6 minute read
Key Takeaways:
- Women are set to control $30 trillion in U.S. financial assets by 2030, driven by increased education, entrepreneurship, and inheritance from the Great Wealth Transfer.
- Female investors prioritize security, longevity planning, and values-based investing, offering distinct opportunities for financial advisors to personalize their approach.
- 70% of women change financial advisors within a year of inheriting wealth, signaling a need for more relationship-driven, life-goal-oriented service models.
- Women-owned businesses are growing 4.5x faster than male-owned firms, further amplifying women’s influence across the wealth landscape.
- Advisors who embrace the feminization of wealth by tailoring financial plans, offering guidance through life transitions, and building trust will be best positioned for long-term success.
Over the next decade, the financial industry will undergo a dramatic transformation - one driven by the feminization of wealth.
Women are set to take unprecedented control over global financial assets, fueled by rising labor force participation, higher education levels, increased entrepreneurship, and the Great Wealth Transfer from baby boomer men to women.
Let’s explore why this shift is happening and what financial professionals must do to stay ahead.
Women’s Growing Economic Power
Women’s financial influence is expanding faster than ever. Here’s why:
1. Women Are Outpacing Men in Education and Employment
- Women now represent the majority of the college-educated labor force in the U.S.
- As of Q2 2022, 31.3 million women held at least a bachelor’s degree, surpassing the 30.5 million men with the same level of education.
- This trend is accelerating, translating into greater earning power and financial independence.
Figure 1: September 2022
2. Women-Owned Businesses Are Booming
Women are not just earning more - they’re creating more.
- Women-owned businesses makeup 40% of all U.S. businesses, employ over 12 million workers, and generate $3 trillion in revenue.
- From 2019 to 2023, the number of women-owned businesses grew twice as fast as men-owned businesses - and from 2022 to 2023, that growth accelerated to 4.5 times faster.
Even during the pandemic, women-led firms thrived, adding 1.4 million jobs, while male-owned businesses contracted.
- In fact, Kevin O’Leary (Shark Tank) found that 75% of his best investment returns came from companies led by women - a trend observed across multiple industries.
3. The Great Wealth Transfer: Women Are Inheriting More Than Ever
A massive shift in wealth is already underway.
- As baby boomer men pass away, their wealth is increasingly inherited by women - as widows, daughters, or beneficiaries.
- Women live longer than men - by an average of five years in the U.S. and seven years globally.
- Harvard Health reports that by age 85, 67% of the population is female.
This means that over the next decade, women will be first in line for inherited wealth, making them a dominant financial force.
Why Women Invest Differently - and Why It Matters
Women have distinct financial priorities compared to men, and understanding these differences is key for financial advisors.
1. Women Prioritize Security Over Risk
- Women tend to be more risk-averse, focusing on long-term security, retirement planning, and wealth preservation.
- This cautious approach is influenced by longer life expectancy, higher healthcare costs, and the need to ensure financial stability in later years.
2. Women Seek Personalized Financial Advice
- Research shows that women are twice as likely as men to pay for professional financial advice, especially during major life transitions like retirement or widowhood.
- However, 70% of women switch financial advisors within a year of inheriting wealth from a spouse - a major risk for advisors who fail to meet their needs.
3. Women Focus on Family and Impact Investing
- Female investors are more likely to prioritize family well-being, philanthropy, and sustainable investing over short-term profits.
- Advisors who align with these values will have an edge in retaining and attracting female clients.
What Financial Advisors Can Do
To succeed in the era of female wealth, financial advisors must adopt new strategies that cater to the distinct needs of women. Here are some key approaches for advisors:
- Personalize the Approach - Women value advisors who take time to understand their unique circumstances and life objectives. Building trust and personal connections is crucial to long-term success.
- Focus on Life Goals - Female clients prioritize financial goals such as retirement security, managing healthcare expenses, and ensuring they don’t outlive their assets. And as more women increase their earnings power through higher wage potential and entrepreneurship, advisors should align financial plans with these objectives.
- Plan for Longevity – Since women tend to live longer than men, their financial strategies need to account for longer retirement periods, healthcare expenses, and the risk of outliving savings.
- Guide Them Through Transitions - Women often manage their wealth through significant life transitions, such as inheritance or retirement. Advisors should provide both financial and emotional support during these periods.
The Future of Wealth Management is Female
As the Great Wealth Transfer continues, women will play an increasingly dominant role in shaping the financial industry.
For financial advisors, the message is clear: adapt now, or risk losing assets under management (AUM).
Figure 2: McKinsey & Co., “Women as the next wave of growth in US wealth management,” July 2020
Are you prepared to serve the growing female wealth market?
Take Action Today
- Personalize your strategies to meet the unique financial needs of women
- Focus on long-term relationship-building rather than short-term gains.
- Educate and empower female clients to make informed financial decisions.
Ready to grow your practice and better serve female clients?
Contact our Business Development Team today to learn how you can tailor your services for this rapidly expanding market.
Click here for more information.
Sources:
- Women are now a majority of the U.S. college-educated labor force | Pew Research Center
- Wells Fargo Newsroom - New Report Finds Growth of Women Business Owners Outpaces the Market (wf.com)
- Kevin O’Leary's best 'Shark Tank' investments are women-led startups (cnbc.com)
- Why Do Women Live Longer Than Men? (aarp.org)
- Why men often die earlier than women - Harvard Health
- The Great Wealth Transfer: The Future is Female (rpia.ca)
- Women and wealth: The future is female - RBC Wealth Management
- Women as the next wave of growth in US wealth management | McKinsey
Disclosures:
This communication is general in nature and provided for educational and informational purposes only. It should not be considered or relied upon as legal, tax or investment advice or an investment recommendation, or as a substitute for legal or tax counsel. Any investment products or services named herein are for illustrative purposes only and should not be considered an offer to buy or sell, or an investment recommendation for, any specific security, strategy or investment product or service. Always consult a qualified professional or your own independent financial professional for personalized advice or investment recommendations tailored to your specific goals, individual situation, and risk tolerance. All examples are hypothetical and are for illustrative purposes only.
Information contained in the materials included is believed to be from reliable sources, but no representations or guarantees are made as to the accuracy or completeness of information. This document is provided for information purposes only and should not be considered as investment advice.
Dunham & Associates Investment Counsel, Inc. is a Registered Investment Adviser and Broker/Dealer. Member FINRA/SIPC. Advisory services and securities offered through Dunham & Associates Investment Counsel, Inc.