Women comprise half of the population, but were not historically treated as a financial force to be reckoned with until recently. The rising economic power of women is considered to be one of the most significant economic shifts to occur over the past several decades. Women control over half of the personal wealth in the U.S. totaling $14 trillion. And, wealth experts estimate that, by 2030, women will likely be in control of two-thirds of the personal wealth in this country.
This phenomenon is not limited to the U.S. Globally, working women put a significant amount of their earnings into their families vs. men and are responsible for 70 – 80% of all consumer spending, which means they’re also helping to support their economies.
In addition, women are starting and running new businesses at a rapid pace. According to a 2017 report released by the Small Business Administration (SBA), in 2012, women were majority owners of more than 11.6 million U.S. businesses of all sizes, employing nearly 9 million people. These businesses produced $1.7 trillion in sales.
The primary reason for the shift towards women becoming bigger contributors to personal wealth is due to longevity. According to the United States Administration on Aging, approximately 70% of baby boomer wives will most likely outlive their husbands, some by as much as 15 -20 years and will inherit their shared assets. Another factor is a narrowing of the income divide between men and women as more and more women earn college and graduate degrees, start their own businesses, and move up the corporate ladder.
All the stats and graphs generated from numerous studies on these trends point to one conclusion — women are controlling more wealth than ever before.
Watching the Trends
Not only are women today owning and controlling more wealth than ever before, but they are changing the goals of wealth creation and how women manage their wealth. Women will play an increasingly bigger role in the future of wealth management.
While equal numbers of women and men expect to make more of an impact on the world with their wealth vs the generations that have come before them, two-thirds of women feel that they have more opportunity to address societal issues through impact investing.
Very few women of means say they don’t have enough wealth to be able to make charitable contributions. However, there are generational differences with respect to giving back. When it comes to how they give, younger women more often align their investments with their giving goals vs older women. They often look at impact investing as a form of giving back.
For many women, establishing their legacy is more about getting involved in societal causes than it is wealth accumulation. However, there is agreement across generations that it’s still important to lay a foundation to define their legacy for their family and future generations, as well.
Is Wealth Management Different for Men and Women?
Wealth management should not be a one-size-fits all approach. Men and women are going to have different needs when it comes to financial advising and estate planning because of differing career, financial, and personal goals.
At the Jeffrey Verdon Law Group, we have written “Estate Planning for Women Only,” a primer addressing estate planning specifically for women.
1 Women of Wealth, Family Wealth Advisors Council (FWAC)