The Great Wealth Transfer. What Will Women Do With Financial Power?

By Karen and Erica

Soon, the greatest wealth transfer in history will occur. About $68 trillion will be transferred from Boomers, mostly to millennial children. Women will be the primary beneficiaries.

What will happen when women become the beneficiaries of these transfers ? They may change society.

The way Sallie Krawcheck, CEO of the women’s investment platform Ellevest and a former Wall Street executive, sees things, women controlling more cash just might change the world.

“When women have the majority of the money and when they step into their power — I don’t want to say be empowered — but when they recognize the power that money gives them, everything changes,” she said.

Which is not to say that the great wealth transfer will completely eliminate wealth inequality. But it is a start.

The wealthiest 10 percent of households will be giving and receiving a majority of the riches. Within that range, the top 1 percent — which holds about as much wealth as the bottom 90 percent, and is predominantly white — will dictate the broadest share of the money flow. The more diverse bottom 50 percent of households will account for only 8 percent of the transfers.

But it may jumpstart equality, as women, generally at an economic disadvantage, begin to play catch-up.

Compared with men, women earn less, live longer, have higher educational attainment, and are more likely to have their financial lives disrupted by caregiving responsibilities. The money women earn must be stretched further for longer. …

Women earned 82% of men’s earnings in 2022, a mere 2% increase from 2002, when women earned 80% of men’s earnings. In addition, inflation historically most harms those who are on fixed incomes and those who are in debt – meaning, women are most negatively impacted by a high-inflation environment. …

Finally, changes brought about by COVID-19 have also disproportionately impacted women—forcing many women to leave the workforce due to caregiving responsibilities, experiencing burnout, and down-shifting their careers, citing factors like lack of opportunity for advancement or conflicting demands.

Nothing will happen overnight. But that does not change the fact that women will receive a huge financial handover. How much? Here’s what Yahoo Finance says:

Across all generations, the average recipient says they’re expecting to receive $738,724. But more than half (58%) of adults who expect an inheritance worry inflation—even though it’s cooled—will lessen its value. “Inflation has impacted everyone, and those passing down or receiving inheritances are no exception,” Schmitt says.

Nonetheless, that kind of sum can dramatically change people’s lives—especially for the generation that sorely needs assistance to get by. Having graduated into the rocky job market of the Great Recession and its aftermath while juggling massive student debt and a rising cost of living, millennials have been on a long journey toward financial stability in which they can afford milestones like buying a house. While they’ve recently made strides in building wealth, the Great Wealth Transfer was something experts predicted for years that would help propel millennials on the right financial track.

So what happens when women get a larger share of wealth?

First, financial institutions will widen their focus on women. Financial advisors will need to learn that women object strongly to being treated like a plus one, and that many have different objectives than men. The industry will have to increase hiring of women, because women like women. (Women like men, too, but they would like to see more women.) As institutions begin to respond to the new reality, inevitably they will begin to view women, and the opportunity they represent, with greater interest.

As wealth begins to pour into the hands of women, firms will need to commit to a much more systematic approach—transforming their business and client-service models in ways that will acquire, retain, and serve women as long-term investors. Other previously male-focused industries, such as automobiles and real estate, have revamped their product and service models to meet women’s needs. For instance, the real estate industry, recognizing that there are more single female buyers than male buyers, moved from a focus on married couples to creating powerful value propositions for single women looking to become home owners. Now the time has come for wealth management firms to refresh their offerings. Firms that wait too long risk losing out on the next leg of growth.

As women’s presence in the financial world grows, so will their influence.

With wealth comes influence, as women today control more investible capital, voting shares of stock and corporate board seats than ever before. In 2021, the percentage of director roles held by women on the boards of S&P 500 companies reached an all-time high of 30%. That means the unique perspectives of our mothers, wives, daughters, colleagues and business partners are increasingly moving the markets and changing the ways we talk about money.

Women will likely become better represented in the political world, where, at present, they donate, and run, at far lower rates than men, and their voices are not heard as loudly as those of men.

The share of all money raised from women donors was as low as 14 percent in Nebraska and 18 percent in Illinois, the report found. Colorado led the nation in this time period with 46 percent of all money raised coming from women donors, as it became the second state to elect a majority-woman legislature. 

[Kira Sanbonmatsu, an expert on women and politics] said the impact of this gender gap is wide-ranging. Because women are more likely to donate to women candidates, it can impact who decides to run and how successful they might eventually be. There is research showing that politicians are responsive to their donors, Sanbonmatsu added, meaning that the disparity in donations may give women less influence over policy platforms compared with men. 

And women, who also do philanthropy differently from men, will likely continue to transform that world too.

it seems that philanthropy comes naturally to women. A 2017 study by the University of Zurich found that women are more likely than men to engage in prosocial behavior (defined as voluntary behavior intended to benefit others), including simple acts of kindness and donating to charity. Indeed, research supported by PayPal found that women give more to charity despite earning 19 percent less than men, and that as they age they become even more generous.

Perhaps most importantly, women are taking control of their own destiny. A study by the Women’s Philanthropy Institute at Indiana University-Purdue University Indianapolis found that women increasingly are spearheading efforts focused on addressing women’s issues. Specialized women’s funds and foundations are going beyond grantmaking to achieve impact, engaging in activities such as relationship-building, partnerships, and policy advocacy to pursue broader social change.

What about us? Some of the ones doing the transfer? Anyone interested in participating in this new world must definitely speak to younger women. But they would also do well to speak with us. We have been on the front lines of financial equity for decades. We can help the financial advisors understand what they need to learn, and help younger women understand the essential need for financial literacy and control.

This vast wealth transfer will surely have effects we can’t begin to imagine. What an exciting, and unexpected, development! We want to be part of the change, and we can’t wait to see how it all shakes out!