Women and Wealth: Estate and Financial Planning Considerations

May 10, 2024 | Estate Planning & Administration

The Great Wealth Transfer: A Window of Opportunity

There’s a major shift happening in the world of wealth. The Great Wealth Transfer will soon put wives, mothers, sisters,  and daughters in control of more resources than ever before.  By 2030, it’s estimated that women in the United States will have influence over an unprecedented $30 trillion in assets. With this massive transfer of wealth on the horizon, now is the time to consider its impact. 

Despite this impending shift, a significant underrepresentation of women working with financial advisors exists. Shockingly, only 38% of women have a professional advisor to help them navigate financial windfalls. This means a large number of women may be handling their wealth on their own.

Financial professionals have an opportunity to embrace this growing segment of potential clients. There is a great need in this emerging market. Financial advisors can build and retain clients by tailoring services to meet the unique needs of women investors. 

Women and Wealth Management

Did you know that 70% of women change their financial advisor within a year of their spouse’s or parents’ death? This staggering statistic highlights a significant challenge faced by many financial advisors. How do they maintain asset management when female heirs assume control of family wealth?

More importantly, why do some females feel the need to switch advisors after their spouse or parent passes away? Here are a few reasons why they may feel underserved:

1. Lack of communication: Many women report feeling ignored or brushed aside during meetings with their financial advisors. Some women believe their advisors unconsciously favor male clients and direct investment decisions to the family patriarch.  Women are looking for the same personalized service they feel their male counterparts receive. Missing out on key communication cues from female clients can motivate them to seek out advisors who they feel will listen to them.

2. Lower Financial Self-Confidence: For various reasons, some women may feel less confident in their financial decision-making. They might look for an advisor who can help educate them on investments and savings-related decisions and empower their financial literacy while supporting their goals.

3. Wealth management differences: Many women view wealth not merely as an end but as a means to achieve objectives that reflect their values and life priorities. Consequently, women’s investment strategies often focus on funding specific goals such as securing a family legacy, enhancing a post-retirement lifestyle, supporting a family business, or making impactful community contributions. Unlike men, who often prioritize asset performance, women tend to invest in ways that align with their personal values.

Financial advisors can serve this demographic by understanding how to partner with women leading their family’s wealth management. Building trusting relationships, providing personalized attention, and growing financial confidence will go a long way.

Understanding the Investment Priorities of Women

Many women have different wealth goals than their male counterparts. Their ideal outcomes for investment strategies often extend beyond financial returns. Women who manage their family assets often do so for the benefit of others. These considerations include providing for their children’s education, supporting family members in need, and contributing to charitable causes. This holistic approach reflects their life experiences and their roles within their families.

1. Education Funding: Many women prioritize ensuring their children have access to quality education. They are more likely to allocate funds specifically for educational purposes, viewing it as a key to unlocking their children’s potential and securing their future.

2. Family Support: Women often view their wealth as a means to assist family members who may need financial help, whether for medical expenses, elder care, or other personal crises. Their investment decisions frequently reflect this commitment to family welfare.

3. Longevity Planning: With women generally outliving men, there’s an increased focus on managing assets to support a longer retirement period. This includes investments in annuities, long-term care insurance, and other financial products designed to provide stability in the later stages of life.

4. Charitable Giving: Charitable giving is another area where women’s investment choices stand out. Women tend to donate to causes that resonate with their personal experiences and values. Some common areas of giving include early education, women’s health, and climate change. 

The Importance of Personalized Financial Strategies for Women

Women’s investment strategies can be deeply intertwined with their life goals, family commitments, and altruistic desires. By understanding what drives women investors, financial advisors can better tailor their services to meet these unique needs and priorities.  

To connect with women directing their family’s wealth, financial advisors could incorporate some of these suggestions into their practice: 

1. Know. Like. Trust: These three stages of relationship building can resonate with female clients. Women directing wealth might look for advisors who display deep expertise and knowledge and possess a likable personality.  Over time you’ll build trust, rooted in solid recommendations and reliability.

2. Address the complete financial picture: This broad perspective encompasses everything from daily budget management and long-term investment planning to retirement strategies and estate planning. By addressing the complete financial picture, you can ensure all elements of the family’s financial health are aligned with their overall life goals.

3. Personalize planning: Regular communications allow advisors to better understand their clients’ values, aspirations, and concerns. This insight enables them to provide financial advice that resonates.

4. Create confidence in decision-making: Empowering clients to voice their opinions and ask relevant questions helps them feel heard and understood. This connection builds confidence, leading to more active involvement in the decision-making process and greater satisfaction with the outcomes.

5. Help knowledge transfer: One of an advisor’s most important roles is sharing knowledge. Take the time to educate clients on various aspects of wealth management. Through regular engagement, clients develop a solid understanding of their family’s financial assets.

Engaging Women in Financial Planning

Here are some strategies to better engage with current or future female clients.

1. Listen and understand: Take the time to listen and understand their financial goals. Women are more likely to expect investment strategies to align with their values and life goals.  Show genuine interest in their unique circumstances and concerns.

2. Use positive language: Build confidence with positivity and optimism. Don’t avoid talking about risks or challenges but take a communal approach that builds on the team concept when making important investment decisions. 

3. Educate and empower: Offer educational resources and workshops. Create some opportunities specifically catered to women who oversee family finances. Empower them with the knowledge they need to make informed decisions about their financial future.

4. Build trust through empathy: Show empathy and understanding towards the biases women may face in the financial world. Establishing trust early can go a long way in maintaining long-term client relationships.

5. Customize strategies: Female investors often have different needs and goals than men. Tailor advice and strategies to align with their preferences.

By following these best practices, financial advisors can engage women and create long-lasting client relationships. Understanding and addressing each individual’s unique needs is key to maintaining them as a client.

The Importance of Women Investors

Financial advisors may benefit from adapting practices to better serve women investors. Building strong relationships, offering comprehensive solutions, and providing ongoing support are essential to secure client trust. By understanding the priorities and challenges faced by women, advisors can help them meet their financial goals and preserve their wealth.