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Increased democratization in investing and rising earnings power are among the reasons why more and more women are investing and wanting to work with advisors to realize their long-term financial goals. Those are positives, but there’s still work to be done.
It needs to be done quickly because women are poised to inherit as much as $30 trillion in assets from baby boomers. Plus, the interest is there. Long gone are the days in which investing was mostly a man’s game. A 2021 survey by Fidelity Investments indicates two-thirds of women have investment accounts that are not retirement accounts. A similar percentage are taking active roles in leading investing conversations in their households and as of last year, six in 10 women were invested in equities, according to another survey by Fidelity.
The point is more women are participating in financial markets and they’re doing so beyond the confines of conservative instruments such as cash and retirement accounts. With that increased risk tolerance comes more interest in investing education and higher levels of willingness to work with advisors. It’s time for the advisory community to answer the call.
With Women and Investing, Age Matters
Advisors are well aware of the role age plays in portfolio construction and that’s applicable to women, too. Perhaps more importantly when it comes to female clients is leveraging youth in the name of taking on more risk to potentially generate more reward over the long-term. Data indicate some women are already doing that when investing on their own.
The aforementioned 2023 Fidelity report says 71% of Gen Z women are investing while the same is true of 63% of millennial women. However, that percentage declines to 55% for Gen X women. That’s too low for Gen X women, particularly when considering that generation will be the first to inherit significant assets via the great wealth transfer.
“A 2022 survey by Bank of America shows differences based on age and affluence. Among affluent households, women younger than 60 (45%) were more confident about making investment decisions on their own compared with those 60 and older (40%),” according to U.S. News & World Report.
Why It Behooves Advisors to Help Women
Whether it’s cash instruments (CDs, money markets, etc.), employer-sponsored retirement plans, retirement accounts held outside of the workplace or discretionary investing accounts, data confirm women are involved all of those assets, but at percentages that, in some cases, badly lag those of men.
That needs to change and for advisors there is an element of “doing good” when helping women increase their exposure to financial markets while boosting their investing confidence. There are also compelling economic considerations. A 2022 study by BNY Mellon Investment Management indicated that if women invested at the same rate as men, there would be another $3.22 trillion in assets attributable to individuals floating around in the financial system.
Putting that figure into context, it’s slightly less than the market value of Apple (AAPL). So yes, there are myriad good reasons why advisors should increase the quality of service to female clients.