. If your credit score is not up-to-par, most likely you will not be offered credit cards with these types of perks.

I’ll tell you mine if you tell me yours

There are different ranges of credit scores based on a mathematical equation that analyzes your credit reports which include factors like payment history, debt levels, age of accounts, income etc.

Typical Credit Score rankings: Excellent: 750 plus Good: 700-749 Fair: 650-699 Poor: 600-649 Bad: 599 and below

Here’s how to maximize your Credit Score

  • Pay bills on time This is important. If you are late on your payments, not only will your credit score go down, but you will also most likely pay an unnecessary late fee which just adds to your debt balance
  • Pay more than just the minimum When you pay only the minimum, you are only paying the interest instead of paying down the debt balance. Creditors notice this. If you are unable to make payments that are larger than the interest, look for balance transfer offers from other creditors that may allow you to roll your balance over (for a minimal fee-usually 3%) in order to receive a zero percent APR for a set period of time (usually 6 months to a year). That will hopefully give you the opportunity to pay down the balance. (the pros and cons of balance transfers will be another blog post at a later date)
  • Apply for credit cards in moderation Although balance transfers are a possible option, make sure you don’t open too many credit cards at once. If you have balances on too many and continue to look for more, lenders will think you are credit-hungry and are a candidate for possible default.
  • Keep your credit card balance at 20% of the available credit or lower The lower the better.
  • Don’t close credit cards If you have paid off a credit card balance, do not close the account. A zero balance on the card will help boost your credit score. It shows good payment history and can help your debt ratio. And never close a card with an existing balance, as it will just drive your current score down.

Learn more about our Budgeting and Savings planning.

Related Reading:

Save Money or Pay Down Debt



Rebalance Your Portfolio To Stay On Track With Investments

Rebalance Equity Allocation

A drift portfolio 60% invested in stocks delivers risk comparable to a portfolio with greater market exposure, 80% invested in the stock market in the example of Figure III-2. This added risk from an unbalanced portfolio is not rewarded by a significantly greater return on your investment. Thus, a professionally balanced portfolio may help reduce risk that isn’t delivering a significant increase in return. Sherman Wealth Management understands that increasing potential risk without increasing the potential returns is unnecessary. It’s time to rebalance your portfolio to stay on track to help mitigate unnecessary risks.

Equity Allocation 1

Equity Allocation 2

Equity Allocation 3

“The S&P 500 Index is representative of domestic markets and includes the average performance of 500 widely held common stocks. This is a hypothetical example. Individuals cannot invest directly in any index and unlike investments, indices do not incur management fees, charges or expenses. Past performance is no guarantee of future results. The performance of indices would be lower if fees and charges were incurred.”

Learn more about our Investment Management services.

Related Reading:

Tips for Millennials to Understanding the Stock Market

What is Dollar Cost Averaging?

5 Things Investors Get Wrong

5 Big Picture Things Many Investors Don’t Do

Why and How to Get Started Investing Today

Mitigating Your Investment Volatility

The Psychology of Investing

Behavioral Investing: Men are from Mars and Women are from Venus!


Your 401K Program: A Little Savings Now Goes a Long Way


Though it may seem daunting, investing in your future is a positive choice. Your experience doesn’t have to be intimidating; I will be happy to serve as your financial planner to help guide you through the process. There is no better time to begin than now. The earlier you can begin to save, the greater earning potential you have at retirement.

Why a 401k program is essential

Assuming an average annual return of 8 percent, setting aside only $4,000 per year starting in your 20s could make you a millionaire by age 62, according to an article by Hitha Prabhakar in U.S. News and World Report. The article further explains that the Employee Benefit Research Institute reported in January 2014, that 30 years of 401(k) savings, combined with Social Security benefits, should generate an income that replaces at least 60 percent of per-retirement salaries.

In addition to putting away money on your own, many companies offer a “matching” program for retirement savings. Some companies may have avesting schedule, which means that the match is earned over time. However, if you don’t take advantage of a 401k program, you are passing up the opportunity for “free money” contributed to your retirement account by your employer.

We started this company with a goal to help educate investors, and guide them through an otherwise daunting experience. Sherman Wealth is happy to look at your 401(k) plan and give you ideas on how to best manage your money. Give us a call at (240) 462-5273 if you would like more information in creating a retirement savings fund. Your retirement may seem far away, but developing a savings plan early you can help ensure confidence in your financial future.

Find an accessible path to your financial future at Sherman Wealth Management.

Learn more about our Retirement Planning services.

Related Reading:

Four Things Entrepreneurs Can do Now to Save for Retirement 

Finding Financial Independence

YOLO (You Only Live Once) so you Need a Retirement Goal

How Much Money do you Need for Retirement These Days?

The Benefits of Saving Early for Retirement

Advantages of Participating in Your Workplace Retirement Plan


How much money do you need for retirement these days?

Pre Retiree

Although retirement may seem distant, it is important to start a strategic plan now so you are prepared when that day arrives. Timing is very important, and the sooner you start saving and investing, the sooner you can begin to focus on a life that will not require you to work.

How much money do you need for retirement?

Well it depends on three factors:

(a) when you retire

(b) where you retire


(c) what you plan to do in retirement.

Not all of these questions need to be answered right away, but saving now in a retirement fund that has time to grow is invaluable. Fidelity says to try to have saved at least as much as your current salary by the time you are 35, have three times your salary saved by the time you’re 45, and at least five times your salary by your 55th birthday. When it’s time to retire, your goal should be to have saved at least eight times your ending salary. These numbers aren’t set in stone, but are good benchmarks to follow when starting your retirement savings and investment plan.

Dependable advice in a fluctuating market.

Learn more about our Retirement Planning services.

Related Reading:

Four Things Entrepreneurs Can do Now to Save for Retirement 

Finding Financial Independence

YOLO (You Only Live Once) so you Need a Retirement Goal

Your 401K Program: A Little Savings Now Goes a Long Way

The Benefits of Saving Early for Retirement

Advantages of Participating in Your Workplace Retirement Plan

Sherman Wealth Management


Dimensional Funds Advisors


Early this year, Barron’s posted an article by Beverly Goodman on a program orchestrated by financial firm Dimensional Fund Advisors, led by University of Chicago economist Professor Eugene Fama. Dimensional Fund Advisors’ investment strategy is based on Fama’s early and ongoing research, and the students at this program were the financial advisors who sell its products. Fama is a recent Nobel Prize Winner and the two day, biannual program, held in Austin, Texas allowed the students to hear about new research and new strategies from Fama himself.

Strategies like Dimensional Funds Advisors

It may seem like an exclusive strategy and that the information that Professor Fama spoke about during the two-day program is only available to a select number of people. In truth, this is a strategy that is available to everyone and we are very excited that Sherman Wealth Management can now offer services like this to you. We will determine if any of these strategies are right for your unique financial plan.

We believe everyone deserves sophisticated financial advice. Our mission is to provide the same kind of high-quality investment services offered by the finest financial institutions and private Wealth Managers, without the high account minimums or costs. Please give me a call at (240) 462-5273 or e-mail me at so we can discuss how to help you meet your financial goals.

Dependable advice in a fluctuating market.
Sherman Wealth Management