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Women can be smart speculators. Many even made money in the South Sea bubble of 1720. But they have a reputation as prudent investors. They are more likely than men to keep a significant portion of their wealth in cash and postpone their spouses when it comes to long-term financial decisions.
The wealth management industry is male focused. That needs to change. Wealth controlled by women is growing one and a half times faster than the rest, Ralph Hamers, UBS boss, said in April. The female share of global investment wealth has risen by 2 percentage points from 31 percent in 2016, and is expected to rise to 35 percent by 2025.
UBS is not alone. More banks are targeting women as they try to expand their wealth management operations in favor of their fixed fees and light capital requirements. Online brokers, such as Robin Hood, also wants to attract more women users.
Much of the wealth controlled by women is self-made, especially in Asia. The richest homemade female billionaire in the world is Zhong Huijuan, founder of Hansoh Pharmaceutical, according to the Hurun Research Institute. The ten richest women entrepreneurs who mentioned it were all Chinese, with the exception of Denise Coates, the UK CEO of online gambling company Bet365.
Inheritance has traditionally been a more important source of wealth for women than for men. It is becoming increasingly important. Control much of the $ 30 million in wealth that American baby boomers have amassed will be passed on to women, says McKinsey. They usually survive their partners by five to seven years.
This poses a risk to wealth managers. According to a survey by Credit Suisse, women are more likely than men to change managers. Female investors often complain that wealth managers’ assumptions about their needs are outdated. Newcomers, such as Ellevest, a women-focused robo-advisor backed by Melinda Gates’ Pivotal Ventures, want to compete.
Studies suggest that men focus on pure investment performance, while women tend to invest to fund specific goals. They are more focused on environmental and social investments.
It is also more likely to do so lack of confidence financial. Risk aversion shrinks back. But it also means that women are more likely to hire a financial adviser and pay a premium for guidance.
Traditional wealth managers will need to adjust their processes and attitudes to attract and retain more female clients. But there will be a great prize for the successful. The advice of the growing ranks of wealthy women can indeed be very profitable.
The Lex team is interested in hearing more from readers. Please tell us what you think is the key to wealth management for women with a net worth in the comments section below.