5 minute readThis article was written by Jamie Jones, Regional Director, and Rebecca Pearson, Regional Account Manager, for the Southeast Region at Dunham
An interesting dynamic of the great wealth transfer is how it will impact women.
A recent article in The Washington Post highlights that women will inherit $30 trillion of Baby Boomer wealth by the end of this decade. This is almost equivalent to the annual U.S. GDP and represents three times more than the $10 trillion they control today,
The Feminization of Wealth
In the Southeast Region, we both impress upon our financial advisors that this massive transfer of wealth to women is a MOVEMENT, and it has a name.
It is the “The Feminization of Wealth”.
We view The Feminization of Wealth as an unfolding demographic shift so powerful, so potent, that it might change this country, and we are surprised how few financial advisors are thinking about this.
How Can You Advise This Group?
This is why we are training our male financial advisors to develop a strategy for working with women.
As two southern-born and raised women and financial professionals in our industry, we feel we can offer some valuable insight on this topic, not only from surveys and studies but, more importantly, from experience.
We encourage our financial advisors to listen more intently and say, “I want to serve you and be a part of this movement with you.”
If the financial advisor is working with the husband, we stress the importance of including the wife in discussions and encourage listening and asking questions about her view on money, risk, family, and charitable giving.
Women of the Golden Rock
We (Rebecca) started Women of the Golden Rock as a program designed to encourage our financial advisors to conduct women's events but to move away from the typical events they host dealing only with financial topics. We encourage events with topics that would interest women, like wine tasting and fashion shows, and carve out a portion of the event to increase the financial literacy of this dynamic group that is changing the financial landscape.
Why is this important?
We feel women are more social, compassionate, and nurturing. Our experience and observation have us believe that most women tend to reinvest their profits in family and community. Women represent the greatest untapped resource of the developing world, and they generally don’t care about legacy as much as men; they care more about their heirs, helping other women, helping underserved communities, and charitable giving.
Women empower other women, which, if you can cultivate this group, could compound the impact that this great wealth transfer will have on our culture and your practice.
The Dalai Lama said that “Western women will save the world.” Financial Advisors need to help women see that they are the change.
What is a world when wealth is feminized? In our view, it is a better world for everybody.
We always say to our financial advisors that “women are the new face of wealth.”
How does this tie to the importance of DunhamDC?
Fidelity’s research reveals that women make healthier investment decisions than men. For instance, 51% of women STAY THE COURSE during market dips, compared to only 43% of men.
They found that 60% of women are also actively investing and adopting a less reactive, less emotional approach toward recent market ups and downs compared to their male counterparts. Fidelity’s research also found that more women are seeking financial guidance, with a 19% increase since 2019, surpassing a 16% increase in men.
When considering investing with less emotion and developing a plan that, in our view, is easier to stay with because it has historically owned fewer equities at market peaks and more at the market cycle bottom.
As women, we can say this type of investing, while not right for everyone, truly resonates with us.
The Feminization of Wealth represents a monumental opportunity for financial advisors to adapt and thrive in an evolving landscape. By recognizing and embracing the unique perspectives and priorities of female clients, advisors can enhance their value proposition and contribute to a more inclusive and equitable financial future for all.
Sources
(1) What is the Feminization of Wealth?, by Sallie Krawcheck, March 27, 2024, https://www.ellevest.com/magazine/disrupt-money/feminization-of-wealth-outlook#:~:text=To%20TL%3BDR%20this%20historic,and%20then%20to%20their%20kids).
(2) The Wealth Transfer from Baby Boomers Mostly Benefit Women, by Brittany Shammas, January 16, 2024, https://www.washingtonpost.com/business/2024/01/16/women-economic-power-demographic-shifts/
(3) Fidelity Investments® Study: Women Tapping Into Their Financial Superpowers to Gain Ground with Their Money, by Fidelity Newsroom, October 9, 2023, https://newsroom.fidelity.com/pressreleases/fidelity-investments--study--women-tapping-into-their-financial-superpowers-to-gain-ground-with-thei/s/f912c67e-75e9-4398-9ea8-dd6e196005a4
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DunhamDC (“DunhamDC”) is a proprietary algorithm of Dunham that seeks to mitigate sequence risk, which poses a threat to an investor's returns due to the timing of withdrawals. The algorithm employs what Dunham considers to be a pragmatic strategy, generally making incremental increases to the equity allocation when global stock market prices decrease and decreasing it when global stock prices increase. This approach is objective, unemotional, and systematic.
Rebalancing is initiated based on the investment criteria set forth in the investors application and is further influenced by the DunhamDC algorithm.
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