Men and women approach taxes & investing differently

By Gennaro De Luca

Special to the Financial Independence Hub

Anyone who is in financial services, and especially wealth management, knows there are big differences between men and women in terms of how they invest. But what isn’t as well known is that there are also big differences between men and women when they do their tax returns.

I started working at a bank at the age of 19, have been in financial services since 1990, and have spent the past 18 years in wealth management. But I also have a company that specializes in doing tax returns for small businesses, families and students. All this experience has provided a lot of insight into how men and women differ when it comes to financial matters.

Let’s first look at tax returns. Nine times out of ten it is the woman who takes the bull by the horns to get the family’s taxes done. Women tend to be more involved and are much more apt to ask questions of their accountant or tax preparer. Men may not ask any questions at all; they just hand over their documents and see you later.

What kind of questions am I talking about? Women want to know things like this:

• What kind of tax credits are we eligible for?
• Are there any government benefits we are eligible for?

That latter point is especially important for women who have small children. Indeed, many young families are really squeezed nowadays, so every opportunity for a tax break is vital.

Here is a perfect example from a client that illustrates what I mean. The woman is a teacher who could claim certain expenses for driving her car to work. Her husband is not a teacher, but does work for an employer. She asked us if her husband is also eligible for this same deduction because, like her, he drives a car for his employer and has lots of expenses.

As it turned out, he was eligible for what is known as a T2200, which is a declaration of conditions of employment –- effectively work-related expenses –- and in his case it meant deductions of $10,475, which resulted in a tax saving of over $3,000 on his tax return. But if his wife had never asked the question, none of this would have been claimed.

Men are more resistant to change

Another difference with doing taxes concerns technology. Today more than 80% of tax returns in Canada are done digitally, and our company offers a unique service in that everything can be done digitally but with the help of a tax professional. We even have an app that allows you to take photographs of all your documents and receipts. You take the photos and send them to your secure, encrypted account.

Of course, you can do this from an iPhone. But while men are happy to do so with their mobile device, women are more likely to do it on a desktop. On the other hand –- and this may come as a surprise –- women tend to be more open to adopting new technology. A lot of men are somewhat resistant to new technology and, as said earlier, like to bring all their documents in to us the way it’s always been done. So in a general sense I would conclude that men are more resistant to change.

As for investing, there are also big differences. The main ones are that women are much more interested in the future and in planning for that future than men, and it’s no secret that they are also far more risk-averse than men. Women are more open to budgeting and having some kind of plan for savings, while men tend to be more growth-oriented and are more willing to accept risk.

I would also say that men sometimes have an inflated sense of their own ability to manage their investments and that means they can take on too much risk, which may lead to disastrous results.

When it comes investing, risk is always the key. And when it comes to tax returns, well, it’s always a good idea to keep asking questions.

Gennaro De Luca is the Founder of TAXplan Canada, a Certified Financial Planner, and Senior Partner of Redwood Capital Management, a financial advisory firm that offers services in all areas of financial planning including tax, insurance, wealth management and mortgage planning. Before starting his business he was with Investors Group, rising to the position of Associate Regional Director in Toronto. He has a B.A. from York University.