Women control increasing wealth, and seek other women for financial advice

By JULIA HEALY   On June 14th, 2021   From Currentsneo.com 

 

Women’s wealth is growing twice as fast as men’s in the U.S., thanks to changing demographics and women’s advances in the workplace. Today, women control more than a third of U.S. household assets—at least $10 trillion. By 2030, that figure is expected to balloon to $30 trillion. Women on the receiving end of those assets increasingly seek the advice of other women to manage, invest, and secure that wealth for themselves and their families.

Vast wealth is transferring to women for three main reasons

Demographic trends are the main driver of this massive wealth transfer. According to a 2020 study by McKinsey & Co., baby boomers control roughly 70 percent of U.S. household investable assets, two-thirds of which are held jointly by married heterosexual couples. As men pass, those assets will flow to their spouses, who tend to be both younger and longer-lived. About half of women over 65 outlive their husbands by 15 years.

Another contributing factor is the high rate of divorce among couples over 50—sometimes called “gray divorce.” Despite an overall decline in U.S. divorce rates since 1990, divorce rates among older couples have more than doubled. COVID-19 lockdowns suppressed the effect somewhat, but as the pandemic phases out, lawyers and counselors are beginning to report a resurgence in gray divorces.

Finally, women earn more than they once did and are becoming more financially savvy. McKinsey & Co.researchers have seen a 30 percent increase in the number of married women making household financial decisions. More women than ever are the family breadwinners, and 40 percent of new entrepreneurs are women. The share of women in corporate C-suites has risen from 29 percent in 2015 to 44 percent now.

Advisors help manage, invest and secure women’s wealth

Today, information about investing and managing finances is just a few keystrokes away. Free retirement calculators, portfolio analyzers, and personal finance apps abound. Friends share investment tips on social media, or join investment clubs. Sifting through all this advice to make wise financial decisions requires skill and dedication. Not everyone has the time or inclination to do it, or the discernment to avoid potential pitfalls. That’s where financial advisors can help.

Financial advisors meet with clients to assess their current financial situations and goals. They create investment strategies, invest funds, minimize taxes, rein in emotional decisions, curb financial risks, structure account withdrawals during retirement, and gain access to more rarefied investment opportunities not typically available to the average investor.

Lauren Rich Fine, CFA, is Managing Director of Investment Management Services at Gries Financial Partners. After working on Wall Street for 20 years, she joined GFP where her client base is predominately women, many of whom are divorced.

 

Some, like Gries Financial Partners, also offer planning services such as analyzing a client’s monthly expenses, assessing the tax consequences of selling a piece of property, or helping the client understand the financial implications of buying vs. leasing a car.

Lauren Rich Fine is the Managing Director of Investment Management Services at GFP, the first female-owned registered investment advisor (RIA) firm in Ohio. Founded in 1978 by Sally Gries, GFP is a firm many local divorce lawyers recommend to their clients. 

Rich Fine says that although her firm does not market specifically to women, Gries Financial Partners nevertheless attracts a lot of women clients. According to Rich Fine, “Somebody called me recently and said she was looking for an advisor. She’d done a Google search and saw all these firms with men in pinstripe suits, and she found that intimidating.”

That prospective client was not unusual. According to the Insured Retirement Institute, nearly three quarters of women seeking a financial advisor would prefer to work with a woman. The reasons women prefer working with other women have less to do with differing ways of managing and investing, and more to do with the style and nature of the advisor-client relationship. Women say they prefer a more collaborative approach with an advisor who takes time to understand their unique life experiences and goals. A personal fit is more important to them than it is to men, and they are less confident about their own skill at financial decision making. They care less about beating market averages and more about what they can achieve with their money—such as not outliving their assets or not being a financial burden to their children.

Forty-four percent of women do not currently have a financial advisor, according to a study by the Boston Consulting Group. Their money may not be working as hard for them as it could. Women without financial advisors hold an average of 20 percent of their assets in cash, compared to nine percent for women with financial advisors. In today’s low-interest-rate environment, that’s a lot of money on the sidelines, earning almost nothing and losing value through inflation. Of the women who have financial advisors, many are unhappy with the relationship. Forty-four percent agree with the statement “my advisor does not understand me.” Seventy percent of widows switch financial advisors within a year of their husbands’ deaths because they don’t feel respected by their advisors.

Finding a woman financial advisor is a challenge in a field dominated by men

Only about 15 percent of established advisors are women, so finding one can be a challenge. The field is still dominated by men, for a variety of reasons. According to Satricia Rice, Senior Managing Director at Cleveland’s Clearstead Advisors, it’s partly because of misperceptions and myths. “This industry has a bad reputation thanks to books and movies like “The Wolf of Wall Street,” she says. “And there’s a misperception that you have to be a math whiz and crunch numbers all day. Computers do the math now. This job is really more about helping people.”

Being an expert financial advisor requires an element of psychology, according to Rice. She says some of Clearstead’s best advisors—both male and female—are the ones with the best people skills. “The way they work with clients, the way they listen, the way they’re able to build trust over time and develop the confidence of the client—those are skills that have nothing to do with number crunching.”

Clearstead, which serves both institutional investors and private individuals, has worked hard to buck the national statistics. Rice started Clearstead’s women’s initiative six years ago, and the firm now has nine women partners (up from two in 2015), with two women on the Board of Directors (up from zero). The head of almost every Clearstead department is a woman—including the heads of HR, Finance, Financial Planning, Research, Operations, and Portfolio Management. “That didn’t happen by accident,” Rice says.“This is not like any other finance firm you will go to, with this many women in charge. I give a lot of credit to [Clearstead President and CEO] Dave Fulton and our senior management team because they’ve always been incredibly supportive of the need to have women in leadership.”

Do you need a financial advisor?

Particular life events often prompt people to seek financial advice. These are some common triggers:
■ I’m nearing retirement. Do I have what I need to support the lifestyle I want?
■ I just inherited some money. How should I invest it?
■ I married recently. How should we manage our finances as a couple?
■ I’m recently divorced or widowed. How do I manage financially as a single person?
■ Mom and dad are getting older, and might need my help with their finances. How do I/we prepare for that?
■ I hate investing and financial planning. Please help me secure my future.
■ I enjoy financial planning and investing. How can I do it better?
■ My company has offered me an early retirement buyout package. What options should I choose?