Financial Poise
a baby boomer woman, representing women and the great wealth transfer

The $68 Trillion Great Wealth Transfer Is Coming: What Most Advisors are Missing

As Money Changes Hands, Don’t Overlook Women and Wealth

The business and finance world feels excited about the greatest wealth transfer in history. This is the estimated $68 trillion in wealth passing down from baby boomers to their children and other heirs over the next 30 years. It is of vital importance for wealth managers, accountants, attorneys and other advisors to prepare for this massive wealth transfer by developing a relationship with clients’ children and getting them more involved in the planning process.

However, as financial advisors look for ways to cater to millennials and their unique financial habits, they miss the opportunity to work with an overlooked group that will control much of the narrative during the wealth transfer: women. How can advisors approach women and wealth?

Advisors Miss a Critical Inheritance Step in the Great Wealth Transfer

Before the next generation inherits these assets, they will be in the hands of baby boomer women who, after their husbands die, suddenly control massive amounts of wealth. (After all, women tend to live longer than men, and the majority of wives are younger than their husbands.)

Boomer women often emerge as the “middle-person” long before their children inherit the “family fortune.” Amid this trend, it is important to understand that women, particularly baby boomer women, often have different priorities and needs than their male counterparts.

Here’s what advisors should keep in mind when working with women and wealth:

Why Your Firm Needs Women in the Workplace

According to the Barron’s, women make up just 15-20% of all financial advisors,. The American Bar Association reports that women make up 38% of legal professions—19% of whom are equity partners.

While many women trust their male advisors, having a strong female presence at your firm can be a tremendous asset and help you stand out from the competition, especially when attracting and retaining female clients.

This is particularly the case with baby boomer women. It is likely that boomer women were largely uninvolved in their family’s finances throughout their lives. Males and females tend to have different priorities when it comes to managing their finances, and a woman advisor can be invaluable in helping women feel more comfortable throughout the process.

From entry-level to partner, retaining strong female professionals at your firm should be a top priority.

This will also help when it’s time to work with baby boomer children. According to Boston College’s Center on Wealth and Philanthropy, women will inherit up to 70% of intergenerational wealth over the next several decades. Once you have a strong female presence in your office, do not be afraid to let them run with any ideas they may have to better cater to your female clients.

For Boomer Women, Financial Education Is Key

Because baby boomer women may not be as involved in their family’s finances as their younger counterparts, education is critical. Workshops and seminars can be a fun way for a group of female clients and prospects to get together and learn about the financial topics that are most relevant to them.

A woman who was not involved with the family’s day-to-day finances may not even know where to begin when meeting one-on-one with their CPA or estate planning attorney. A group setting that covers different topics could allow her to build her knowledge in a more manageable way.

Help advisors connect with their boomer clients on a more regular basis. Classes can build loyalty as clients start to invest more time with their advisor and possibly even develop friendships with other clients. E-newsletters, blogs, social media and handouts are also valuable educational tools.

While male advisors can be invaluable resources as well, female advisors can be more effective at education initiatives. Group meetings where only women are present are more likely to elicit questions from women who might feel less comfortable asking questions with men present.

Furthermore, a study from King’s College and City University London found that female clients reported higher risk tolerance, knowledge and confidence when working with a female advisor, and held 10% fewer points in cash in their portfolios, compared to female clients who worked with male advisors.

Women and Wealth: Female Money Management Styles

There is a wide range of money management styles, and all of them should be considered as new clients are brought on with this great wealth transfer.

Some boomer spouses and partners may be more risk-averse when it comes to their finances. They may be more focused on short-term budgeting than long-term financial performance and planning.

According to a study from SoFI, women are much less likely to choose an aggressive investment plan (38% women vs 53% men) and invest only 5.4% of their income compared to men, who invest 6.6% on average. They are also more liable to feel that investing is a risky bet, and they focus more on paying debt and other daily expenses.

This is amplified in the boomer age group of women, who tend to have less financial education and involvement than younger generations.

The good news: Women who do invest outperform their male counterparts by 40 basis-points or 0.4%.. As wealth managers, accountants, attorneys and other advisors to these boomer women, we owe them personalized guidance that they can feel confident in trusting.

Especially during the difficult time after losing their partner, we advisors must be sensitive to the new barrage of financial information they must handle during the wealth transfer. We owe it to our female boomer clients to involve them in the family’s financial decisions long before such stressful situations.

We must continue to be a steadfast resource, before and after they entrust us with their family finances. It is the right thing to do, professionally and morally.

[Editor’s Note: To learn more about this and related topics, you may want to attend the following webinars: Basic Investment Principles 101 – From Asset Allocations to Zero Coupon Bonds and Goal Based Investing – Planning for Key Life Events. This is an updated version of an article originally published on February 17, 2017.]

©All Rights Reserved. May, 2020.  DailyDAC™, LLC d/b/a/ Financial Poise™

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About Rhonda Ducote

Rhonda Ducote is President/Principal at Apriem Advisors, a wealth management firm in Irvine, CA. Share this article:

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