WeDigest > Wealth Management > Women: Steer Your Wealth Journey with Confidence
Women are getting wealthier at a faster pace than men.
According to a 2022 UBS report (« Women and Investing »), the growth in women’s investible wealth has outpaced men’s between 2016 and 2022. During this period, women’s wealth increased at a compound annual growth rate (CAGR) of 8.2% compared to 5.9% for men. And women’s growth momentum does not stop there, as it is expected to continue to accelerate more rapidly than men’s in the coming years and beyond.
Compound annual growth rate of wealth 2016 – 2022
Women
Men
of global personable investable wealth by 2050
of female investors globally expressed that their wealth managers misunderstood their goals
With women projected to amass 35% of total global personable investable wealth by 2050, they are fast becoming a considerable force in the face of wealth and investing. Yet, it appears that women are still greatly undeserved in their wealth management needs. The lack of adequate planning could boil down to factors such as deep-rooted historical and social norms that have shaped gender roles and financial decision power or a misalignment between what women need and what advisors believe they need. For example, 67% of female investors globally expressed that their wealth managers misunderstood their goals, according to a 2017 Ernst & Young report.
Recognising this shift in women’s financial power, we need to begin by understanding what makes women’s wealth and investment needs different in order to effectively empower them in their wealth journey.
While every individual encounters unique life experiences and circumtances, we can typify some common elements among women’s life journey and why it is paramount for women to give wealth planning extra thought and consideration.
| Challenges / Needs | How can wealth management mitigate them? | |
|---|---|---|
|
Income Gap |
Long-standing pay differences between genders can diminish women's wealth-creation potential |
With lower average earnings, women and men begin their journey on uneven ground.
To bridge the gap with their male counterparts, women should leverage tailored wealth planning tools and investment strategies while balancing risk and rewards to maximise wealth opportunties. |
|
Caregiving Responsibilities |
With women often acting as the dominant caregivers for children and ageing parents, the demands of caregiving can fall disproportionately on them. This can result in career breaks and lead to long-term implications such as stifling career prospects, progression and income. |
It is criritcal for women to undertake sophisticated wealth growth and protection strategies to ease the financial pressure of shouldering caregiving responsibilities. It is essential that they create and protect generational wealth to prepare for both their and the next generation's financial future. |
|
Life Expectancy |
Statistics also show that women have a longer life expectancy than men, which translates into longer retirement years. |
Women's wealth planning has to be designed with a longer time horizon and effective cash management in mind to provide for more years of retirement. |
While every individual encounters unique life experiences and circumtances, we can typify some common elements among women’s life journey and why it is paramount for women to give wealth planning extra thought and consideration.
Risk tolerance:
risk-averse or risk-aware?
There is an underlying assumption and conventional wisdom that women are more risk-averse than men in investing. This conservative risk appetite could stem for gender norms and masculinity traits tied to investing or even a lack of financial literacy. But we can also discern women's risk tolerance from a different angle. BCG's report, "Manging the Next Dacade of Women's Wealth", found that women seek to pursue their goals with a higher degree with confidence which thus could be perceived as lower risk tolerance. But in fact, women are possibly not more risk-averse but more risk-aware. They want to be geared with the accurate data and facts before making an informed decision. When this information gap is bridged, they share a similar investment profile to men.
It is impact quality as it demonstrates the potential women can attain if they partner with experienced wealth advisors who can provide them with valuation insights to navigate important wealth decisions.
Investment preference:
goal-based investing
Women's perceptions of wealth and money can differ from men's too. Studies have suggested that women gravitate towards attaching wealth to their goals and needs instead of simply chasing the market. A USB report ("Women on purpose", 2022) found that 87% of women agreed that money is a tool to help fulfil their purpose. This pursuit of meaning can also extend to a women's preference in having their investments aligned with their values, such as environmental, social and governance (ESG) factors. For example, women. (71%) are more likely than men (58%) to include ESG concerns in their investment process, according to a USB Investor Sentiment Survey.
For women, it is not all about the numbers. The picture is more intricate, so it is rewarding to have wealth advisors take a holistic view of a women's needs, goals and values. They key is to weave wealth management with what they genuinely want in value and purpose.
A woman’s wealth journey is not straightforward; it is multi-faceted, tying in unique life circumstances and challenges. At the same time, we have to recognise that their goals are distinctive. It calls for delicate and holistic attention such as that this myriad of factors is comprehensively accounted for in future-proofing their wealth and legacy.
As an underserved segment in the wealth management community, there is so much unrealised potential that proper wealth planning can offer. SingAlliance is an independent wealth management company in Singapore, Geneva, Hong Kong and Dubai. As a wealth manager, we are committed to delving deep to understand your real needs and align your interests with your goals. Our unparalleled experience and expertise in wealth planning equip us to empower you in your journey and support you in every stage to give you greater peace of mind.
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