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Women’s financial empowerment has been bolstered by access to education, increasing participating in the labor force and a growing number seeking entrepreneurship as a means of wealth building. According to the Winning Women: Key Insights for Wealth Firms Targeting Today’s Dynamic Female Clients by Clearview Family Wealth, WealthBriefing, Wealthmonitor and Boston Multi Family Office, surveying 35 wealth-holders, business owners, family office professionals and advisors, women control an estimated third of the world’s private wealth. In the United States alone, women are the primary earners in 40 percent of households.
Female representation has also grown in the ultra high net worth level with women from the Asia-Pacific leading in wealth creation among women. In this region, over half of female billionaires are first-generation entrepreneurs, a trend that is seen around the globe. In a little over a decade, researchers predict that women, who comprise about half the world’s population, will control 75 percent of discretionary spending.
Despite these facts, some still underestimate the strength of female wealth in the economy. While about three-quarters of survey respondents for the Winning Women report accurately assumed that women hold less than half of total personal wealth, but 35 percent believed that women hold less than 25 percent of global private wealth. This assumption is false as women currently control 30 percent. The good news is that over half of survey participants, at 54 percent, realize that women’s financial independence is increasing around the world.
As women become more represented in the wealthy population, it is important for the wealth management and advisory sector to understand the needs of their potential clients in order to develop products and services that match them. In the following, we will highlight some of the most important trends and findings regarding wealthy women and women’s representation in the wealth management sector.
Women’s Wealth Promising in Europe
In Europe, wealth created by women steadily increased between the years 2012 and 2016, especially in Western Europe with the United Kingdom and Germany as top places for female wealth creation. In 2012, women contributed a little under 3.5 billion Euros. This rose to a peak of 6.5 billion Euros between the years 2014 and 2015. In 2015, the contribution of women’s wealth to Europe’s economy was 14.3 percent, an increase of 2.1 percent from the year prior.
Women Impacting the Media Sector and Others
According to the aforementioned report, the media sector in 2016 had the smallest gender difference in wealth creation, with a 26.6 percent to 73.4 percent female-to-male ratio. The greatest gender gap in wealth creation is found in the financial services sector: a whopping 92.3 percent of the wealth is created by men.
Other sectors where women are generating the greatest wealth include Industrials & Chemicals with a female wealth contribution of 25.1 percent at the top, followed by Consumer Industry at 13.8 percent and the Technology sector at 12.3 percent.
Female Representation Needed Among Clients and Advisors
Both wealth-holders and advisors understand the importance of having diverse perspectives for understanding the female client base. Two-thirds of those surveyed agreed that a gender consciousness should be taken into account when serving the needs of clients, while 34 percent see it as a very important intelligent segmentation strategy.
While seven in 10 wealth-holders believe very strongly that gender should be considered a primary segmentation factor, only 17 percent of advisors believe the same. This indicates a startling disparity in the beliefs of wealth-holder, the clients, and the advisors that are meant to serve them.
At present, 62 percent of professionals in wealth management believe that the industry does not fully cater to the needs of female clients, and only one in 10 believe that female clients are well served today. Sixty-three percent of respondents believe that the advisory industry is not paying enough attention to the financial planning requirements of women.
Female participants were more likely to believe this than their male counterparts—78 percent compared to 42 percent. Overall, an overwhelming 82 percent advocate that advisors should receive further training in how to serve the needs of their female client base. Among wealth holders, this belief is held by 90 percent of participants.
To address this issue, 84 percent agree that wealth management organizations need to have greater female representation in their workforce and leadership. Having a diverse workforce at every level of employment is vital for wealth managers to understand and meet the needs of their diverse client base, especially for the growing female segment.