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The private wealth gender rebalance

30 October 2020

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Around the world women aren’t only enjoying growing levels of wealth, they’re also increasingly in control of it. Greater equality of wealth is to be welcomed, but what does it mean for private wealth practitioners who find themselves having to deal with a broader client base with different expectations and demands? Camille Hordeaux, Director of Private Wealth at Intertrust in Guernsey, explores the rebalance and asks what women are doing with their wealth.

Women’s wealth is on the rise throughout the world and as more and more women join the ranks of the HNWIs wealth advisors need to adapt to adequately serve this growing market.

Just as the number of female HNWIs is increasing, so are the sources of their wealth. High-profile divorces tend to grab the headlines – MacKenzie Scott instantly became the world’s fourth-richest woman when she divorced Amazon founder Jeff Bezos last year – but entrepreneurship is also a major contributor to the global financial rebalance.

Factors like divorce and inheritance will continue to play major roles in wealth transfers but a clear trend has emerged of millennial women making money faster than their forebears and more often doing it through their own business interests.

RBC Wealth Management reports that half of millennial women had gained their wealth through business (compared to 37% of baby boomer women) and 21% of women with US$5 million or more in investable assets are owners/founders of a business, self-employed or entrepreneurs.

Women taking control

A growing entrepreneurship is resulting in more women with greater financial independence. 72% of millennial women are the primary decision makers, according to RBC, and many women cite breaking free from social constraints as a motivating factor in starting a business.

More women coming through the doors of fiduciary firms is resulting in more diverse conversations about wealth and is sparking some truly fascinating observations about the different outcomes and ambitions that women have compared to men.

For example, RBC notes that desire to tackle societal issues with wealth is slightly more prevalent among women (66% compared to 56% of men) and, similarly, 72% of women believe their business should have a positive charitable impact (compared to 65% of men). To return to Ms Scott, she announced just last month that she has so far donated US$1.7 billion to a variety of institutions and causes.

What’s equally relevant is that millennial men and women all expect to have a greater, broader impact with their wealth than previous generations. Generational differences are a separate but related consideration for practitioners but are certainly illuminating on the issues that will face the private wealth community now and in the future.

Adjust now to meet new needs

Practitioners need to adjust their approach now in order to meet the rebalanced client base of the future.

Women don’t want special treatment from their advisors – they want to be treated equally and with respect. After all, the definition of a successful business owner is the same no matter which gender you are.

Firms should consider the match-up of client and advisor. It’s important that clients feel culturally and gender comfortable when choosing advisors, so discuss this with them and ascertain the optimum client-team composition for them.

Likewise, when dealing with a wealthy family don’t assume who the main wealth owner is when you meet a couple; and involve female family members in discussions and considerations from the outset. Building a relationship with the whole family will leave you in a better position should the dynamic change, but will also set you up to better understand what different genders and age groups expect from their private wealth service provider. According to the consulting firm Iris, 80% of women leave their financial advisers after losing a spouse – so don’t miss the opportunity to form solid relationships from the start and protect yourselves in the event of a change in circumstances.

Much of the cultural adjustment will be achieved through the changes that are occurring increasingly organically within fiduciary organisations and teams. Women are rising up the corporate ladder quicker than before and increasingly occupying senior roles. Research from Oliver Wyman shows that female representation on boards across the financial services industry worldwide is 23%, up from 17% in 2013 and 11% in 2003.

Here at Intertrust we’re proud of our diverse global leadership team. Having multiple perspectives in our senior team means that we’re better aligned to our varied client base and take a much broader view of the service we provide and our aims and vision.

Increasing diversity overall at the highest level is becoming more common and there’s plenty to be done to achieve a greater gender balance in financial services.

The private wealth client base is changing, and the organisations who adapt to this change will be the ones to survive in a rebalanced world.