Women and the Great Wealth Transfer

A great wealth transfer is coming, and women may emerge as the biggest beneficiaries. Approximately $30 trillion in wealth is set to change hands in the next three to four decades, and women are poised to inherit a sizable share from their spouses and aging parents. Despite the persistent gender pay gap (women still only earn approximately 80% of what their male counterparts do), many women are intentionally accumulating their own wealth by climbing the career ladder. 

Unfortunately, according to RBC Wealth Management’s 2017 Wealth Transfer report, just 22% of women have a comprehensive wealth transfer plan in place. The services of an advisor are necessary to guide successful wealth transfers at this critical juncture where the financial stakes are so high. (Read more: Preparing Clients for a Successful Wealth Transfer)

“It’s critical that women seek professional guidance regarding wealth management,” says Malia Haskins, vice president of wealth strategies at RBC Wealth Management. “Women are attaining financial roles and responsibilities that are taking them beyond simply controlling the household budget.”

What do women want when seeking financial advice? Determining the answer to this question is crucial for financial advisors as the wealth management landscape shifts to accommodate the growing needs of women. (Read more: How Advisors Can Tackle the Big Wealth Transfer)

Currently, the majority of the financial planning professional is male, with women accounting for only 16% of financial advisors and less than a quarter of certified financial planners. This influences the dynamic between advisor and client, especially when their values diverge. An EY report reveals that there are several key areas in which men and women diverge when it comes to their financial planning goals. Thirty-five percent of women want a deep understanding of their investment goals to be central in their wealth management experience.  

Myra Natter, a certified financial planner and wealth advisor at Titus Wealth Management in Larkspur, California, says advisors, who are typically male, can position themselves to attract and retain female clients by recognizing their need and desire to understand. “When approached in a way that makes finances easier to use and understand, women are more likely to become comfortable with the investment process.”

That includes understanding the unique challenges that women can face when managing wealth accumulation. For instance, they may have to take time away from the workforce to care for children, or aging parents, and structure their portfolios to account for longer life expectancies.

Women also approach risk differently, says Gretchen Cliburn, director at BKD Wealth Advisors in Springfield, Missouri: “Women are less likely to take on as much risk as men and with less risk, they may need to save more to achieve their goals.” This choice requires that they are more focused and diligent, and advisors can encourage this strategy by creating a space for open dialogue.

“Advisors need to break down the barriers that prevent women from asking questions,” says Leslie Thompson, managing principal at Spectrum Management Group in Indianapolis, Indiana. “If an advisor finds that their female clients are hesitant to meet with them or reluctant to speak, they need to dig deeper to find a common ground to begin a discussion on how to view and manage their wealth.”

Women can be pragmatic when it comes to their finances, but there’s an element of emotion that also influences their decision-making.

According to Haskins, the framework for women’s decision-making tends to be built on family and relationships: “To help ensure their client’s relationship values are incorporated into financial decisions, an advisor needs to explore both facets – get a deep understanding from the client about what is important from an emotional and relationship perspective and combine that with the specific financial picture the client is working under.”

Haskins says savvy advisors need to be able to manage both financial and emotional objectives in order to be effective in guiding women through the wealth transfer and wealth management process. Getting to know clients on an emotional level can deepen the professional relationship, and allow women to better relate to the financial strategies being proposed. (Read more: The Unique Ways Women Approach Finance)

Acknowledging the emotional element can also help bridge potential communication gaps. It’s possible that the language of financial planning may not be familiar to some women, but advisors should not assume that they do not understand it.

Natter says advisors must avoid patronizing women clients, and focus on explaining their financial situation and options in a way that resonates with them. According to the EY report, women are more likely to place greater trust in an advisor than men when the advisor clearly explains their investment decisions and prioritizes their goals.

“Advisors who ask clarifying questions and understand a woman’s goals and concerns will be better positioned to provide meaningful advice in a non-threatening way so that it’s well-received,” Cliburn says.

Asking questions is one half of the equation; advisors also need to listen to what women have to say. “Advisory relationships should not be one-way communication paths,” Thompson says.

The great wealth transfer is far enough in the future that advisors still have a chance to prepare for an impending increase in demand for their advice from women. To succeed in a changing wealth management environment, advisors must be prepared to create a holistic experience for their female clients, Haskins says.

That includes designing a customized, comprehensive financial plan, recommending appropriate financial solutions, and being able to pivot the plan to adapt to women’s changing lifestyles and needs over time. Haskins says the advisor who can do that, “... will cultivate relationships that will endure market fluctuations and other economic forces over the long haul.”