Women’s Wealth And The Great Transfer.

By Karen and Erica

Something startling is about to happen—a truly vast transfer of wealth, to women. A transfer the likes of which has never before been seen.

Why are women gaining unheard of wealth?

This gender shift is happening in two ways. Women tend to live longer than men, so more women Boomers will manage their wealth independently. Meanwhile, money will be handed down. Gen X will receive some, but the much larger millennial generation — with its record numbers of single women — will end up with most of it. 

How much will millennial women get?

Some sources have this amount of money at $84 trillion. Others say it’s closer to $129 trillion, thanks to government policy during the pandemic. And we don’t need to wait a generation, either: This is going on right now. In fact, by 2030, American women will manage at least $30 trillion, more than the national GDP. We’ve never seen this kind of change in our lives, or in our grandmothers’ lives. 

But we of the Boomer league will get a nice payout first. We stand to receive $9 trillion.

According to UBS, an estimated $9 trillion is about to move between spouses and partners as part of a “horizontal wealth transfer.” With baby boomers aging and passing down their fortunes, a whopping $84 trillion is expected to flow to family and charity over the next 20-30 years. But here’s the catch: before younger generations like Gen X, millennials, and Gen Z see their inheritances, most of that cash will land in the hands of surviving spouses—primarily women, since they tend to outlive men.

Women are poised to inherit $9 trillion first, before passing $8.4 trillion to future generations, positioning them as key players in the great wealth hand-off.

Importantly, women are not just inheriting wealth; they are also creating it—building businesses, becoming primary family breadwinners and joining the C-suite in increasing numbers. To us, this will make the future “much more female.” We have made startling progress when you think about where we were not long ago.

Fifty years ago, many among this group were barred from even taking out credit cards and loans.

“What was an unequal partnership in one direction may well become an unequal partnership in the other direction,” said Paul Donovan, an economist at the bank UBS.

The wealth shift will have an enormous impact on society. Women will Money Like A Woman. Our affluence will allow us to exercise power differently from the men who have ruled the financial world for aeons.

[Women] are handling the money differently than their husbands by switching financial advisers and investing more with an eye toward longevity. They are redirecting money to charity and allocating more to long-term healthcare. 

Women of the baby-boom generation are also having to decide how the money transfers to the kids, making them linchpins in what can turn into uncomfortable family drama.

What will we Boomer ladies acquire with all this money? We like, and can afford, lots of things, like good vacations and fast cars and cool clothes. Those who expect us to spend only on medical devices and wheelchairs will miss a big boat. We have decades ahead of us, most of us are healthy and active, and we want to have fun. Smart marketers will figure out how to reach us.

Presumably in part because women are usually tasked with child rearing, our perspectives are often personal, and in the moment.We do not tend to see the amassing of money as a good independent of the rest of our lives.

Women tend to focus their financial plans around specific life goals for themselves and their families instead of obsessing over investment performance. They’re much more inclined to view money as a means to an end (protecting and caring for their family and living fully) rather than as a scorecard of personal success. As such, women generally assign far greater significance to long-term goals such as retirement, education, and legacy planning.

From an investment perspective, women are often a lot more risk aware and therefore better diversified in their portfolios than men. They typically place a higher premium on asset protection and preservation in hopes of not outliving their retirement savings. This can lead women to pay closer attention to life and long-term care insurance planning as well as to exploring guaranteed lifetime income solutions.

These important behavioral tendencies—patience, a long-term, goals-based perspective, and risk-aware diversification—make up the essential qualities of any successful investor. And women seem to have a clear gender advantage in this regard. (Citations omitted.)

We also want othes to prosper. Women are very philanthropic, but, until recently, few women controlled their families’ wealth. The coming change will likely result in very different giving patterns:

According to the WPI, women’s giving differs from that of men along the following dimensions (this is a summary of multiple reports):

• Women give more as a percentage of assets: Single women are more likely to give than single men; they give more and to more causes. Married women socialize their spouses into giving.

• Women give more broadly than men: Women spread their giving across more organizations, whereas men concentrate it into fewer, larger grants, often to large institutions.

• Women are more hands-on: Women volunteer more than men, including at places where they donate (i.e. their time and talent are more correlated with their treasure.)

• Women are more collaborative: Women are more likely to engage in collaborative giving than men (e.g. a giving circle). They are also more likely to ask others for input into their giving.

• Women are more relational: Women are more likely to involve multiple generations of the family, and they are better at communicating with their nonprofit grantees than men.

• Women give with a gender lens: Not surprisingly, women tend to give more to causes that support women and girls. They are also more likely to give to racial justice and equity.

The effects of women’s wealth have begun to emerge. We have watched as wealthy women give away money in their own ways—mainly with an eye to giving help now, not over the next decades. And we recently learned about other innovations that allow us to multiply the impact of investing through a donor advised fund. We’re sure there are many more ideas to come that will allow for targeted investing–financially and philanthropically–in areas we hold dear.

Boomer times remain change times, including in the world of money. We’re excited to see what’s next, for all of us.