December 11, 2023

The future of women’s wealth in the U.S. is bright — a finding that opens up opportunities for financial advisors who can adapt to serve a growing wealth cohort.

A new report from the Pew Research Center finds that in almost one-third of marriages, wives earn the same as their male partners. In 16 percent, women were the sole providers.

The findings are part of a larger trend: Women’s wealth is growing faster than ever, adding $5 trillion a year to the global wealth pool. 2020 Research Courtesy of Boston Consulting Group. Women’s wealth will reach $93 trillion this year, the report finds.

In the US, household financial assets controlled by women will increase from $10 trillion today to $30 trillion in 2030. McKinsey Report 2020.

But according to BCG, these shifts are not reflected in the practice of the wealth management industry, and women remain largely underserved. Some 64 percent of female respondents believe their bank or wealth management provider needs to improve its value proposition, the report found.

“While banks and wealth managers often offer products specifically designed for women, gender differences are often superficial or reflect outdated assumptions about women’s role in driving wealth and their interest in managing their financial affairs,” the report said. ”

Transferring wealth to women presents a new set of challenges, but also an opportunity to expand the client base by adapting to women’s needs.

Not only are women’s wealth increasing, but they’re already looking for new advisors to guide them forward, said Jenine Garrelick, senior managing director at Boston firm MFS Investment Management.

“Women are looking for connections to their advisors and subjects—and then thinking about how investments can be used to help them process and resolve the various life decisions and challenges they’re dealing with,” says Garelick.

According to the BCG report, women tend to invest with specific goals in mind, whether those goals are leaving a legacy for the next generation, supporting a retirement lifestyle, donating to a family business or making a social impact in the community.

As the study highlights, advisors need to remember that women live longer but also face different challenges in their financial life journeys, such as the gender pay gap and often taking careers on hold while raising a family.

“When working with women, you really have to remember that sometimes they can be a little bit catching up,” says Cathy Curtis, founder of Curtis Financial Planning in Oakland, Calif., which works primarily with women from parents or grandparents. Clients who inherit property there. “For many years, women’s working lives appeared to be more disrupted than men’s, which sometimes meant lower wages and fewer opportunities to save.”

But the perception that women are risk-averse doesn’t hold water. According to the BCG report, female clients take a fact-based approach—they want to understand risk and look at data before making investment decisions. They also often prioritize diversification to reduce overall portfolio risk.

The strategy seems to be working: More than 5 million analytics in 2021 Over 10 years of Fidelity clients have found that women outperform men by an average of 0.4%.

“Women are looking for education on how to use investing to gain more control over their overall financial situation,” Garrelick said. “It’s about education first, and adventure second.”

Women also seek to align their investments with their values.

Steph Wagner, Head of Women and Wealth at Northern Trust, said of the BCG report: “Wealth managers continue to believe that language about performance resonates more with men than with women, when in reality both sexes value performance. “Women, however, were more likely to hold back and ask questions to better understand how it affected their short- and long-term goals.”

Advisors can play an important role in closing the gender wealth gap. According to BCG, nearly 30 percent of assets held by women are concentrated in slower-growing assets, such as cash and deposits. The Fidelity report also found that 77 percent of women believe they would feel more confident about their financial future if they had a financial advisor to help them invest.

“Advisors can help women stay in the game and create more wealth for themselves,” Curtis said.

But advisors need to overcome their biases. The BCG report found that 30 percent of women said they were talked to differently because of their gender. They were often “belittled” rather than treated as equal partners in conversation, the study said.

The industry also still lacks diversity. According to the committee that oversees planner credentialing, female consultants make up just 29.6 percent of CFP credentialing.

Addressing this issue is especially important to attract younger generations.Majority of Gen Z and Millennial women and men prioritize working with financial service providers with high workplace equality and diversity ratings A survey by Bank of America.

To be more inclusive, Garrelick said, advisors need to recognize that every client is different.

“Respectful listening is an important first step in serving women clients better,” says Garrelick. “Women are not monolithic.”