presumptions that women are less financially literate and less risk tolerant—and if so, under what conditions. And it spells out what women want from wealth managers, and what advisors and the industry need to do to win their trust and loyalty.
A WAY FORWARD FOR WOMEN, WEALTH MANAGERS, AND THE INDUSTRY
This book takes our report one step further: it lays out strategies for advisors and institutions to leverage women’s wealth. Our research demonstrates that, in order to harness the power of the purse, change must happen at two levels: in the culture of firms, and in the behaviors of advisors on the frontlines with clients.
You will hear from men and women in the industry who are implementing innovative solutions—advisors and firm leaders who have learned to listen to women and offer differentiated client experiences that align women’s investments with their goals, their aspirations, and their values. You’ll meet industry leaders who are forging the kind of culture where female advisors can thrive and contribute their insights, deepening the pipeline of ideas that culminate in innovation for female investors. You’ll come to see how inclusive leaders and gender-smart advisors build successful businesses by driving market growth in ways that benefit us all, from boosting educational access to building trust with clients, from launching vehicles that invest in diversity to helping clients thrive wherever they live.
With this research, I’ve come to see my own meaning and purpose as a wealth creator: to connect the industry to its most powerful market, and to use the market to realize women’s most cherished goals. On that afternoon in 2011, my women colleagues and I enumerated a vision for the enriched world we wanted to create, a world where we could strike a balance between the bottom-line, enhance the lives of our families, and have a positive impact on society. I hope this book ignites a transformation for women investors, advisors, and the industry—and that it inspires you to be part of this virtuous cycle.
Part One: The Market
1
The Purse
The power of the purse is mighty—and growing.Women control $20 trillion, or about 27% of the world’s wealth.7 They’re the purse-string holders throughout the developed world: women account for 85% of all consumer purchases in the US, from personal computers to pharmaceuticals, from bank accounts to new homes.8 In developing markets as well, women control spending, with 73% in China and 69% in India saying they allocate household resources for their families.9
But women don’t merely control the purse: they’re filling it. As 40% of the global labor force,10 women already earn an estimated $13 trillion worldwide.11 Women own or operate, according to World Bank estimates, between 25% and 33% of all private business globally.12 In the US, women own eight million businesses, with an annual economic impact of nearly $3 trillion.13 If American women-owned businesses made up a country, it would be the fifth largest GDP in the world, ahead of the UK and France.14 Every year, more women join the ranks of the world’s wealthiest, with a record-breaking 172 women on Forbes’ Billionaires list in 2014, up from 138; 12% of the newcomers are women who created their own wealth.15 Nearly 21% of Financial Times Stock Exchange (FTSE) 100 board seats16 and 17.6% of Fortune 500 executive officer positions, are now held by women.17
Women are increasingly likely, we find, to be their household’s primary breadwinner. Our data shows that among college-educated women between the ages of 21 and 64 working full-time in white-collar professions, 52% out-earn their spouse or partner. Fully 68%—of women we surveyed in China and 68% in Hong Kong report that income from their business and/or compensation from their employment represents their household’s primary source of assets.
Women are, in short, economic powerhouses: they are not just influencing wealth, but dictating its deployment. In the US alone, we find women exercise either primary or joint decision-making control over a purse worth $11.2 trillion. That’s a whopping 39% of the nation’s $28.6 trillion total investable assets. And nearly half of that purse—$5.1 trillion—is managed solely by women.
Figure 1.1
Proportion of women (out of all women and men) who are decision makers over assets in the US*
* Decision-making status was computed by aggregating the number of female respondents who are primary (joint) decision makers over assets held in their name, assets held jointly, or assets held in someone else’s name and dividing by the total number of respondents (men and women). This proportion is weighted by the amount of assets that respondents are primary (joint) decision makers over relative to the total amount of their household assets. Sample includes people who make at least $100,000 annually or have at least $500,000 in investable assets.
† Federal Reserve Flow of Funds Report, 10/4/11-3/12/09, Tiburon Research & Analysis.
While we cannot extrapolate the size of the purse in other countries, we do know from our global sample that, on average, 66% of women describe themselves as a household decision maker. Wealth creators are the most likely to describe themselves as decision makers (as fully 75% do), but surprisingly, so too do 66% of inheritors and 43% of women whose spouses created their wealth. Women in Asia wield the most power: 87% of women in China and 71% of women in Hong Kong say that they are decision makers; in India, 80% of women are in charge of household assets.
Figure 1.2
Proportion of women (out of all women) who are decision makers over household assets*
* Decision-making status was computed by aggregating the number of female respondents who are primary (joint) decision makers over assets held in their name, assets held jointly, or assets held in someone else’s name and dividing by the total number of women respondents. This proportion is weighted by the amount of assets that respondents are primary (joint) decision makers over relative to the total amount of their household assets. Sample includes people who make at least $100,000 annually or have at least $500,000 in investable assets.
This trend persists even when we segment the global female investor pool by wealth level and age. Fully 63% of women in our global sample with under $1 million in assets exercise control over those assets, as do 73% of women with at least $1 million in assets—and as do 56% of women who are 40 years of age or older.18
DEEPENING THE BUSINESS CASE
As decision makers over a sizeable purse, women represent a market that wealth managers and advisors can ill afford to overlook. But because women are wage earners and wealth creators, the purse—and the market opportunity—is growing. Compounding the wealth that women generate is the wealth they will inherit: research conducted at Boston College’s Center on Wealth and Philanthropy estimated that some $41 trillion will change hands by 2055 as Americans pass their assets from one generation to the next.19 In the greater Boston area, for example, it is expected that nearly 63% of the final estates will be in the hands of women by 2055.20 Little wonder that the majority of women we surveyed describe their financial situation as “increasing in assets.” The outlook is particularly rosy in Asia, where more than 75% of female wealth creators in India and China say their assets are increasing. Not coincidentally, nearly 20% the world’s richest self-made women are Chinese.21 As we’ll see in Chapter 6, these women represent the leading edge of the female wealth market.
Figure 1.3
How would you describe your current financial situation: Increasing assets
(Women
