Demographically, the United States is poised for a massive transfer of wealth in the coming decade.
Consider the following:
Currently, ~70 percent of U.S. affluent-household investable assets are controlled by baby boomers [Federal Survey of Consumer Finances]
Two-thirds of baby boomer assets are currently held as a joint household where the financial decision-maker is most often male
In the United States, women tend to marry partners who are, on average, two years older than themselves
Women outlive men by an average of five years
As the baby-boomer generation ages and family patriarchs pass, wealth will transfer to the surviving spouses with much of the $30 trillion in baby-boomer assets passing to women.
A 2020 study by McKinsey confirms that 70 percent of women have historically changed advisors within one year of their partner’s death and that younger women are more financially savvy than older generations of women.
While there are still major gaps in the industry with respect to serving women, those who excel at closing them will benefit greatly. McKinsey estimates that “firms who retain baby-boomer women could see one-third higher revenue potential,” and those that “acquire and retain younger women as clients could see up to four times faster revenue growth.”
So, what can advisors, who are still predominantly male, recognize about how women manage their money differently that will help them be both positioned and prepared to serve the financial decision-making of female clients?
The McKinsey study identifies several distinctions regarding female investors:
They are more likely to seek professional advice and are willing to pay a premium for in-person financial advice (v. online services or robo advisors)
They are more likely to identify a life event as a motivator for seeking guidance
They are less confident in their own financial decision-making (only a quarter say they are comfortable making savings and investment decisions on their own v. forty percent of men)
They tend to be less risk tolerant; women were more concerned than men in nine of ten categories including outliving their assets, lifestyle maintenance, healthcare, taxes, and market performance
They tend to be less concerned with outperformance and more focused on life goals
They tend to put a higher value on the personal fit of the advisory relationship
So move over James Brown. While it may have been a Man’s World, financially speaking at least, there’s about to be a new sheriff in town.
Christy Charise, Founder & CEO of Strategic Advisor
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