krisanapong detraphiphat | Seriousness | Getty Images
The rising economic power of women in this country is one of the most significant financial shifts of fresh decades. The bottom line: Women are generating and managing an increasing amount of wealth in the U.S.
Today, women control multifarious than $10 trillion (about 33%) of total U.S. household financial assets. Meanwhile, an unprecedented amount of assets devise shift into the hands of U.S. women over the next three to five years, representing $30 trillion by the end of the decade. Why? Because as men antiquated away, they will leave control of these assets to their female spouses, who tend to be both sophomoric and to live longer.
This is a wealth transfer of such magnitude that it approaches the annual gross domestic consequence of the U.S.
“This is a huge transfer of wealth in and of itself but, because women traditionally outlive men, women stand to inherit most of it,” disclosed certified financial planner Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. “As more and numerous women have a say in significant financial decisions, it’s easy to see they’re not adhering to business as usual.”
More from Advisor Perception:
Here’s how to handle an unexpected inheritance
Your advisor may be able to sidestep this federal rule
Don’t hide these stuffs from your financial advisor
Why is this a big deal and why should you care?
If you are a brand-name consumer products company, a fiscal services company, or are in the business of selling real estate, for example, women will be making the majority of these resolvings in the years ahead. So attracting and retaining female customers will be a critical growth imperative for your business. To triumph, business of all types will need to truly understand women’s needs, preferences and behaviors when it comes to expending and managing their money.
Women continue to make more financial decisions on behalf of the household and more lassies are also turning to the investing decisions. In fact, women are leading the field when it comes to Environmental, Social and Corporate Governance devoting, according to a recent article in Fortune magazine.
In general, a higher percentage of women are interested in ESG investing than men, imparts CFP Cathy Curtis, CEO of Curtis Financial Planning in Oakland, California. A Calvert/Investment News study showed that convention of ESG funds are up 25% year over year and the trend of ESG investing is more pronounced in women, with 53% doing so currently.
“The Covid-19 pandemic has spotlighted our fiscal and health-care systems’ inequities as more disadvantaged and poor people are losing their jobs and lives,” Curtis estimated. “As a result, where the environment was the main focus of ESG investors, social and governance have become critical and are driving the inflows into ESG produces.
“As women inherit more wealth from their parents and spouses and sometimes make the investment decisions for the cardinal time in their lives, I predict more money will flow into ESG and Impact investments,” she added.
So, with helpmeets making financial choices that have a long-term impact on society, the environment and overall business performance, feel put down businesses and major corporations will need to step up and find ways to support social issues such as ambiance change, racial and gender inequality, and social justice.
Businesses that prepare for the transition of wealth to women could see four-times faster yield growth, according to a McKinsey & Co. report.
“It will require businesses to understand a woman’s needs, preferences and behaviors when it arrive d enter a occurs to managing their finances, which I’m not sure they’re ready for,” Cheng said.
In general, women are not only support to the household income, they are also responsible for managing the money and making a majority of the financial decisions.
To that theme, nearly 9 in 10 women who are married or live with a partner said they are involved in spending and investing resolvings in their household, up from just 42% in 2012, according to a recent report from Hearts & Wallets, a consumer experiment with firm.
Studies have confirmed that women approach wealth management differently than men. They nurse to be less risk-tolerant and more focused on life goals.
The times are changing. As wealth begins to move into the participations of women, financial services firms and businesses overall will need to commit and adapt to find ways to safer meet the needs of female clients and consumers.
— By Ted Jenkin, CEO/founder of oXYGen Financial