The Crucial Role of Women in the Great Wealth Transfer

With thousands of baby boomers retiring by the day, increasing attention is being paid to the great wealth transfer – the movement of trillions of dollars of boomer wealth to younger generations.

Advisors often look at the great wealth transfer as a generational concept and it is, but it also pays to examine how this massive shift of capital will affect men and women. Specific to the latter, it’s estimated that helped in part by the great wealth transfer, women will control $30 trillion in assets by 2030. That’s not that far off.

On a standalone basis, $30 trillion is truly a massive dollar figure, but advisors need to consider some issues specific to female clients. Those include the points that many women don’t starting investing until they have what they view as enough cash to do so, being risk averse – something that increases with age – perceived lack of personal knowledge about investing.

The good news women, perhaps more so than many men, are not only open to working with advisors, but want to do so.

Don’t Underestimate Women or Their Wealth

A recent Ellevest survey examined the intersection of women and the great wealth transfer. Advisors, head the following: 94% of the women polled said they believe their wealth is being underestimated.

“45% either had received or expected to receive a financial windfall, the typical amount being around $300K. For many, that’s a life-changing amount of money. And these stats may under-count the impact of the Great Wealth Transfer, given that a much higher percentage — 73% of people surveyed — believed they would be able to leave an inheritance,” notes Ellevest.

Something for advisors to keep in mind as it relates to women and the great wealth transfer. For a variety of reasons, females are often less confident about their financial health and outlooks than their male counterparts, but that changes for the better upon receiving a windfall. Inheritance certainly qualifies as that.

“Receiving a financial windfall increases women’s confidence 1.8 times — from 45% reporting that they’re confident with money, to 81%. And it means that they become more confident about their ability to manage their money than even men are (at 77%),” notes Ellevest.

How Advisors Can Help Women Manage Their Windfalls

Exceptionally wealthy women, such as Melinda French Gates, Laurene Powell Jobs and MacKenzie Scott generate headlines because their big donors to causes, often politically charged ones at that, but advisors might want to consider steering female clients away from these grandiose comparisons. Of the trio, only Jobs inherited the wealth.

There are some demographic issues to consider. As Ellevest points out, Gen X women (41%) and Gen Z ‌women (~35%) would stash their windfalls in the bank whereas boomer and millennial women would put it to work in financial markets. All four cases underscore the point that many of these women will seek out advisors. Data further confirm that notion.

“Just 38% of women say they have a financial advisor who can help them navigate a financial windfall. And only about half of women know where to go with a financial windfall vs 72% of men. (This skews toward younger women, with just 40-45% of Gen Z and Millennial women knowing where to go vs 62% of Boomer women.),” concludes Ellevest.

Related: Advisors Need To Help Clients Dealing With Gray Divorce, Particularly Women