Soon, “rich” will be a term applied to more women than ever before. Women are creating prosperous businesses, earning valuable stock options from publicly traded companies, and inheriting money. Indeed, as a group they stand to control some $30 trillion by 2030.
As women increasingly become the primary financial decision makers for themselves and their families, advisors hoping to win their business must find the most effective ways to help them navigate life changes. Based on clients we’ve worked with, here are suggestions.
Begin with a clean slate. First, listen to your new client and learn what matters to her. We hear too many stories of advisors who get lost in the weeds talking about investments first and miss more pressing priorities.
When her husband unexpectedly passed away, “Maria” suddenly found herself in charge of the couple’s stock and real estate portfolio, a large portion of which was invested in tech stocks, which had performed very well. Her previous advisor was focused on Amazon, Netflix, Apple, and Google parent Alphabet and failed to grasp what was important to the just-widowed client at that moment: Maria wanted to redo her trust and estate plan first and establish accounts for her son, who had special needs.
Take time to assemble the right team. A woman who has recently come into wealth, whether due to the sale of a business, death of a spouse, or other event, has experienced a big change in her life and might feel overwhelmed by the idea of getting her financial plan figured out all at once. Knowing she has the right team in place first is typically more important.
Remember Maria? Her husband was bilingual, but she speaks only Spanish. Her husband had managed all the finances, and after his death Maria was not only left with a multimillion-dollar stock portfolio and dozens of real estate properties, but also advisors who didn’t speak Spanish and had rarely interacted with her before her husband died. In the first six months after Maria switched to our firm—which counts bilingual advisors among its number—we helped her assemble a new, Spanish-speaking team, including a new accountant, a trust and estate lawyer, and a new property management company.
Be dynamic. For a number of reasons, women often lead more complex lives than men. So in order to capture what McKinsey calls “the next wave of growth” in U.S. wealth management, advisors must be willing to offer more complex and holistic financial planning services to make sure women’s interests are being looked after.
Our client “Gianna” is a successful business owner a few years away from retirement. She wants to begin gifting a portion of her business to her adult children through grantor trusts. She will pay the taxes on the trusts, but we can’t just set up this plan for her and forget about it. We’ll continuously evaluate her business in case it generates substantial income in future years that would make Gianna liable for a bigger tax bite. We will constantly review the plan we’ve crafted for her to ensure her generous gifting strategy doesn’t blow up her personal retirement and legacy goals.
On a related note, women are also more likely to give to charity than their male counterparts, according to a study by the IUPUI Women’s Philanthropy Institute. As women come into more wealth, advisors will likely find that charitable donations play an increasing part in their planning.
With “Chloe,” we extended our efforts beyond the finance realm. When her mom developed dementia, we connected her with an elderly care service that evaluates the care a person needs and helps them get set up with an assisted living facility. We’re helping Chloe navigate this huge life change—and likely would have lost her as a client if we’d taken a set-it-and-forget-it approach.
The upshot is that advisors wanting to attract the growing number of affluent women will have to bring more to the table—as we did for Maria, Gianna, and Chloe.
This article was written by Sara Wendt and Anderson Lafontant and published in Barron’s on April 29, 2022.
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