The world of wealth is no longer the realm of men. Women are taking their share, and they want future generations to have the same opportunities and security that they have, if not more. Yet succession planning remains difficult territory for women to explore. If wealth is going to continue giving women freedom of choice, the flexibility and security they enjoyed while creating their wealth needs to extend into their plans for the future.
With each passing generation, more women are coming to earn, inherit and control significant wealth. In a single 30-year period, women shifted the balance in terms of wealth creation and preservation. While in 1989 the American household headed by a woman over 65 was poorer than the average family, by 2019, it was 20% richer1.
New opportunities for women to create and manage wealth are opening like never before. Among high-net-worth (HNW) women, 44% have made their wealth independently2 as business owners. They are taking control of their financial futures and creating the security and freedom that wealth brings for themselves.
However, many women still feel uncomfortable talking about money, especially outside the home, which is presenting a barrier to their long-term financial and succession planning. Many women are at risk of inadvertently managing their wealth in a way that goes against their long-term vision. There is an opportunity to provide women tailored solutions and advice that gives them more freedom of choice and confidence that their family’s wealth is protected and positioned for continued growth.
Women’s view of wealth
Not only are women taking the charge to build their own wealth, but they are also increasingly making decisions about how the family wealth is managed. Surveys reveal that 69% of very-high-net-worth women2 (with more than $5 million in assets) say they are the primary financial decisionmaker. Interestingly, that percentage drops to 50% for HNW women (those with less than $5 million). We can take from this finding that women want more of a say in how wealth is managed the wealthier they become.
Women also want to financially equip their families for the future and for their children’s futures. In their definition of wealth, 38% of women compared to 30% of men2 include ‘preparedness for the future’. It should also be noted that 85% of millennial women2 agree that they want to lay a foundation to define their legacy for future generations.
For self-determined women, especially younger women, security extends to their children, and their children’s children. Women want to use their acquired wealth to give future generations the flexibility and choice that they have enjoyed.
Barriers women face when succession planning
The glass ceiling that women have broken to acquire their wealth seems to reappear when it comes to succession planning. Although women may be comfortable with forging a career path, many feel uneasy when discussing what to do with their wealth. In fact, 61% of women3 would prefer to talk about their own death than money, which could be an aftermath from previous generations who would have considered it rude for women to discuss the topic.
Interestingly, women do recognise the need to talk about wealth. The majority of women (84%)3 believe that understanding their finances is vital to achieving greater career flexibility. Building this understanding would require some conversations, which suggests that women recognise the need to discuss their financial planning but they do not feel comfortable doing so.
Perhaps the reason why women find it difficult to discuss their wealth is that the solutions open to them are not aligned to their wishes and goals. As Maddy Dychtwald, Age Wage co-founder3, says, “Women’s life journeys are not only different from men’s, they’re different from the life journeys of our mothers and grandmothers.” Women’s lives continue to evolve, yet many wealth planning products remain geared towards those of previous generations, making it more challenging for women to secure the legacy they want to create.
Succession planning that works for women
To plan confidently for the future, women need more tailored advice and solutions that answer their changing needs. Studies show that women are more likely to speak to their family4 about their money than financial advisers. This trend appears to continue2 the more wealth women acquire. Women’s reluctance to reach out to professionals could stem from a mistrust or because they feel that the advice they receive will not properly answer their needs.
Women need tailored advice, but we do not mean advice that is geared towards women in general – we mean advice that is tailored to each woman’s own goals. HSBC Global Private Banking explains why5: “Assumptions about women being risk-averse may be based on antiquated stereotypes; the truth is that "women" are an incredibly diverse group of people, and demand adviser relationships that are tailored to their busy schedules and multi-dimensional lives.”
By understanding how individual women define wealth, their financial security and their freedom, advisers can offer solutions that allow them to plan for the future with confidence. Add to this a considerable amount of liquidity included in the plans, and women can enjoy their wealth now while setting their children up for financial success later. Swiss Life Generations is one such product, which can generate as much as EUR65.5 million. Women have complete freedom of choice over how to use this wealth, whether they withdraw some of it early in the product’s life or save it for their inheritors.
Supporting generations to come
It is becoming increasingly important that women have the right financial solutions to support their choices. We can already see the proportion of wealthy women increasing, from 22% of baby boomer women holding $5 million2 or more in assets to 36% of millennial women. As more women acquire wealth, there will need to be more emphasis on ensuring that they can manage their wealth in the way they want.
Overwhelmingly, surveys show that baby boomers and millennials agree2 that they are in control of their legacy (89% and 95%). Women are already empowered and have the resources to shape their financial future – now they need legacy planning to help them realise their goals.
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