The future of American women's wealth is bright — a finding that offers opportunities to financial advisors who can adapt to serve the growing wealth segment.
A new Pew Research Center report found that in marriages, almost one-third of wives earn the same amount as their male partners. And in 16%, women are the only providers.
The findings are part of a bigger trend: women's wealth is growing faster than ever, adding $5 trillion to the wealth pool globally every year, according to a
In the U.S., household financial assets under women's control will increase from the current $10 trillion to as much as $30 trillion by 2030, according to
But those shifts are not reflected in the practices of the wealth management industry, where women remain largely underserved, according to BCG. Around 64% of female respondents felt that their bank or wealth management provider needs to improve its value proposition, the report found.
"Although banks and wealth management firms frequently offer products designed for women, the gender distinctions are often superficial or reflect outdated assumptions about women's role in driving wealth and their interest in managing their financial affairs," the report said.
The wealth transfer to women presents a new set of challenges, but also opportunities to expand a client base by adapting to meet the needs of women.
Jenine Garrelick, the senior managing director at the MFS Investment Management, a firm in Boston, said not only women's wealth is increasing, but also they are already seeking new advisors to guide them along the way.
"Women are looking for a connection with their advisor and with the subject matter — and then considering how investing can be used to help them deal with and solve for the various life decisions and challenges with which they are dealing," Garrelick said.
According to the BCG report, women tend to invest with specific goals in mind, whether those involve leaving a legacy for the next generation, supporting a postretirement lifestyle, endowing a family business or making a social impact in their community.
As the study highlighted, advisors need to keep in mind that women live longer but also face different challenges through their financial life journeys, such as the gender pay gap and usually pausing their careers while raising their families.
"When working with women, you really have to keep in mind that at times they may be playing a little bit of catch up," said Cathy Curtis, founder of Curtis Financial Planning, a firm in Oakland, California, that works mainly with female clients who inherited money from their parents or grandparents. "Women seem to have more disruptions in their working lives than men do over the years, and that equates to sometimes lower pay and less opportunity to save."
But the perception that women are risk averse doesn't hold. According to the BCG report, female clients have a fact-based approach — they want to understand the risks first and see data before making investment decisions. They also often prioritize diversifying their investments to reduce overall portfolio risk.
The strategy seems to be paying off:
"Women are looking for education about how to use investing to take greater control of their finances overall," Garrelick said. "It's about education first and taking the risk second."
Women also seek to align their investment with their values.
"Wealth managers continue to assume that language around performance resonates with men more than women, when actually both genders value performance," Steph Wagner, director of women and wealth for Northern Trust, said about the BCG report. "However, women are more likely to push back and ask questions to better understand its impact on their short-term and long-term goals."
Advisors can play an important role in narrowing the gender wealth gap. Nearly 30% of women's holdings were concentrated in slower-growing assets, such as cash and deposits, according to BCG. The Fidelity report also found that 77% of women believed that if they had a financial advisor to help them invest, they'd be more confident about their financial futures.
"Advisors can help women stay in the game and create more wealth for themselves," Curtis said.
But advisors need to work on their bias. The BCG report found that 30% of women said they were spoken to differently because of their gender. They were often "talked down to" and not treated as an equal partner in conversations, the study said.
The industry also still lacks diversity. Female advisors are only 29.6% of CFP certificants, according to the board that oversees the planner credential.
Addressing that issue is especially important to attract younger generations. The majority of Generation Z and millennial women and men prioritize working with a financial provider who has a strong workplace equality and diversity rating, according to
Garrelick said advisors, in order to be more inclusive, need to recognize that each client will be different.
"Respectful listening is a great first step in better serving female clients," Garrelick said. "Women are not a monolithic block."
