Women are controlling more of the world’s wealth, but is the wealth management industry adapting to the change?
Gemma Livermore, founder of the award-winning community Women of FinTech and head of international FS marketing at Seismic, is a passionate promotor of gender equality and inclusion while driving growth and nurturing impactful communities.
Here she discusses where wealth management needs to pivot.
Gemma Livermore
The tectonic plates of wealth management are shifting, heralding significant changes that could reshape the industry. Despite its appearance of stability, with predictable earnings appealing to Wall Street, the sector’s growth has largely been driven by the capital markets’ performance. According to McKinsey, capital markets were responsible for 70 per cent of asset growth from 2012 to 2021.
However, the industry’s organic growth story is less clear-cut. With many seasoned professionals ageing (50 per cent over 55, according to Cerulli Associates) and diversity issues persisting, the sector faces significant challenges. One large group I recently met has more financial advisers over 70 than under 30, underscoring the need for fresh talent and diverse perspectives.
We are in the midst of what financial experts call ‘the great wealth transfer’, a colossal shift of assets triggering a major chain reaction. Cerulli Associates reports that over $84trillion will change hands by 2045, with nearly $12trillion going to charity and the rest transferred directly to heirs. This transfer marks a seismic change, driven by the ageing baby boomer generation passing wealth to Gen X, millennial and Gen Z households, who bring different perspectives on wealth, prioritising sustainability and social responsibility.
Slow to adapt
Despite these monumental shifts, the wealth management industry has been slow to adapt to the evolving needs of female clients. Women are increasingly controlling more wealth, yet their experiences with financial advisers often leave much to be desired.
Many women report feeling overlooked and disconnected from the family financial adviser, particularly in cases of widowhood or divorce. According to Ellevest research, only about half of women know where to go with a financial windfall compared to 72 per cent of men, resulting in women often moving their money into safe but non-growth-oriented bank accounts.
Women seek different qualities in financial advisers: less jargon, less risk-taking, and more emphasis on financial planning, goal-based investing, philanthropy, and investing in line with environmental, social, and governance policies. Increasing the number of female advisers who understand their clients’ experiences is crucial.
Absent significant strategic shifts by wealth management groups and changes in their workforce demographics, the industry might struggle to sustain its historical growth. Women, who are often overlooked in financial advisory relationships, may choose to leave their joint advisers after becoming widowed or divorced. This disconnect highlights the need for a more inclusive approach.
A new era
Successfully addressing these needs goes beyond profitability. Women with wealth tend to be more philanthropic, politically moderate, and community-focused, driving meaningful societal change. The ‘feminisation of wealth’ could usher in an era of moderation and sustainability.
Is the industry ready for this shift? Not yet. Inflection points are challenging to identify, but the cost of missing this one could be significant — for all of us. To prepare, families should prioritise transparent discussions about their financial plans, values, and legacy, potentially with a financial adviser’s guidance. This proactive approach can help manage the emotional and practical complexities of the great wealth transfer.
As women continue to gain control of more wealth, the industry must evolve to meet their unique needs and preferences. The future of wealth management depends on it.
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