Women’s role in the business world is changing. Yet succession planning appears to be lagging behind, with many women still struggling to stay in the business as their lives evolve. Succession planning needs to adapt if boardrooms are to truly open their doors to female leaders.

Over the coming decades, women’s role in business and wealth planning will become more prominent. Although women currently make up less than 5% of CEO positions1 globally, the wheels are in motion for their representation at board level to increase. In an Economist Intelligence Unit study2, half of millennial women with assets over USD$1 million reported they had gained their wealth through business. That’s an increase from 37% of baby boomer women.

Younger generations are pushing through the glass ceiling to run businesses and drive their own wealth. Long-established approaches to wealth management and succession planning need to adapt to better support women.

Women with wealth rise both in number and influence

When it comes to who owns wealth – men or women – the tide is already changing. If we look at the UK, for example, it has been estimated that 60% of the country’s wealth3 will be owned or managed by women by 2025. And in the US, the proportion of women classed as high-net-worth individuals2 is creeping towards equal at 41%.

Women are also taking more control over their family wealth. While less than half of baby boomer women2 say they are the decision maker for financial planning, 72% of millennial women play this key role. Millennial women are also less likely to say that their spouse has influence over their wealth planning decisions (41%) compared to those in the baby boomer generation (54%). And that’s not because more millennial women are single – statistics show they are just as likely to be married as older women.

The role women play in financial planning is growing, and this will only continue as more women become entrepreneurs or business leaders.

Preparing for an unexpected succession

Even if women aren’t involved in a business, and don’t have plans to be, they can find themselves in the CEO seat. Statistics show that in developed countries, women outlive men by seven years4, and by three years in underdeveloped countries. There is a real chance that women whose partners are business owners may become successors. So, they should be involved in the business’s succession planning. Whether to put plans in place to avoid this situation happening or to prime them to become the business leader, women should have a say in their future.

But succession planning needs to go further than simply involving women – it should adapt to their unique needs. Research says that 70% of widowed women5 switch to a new wealth management provider within a year of their spouse’s death. For many women wealth planning, and likely succession planning, is not tailored enough to their own needs.

Research says that 70% of widowed women switch to a new wealth management provider within a year of their spouse’s death. For many women wealth planning, and likely succession planning, is not tailored enough to their own needs.

Succession planning that caters to women

Women face unique succession planning challenges to men. A Harvard Business Review study6 revealed that female business owners were 15% more likely to exit their business for personal reasons than men. These reasons could be anything from the birth of a new child to an illness in the family or a sabbatical or educational programme.

Succession planning can, and should, prepare for women to take time away from the business. This could involve naming a person to step in to provide interim support or hiring someone on a temporary basis. Either way, it is vital that women have access to liquidity to live their personal choices without impacting their own financial security or that of the business.

Supporting the successors

Women should also consider their own succession plans. Anyone at the helm of a business needs to plan for retirement or the chance that they need to resign for health reasons.

For women who only have a few years in the CEO seat – if they have taken over after the death of their partner – succession planning needs to happen quickly. Ideally, these conversations will have taken place before the woman became a widow. That is why succession planning needs to cater better to women.

In cases where one or more of the children takes over the business, it is important that succession planning enables choice for each child. This isn’t a case of simply giving them the option of yes or no – it means arranging the estate so that each heir will receive an equal share whether or not they take over the business. Only with this kind of foresight and flexibility can women ensure their children have the freedom to choose their own career and life path.

Alternatively, business owners can choose to create schemes that prepare people from within the organisation to take over. Some female entrepreneurs may wish for another woman to assume the role. Currently, just 23 of the Global 5007 companies are female-run, and lots of women will no doubt want to utilise their succession planning as a way to challenge the status quo.

Creating security through liquidity

To be effective at enabling women to achieve their personal and career goals, succession planning needs to create liquidity. Only with additional liquidity can women make confident decisions about their future. Whether to pass on the estate equally between children, take a career break, create a fund for the business to buy out the family, or to prepare for a comfortable retirement, having capital available means women have more choice over their future.

Creating this liquidity can be challenging, which is why we have created a high life cover product that guarantees an agreed lump sum of a high value. With flexibility in every element of the product, from the lump sum to the beneficiaries to the investment strategy, women have total control over their succession plans, as and when they change.

« To be effective at enabling women to achieve their personal and career goals, succession planning needs to create liquidity. Only with additional liquidity can women make confident decisions about their future. Whether to pass on the estate equally between children, take a career break, create a fund for the business to buy out the family, or to prepare for a comfortable retirement, having capital available means women have more choice over their future.»

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