A recent report from McKinsey has brought to light the fact that women are set to inherit a significant amount of wealth by the year 2030, with around $11 trillion of the more than $30 trillion in wealth transferred from prior generations expected to be inherited by women as their husbands and fathers pass away. This is in addition to the $10 trillion in total US household financial assets that women already control. This has sparked interest in the wealth management industry, with asset-management firms and investment advisors looking to better reach and educate this demographic.
One of the key issues highlighted in this report is the need to prepare daughters and granddaughters to be good stewards of family wealth. Women often require special consideration when it comes to financial education, as they may not feel empowered to participate in financial discussions in group environments, particularly in the presence of dominating male counterparts. Studies have shown that women may limit the amount of time they speak in meetings due to fear of being judged harshly. This lack of empowerment and confidence can hinder their ability to influence decisions.
Research conducted by Bank of America and the Royal Bank of Canada has found that while a majority of women believe they will be responsible for their finances at some point in their lives, only about half of them feel confident to take on this role. Surveys also revealed that many women set to inherit wealth received little to no guidance ahead of time. However, younger women, particularly those aged 22 to 39, feel more comfortable having financial conversations, including with financial advisors. Initiating these conversations early in life can help build confidence and empower young women to make financial decisions in the future.
It is important to involve young women in financial discussions early and often. This can help counteract confidence drops that typically occur in girls between the ages of 8 and 14. By introducing financial management concepts at a young age, such as comparing prices at the grocery store or establishing a savings account, girls can develop good financial habits that will serve them well in the future. Empowering them with individual responsibility in areas that interest them can also be beneficial in laying a foundation for financial confidence.
Connecting young women with peers who share similar interests in financial literacy can also have a positive impact on their financial knowledge and confidence. Organizations such as Invest in Girls, Girls Who Invest, and WealthiHer offer classes, internships, and networking opportunities for women to learn about finance starting from high school. Having female mentors in the wealth management industry can also provide valuable insights and guidance for young women. It is important to engage women in conversations about wealth management to ensure they are prepared and empowered to take on this responsibility.
