The 2022 survey of McKinsey, a global management consulting firm, says in Western Europe, women investors now control roughly a third of total assets under management (AUM), valued at some 4.6 trillion euros. By 2030, women’s share of investments is expected to reach 45% of AUM and a total of 10 trillion euros.
Women control more than a third of total US household financial assets—over USD 10 trillion—and with large sums of money expected to change hands in the next decade, women are projected to be the next wave of growth in US wealth management. Recognizing this shift, some leading institutions are setting up dedicated units to serve women investors, though many others have yet to act.
Relationships are an important issue
The female market segment is significantly large. Of the 4.6 trillion EUR in assets under management (AUM) held by women, 3.6 trillion EUR (i.e., 78%) are held by women who are married or in partnerships and are the main financial decision-makers in their households. Single and divorced women hold the remaining 22% of AUM.
Thus, relationships play a significant role in wealth management. When asked whether they would change their bank or adviser if they were separated from their partner, 40% of women said yes, compared with 29% of men. It means that a sizable portion of women’s AUM could be at risk if the relationship breaks down. Or, on the contrary, it can be a chance for new offerings for women.
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Rebecca Tunstall, an investment director at Rathbones Investment Management, focuses specifically on divorcees. “Most are in charge of their own finances for the first time in their lives,” she says for the Financial Times. While the immediate job is to guide them through the practical financial issues thrown up by the divorce, “it’s vital to empower women who may not have had much experience with investments with the knowledge and understanding to be able to engage with us”.
Women have different financial Goals
Women, as primary breadwinners, face societal pressures, relationship tensions, and time constraints that often prevent them from taking a more active role in important financial decisions about the money they are earning.
When providing service to female clients, an advisor or wealth manager may find that women have different financial goals than men do. For instance, they may want to retire earlier, have money to support adult children, or care for a sick or ageing family member. If they are younger, they may want more held in liquid assets to cover periods of childbearing.
The Financial Times notes that “wealth managers who fail to recognise the specific needs of a growing potential female client base or assume that a one-size-fits-all approach will do the job are therefore likely to miss what could prove to be a rewarding field”. Recent research from Schroders found that only 5% of advisers have a differentiated strategy for attracting and retaining female clients.
Preserving the Wealth for next Generations and Sustainability
When asked about wealth management, women prioritise the management and preservation of their wealth with a view to eventually transferring it to the next generation. This is according to a survey of female clients by Lombard Odier, carried out in French-speaking Switzerland, France, Belgium, and Luxembourg during the first third of 2023.
Then, female investors are strongly in favour of sustainable investments. They are particularly interested in responsible consumption and recycling. Their investments must contribute to building the world that their children will inherit. Far from being taboo, more than 50% of respondents said that they have openly addressed inheritance questions within their family.
Young Investors Numbers are growing
A 2021 study by Fidelity, a financial services corporation, found that 67 percent of women are now investing outside of their retirement accounts. In 2018, this number was just 44 percent.
One of the most promising findings is that investing is particularly popular with younger women. Fidelity found that 71% of millennial women were investing outside of retirement, compared to 67% of Gen Xers and 62% of baby boomers. Women are also getting started with investing much sooner.
In 2022, Fidelity found that women in the 18-to-35 age group first opened a brokerage account at age 21 on average and a retirement account at age 20. Women 36 and older first opened a brokerage account at age 30 on average and a retirement account at age 27.
