‘Unprecedented’ transfer of wealth will see $30T shift into women’s hands by end of decade

Wealth in the United States is quietly shifting into more feminine hands in what Fox Business calls “the greatest transfer of wealth the nation has ever seen.”

“There is an enormous undercurrent affecting the world of wealth management in the U.S. that continues to swell, driven by shifts in demographics, culture, families and career trends.” Fox Business reports. “It is the greatest transfer of wealth the nation has ever seen, and financial advisers say they are bearing witness to it already.”

Baby Boomers hold an “unprecedented” $30 trillion in assets, and, by the end of the decade, women will control much of it according to a 2020 study from McKinsey & Company.

According to the study, it is “a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States.”

When the study was conducted, men were the primary decision-makers when it came to money in two-thirds of America’s affluent households. That’s changing, new data shows, with more women taking a hands-on approach to their finances at a younger age.

Tracy Bell is the director of equity investment strategies at First Horizon Advisors. She notes that, among the Boomers, women don’t typically (though, of course, there are plenty of exceptions) take over the household’s investments until their husbands pass away. As a result, a First Horizon study found that women over 45 are not nearly as likely to rate themselves as having “excellent” financial knowledge as women of the generations that followed them.

According to Bell, “it’s very different” when it comes to women under 45. They are “much more career-oriented, and they’re [managing wealth] for themselves for longer,” she explained.

Women are getting married later and are receiving more college degrees than they did some forty years ago, U.S. Census data shows.

“What we find is that younger women tend to do more self-education … and they’re just financially independent,” Bell said. “They know to ask the right questions, and they also tend to seek professional advice more so than men do, which is a good thing. So, they know what they know, but they also know what they don’t know, and that’s one of the strengths that we see, and it’s particularly pronounced for younger women.”

Unlike men, Bell said, women tend to take a holistic approach to money management and are more willing to make long-term financial commitments.

“She pointed to a University of California, Berkeley, study that found women investors outperformed men over time, and the results were attributed directly to men being overconfident and making more trades,” Fox Business reports.

Bell urges women not to wait to educate themselves about household finances or to be involved in making the decisions.

Women, she warns, have a harder hill to climb than men when it comes to amassing enough savings for retirement. Not only do women typically live longer, they tend to get paid less, and they often take time off for children or to care for parents.

“Start with the financial planning process as early as possible,” Bell said. “It’s critical so that when you get to the end of your lifetime, you’ve got the assets that you need to take care of yourself.”

Melissa Fine

Comment

We have no tolerance for comments containing violence, racism, profanity, vulgarity, doxing, or discourteous behavior. If a comment is spam, instead of replying to it please click the ∨ icon below and to the right of that comment. Thank you for partnering with us to maintain fruitful conversation.

Latest Articles