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Reasons are mounting for registered investment advisors and wealth management firms to emphasize female clients. Those include basics such as women accounting for half the world’s population and more studies confirming are increasingly demanding high-quality financial education and are more open to related advice.
Then there’s point, an important one at that, that women are generally better investors than men. Equally as important as those factors is the point that women are becoming increasingly prominent drivers of crucial economic activity, including consumer spending. Some experts call it the rise of the “SHEconomy.”
While women spent mightily this summer, they’re also concerned about their personal financial outlooks. Eight in 10 admit to pondering their finances on a monthly basis while 52% said they frequently think about money, according to a new Morning Consult poll.
Point is women are earning more and taking on larger roles as financial leaders of households while exerting more influence over macro spending trends. All of that should spell opportunity for advisors. However, women face a variety of circumstances that make relationships with financial advisors vital.
SHEconomy on the Rise
SHEconomy isn’t just another Wall Street catchphrase. In fact, it hasn’t been getting much attention of late, but the underlying principle should be garnering focus, particularly among advisors. Ellen Zentner, Morgan Stanley's Chief U.S. Economist, highlights why that’s the case.
“Today, women are having fewer children and earning more bachelor's degrees than men,” notes Zentner. “The median marriage age for women has increased, as has the age at which we first start bearing children. These shifting lifestyle norms are enabling more women to work full time, which should continue to increase participation in the labor force among single females. In 2019, we estimated that the number of single women in the U.S. would grow 1.2% annually through 2030, and that compares with 0.8% for the overall population.”
The Morgan Stanley economist adds that women contribute $7 trillion annually to U.S. GDP. That’s trillion with a “T” and further confirms that advisors would do well to improve connections with female prospects and convert them into clients. Consider the following.
“They are the breadwinners in nearly 30% of married households and nearly 40% of total U.S. households. In the last decade, single prime working age women from 30 to 34 years old have seen the most pronounced rise in female headship rates, and that's followed by 25 to 29 year olds,” according to Zentner.
Change Driving SHEconomy
As noted above, women today are increasingly educated and marrying and having children, if at all, at later ages than their mothers and grandmothers.
Societal factors such as those can contribute “demographic tsunamis,” the likes of which advisors cannot fight. Rather, those changes should be embraced by the advisory community. After all, the importance of the SHEconomy is only going to increase.
“Looking ahead, women are in a position to drive the economic conversation from both the inside as a workforce propelling company performance, and the outside as consumers powering discretionary spending and GDP,” concludes Morgan Stanley’s Zentner.