Setting the stage

The great wealth transfer is upon us, poised to reshape the financial landscape. As trillions of dollars are expected to pass from baby boomers to millennials globally¹, the role of women in this transfer is crucial. Closer to home, it is estimated that over the next 30 years, around £5.5 trillion² will be passed down from baby boomers to younger generations in the UK, highlighting the significant impact of this transfer on the financial sector. Understanding why women are vital to the future of financial services and how businesses can adapt to this significant shift is essential.

The great wealth transfer

The great wealth transfer refers to the massive shift of wealth from one generation to the next. By 2025, it is estimated that more than 60% of the world’s wealth will be in the hands of women.³ Several factors contribute to this high percentage: women tend to live longer than men and are often the primary beneficiaries of wealth from the baby boomer generation. Increasing financial independence, driven by higher education, workforce participation, and leadership roles, further amplifies their growing financial power.

This shift has profound implications for the financial services industry. Businesses must rethink their strategies to cater to a new wave of female clientele. This transfer is not just about the volume of wealth but also about the changing dynamics of wealth management and financial planning.

Women and wealth

Despite the significant wealth transfer, there are notable gaps in how women engage with financial services. Only 50% of women view investing as a financial priority, and just 25% invest across all age groups.⁴ However, women are more likely to save, with 33% more women paying into cash ISAs⁵ (individual savings accounts) than men. Nearly 40% of FTSE 100 board positions are now held by women.⁶ Furthermore, 37% of entrepreneurs globally are women, with 2 in 5 entrepreneurs in the UK being women.⁷ This indicates a need for the financial industry to better understand and address the unique financial behaviours and priorities of women. Addressing these gaps is essential for ensuring that women can fully participate in and benefit from the wealth transfer.

Challenges and opportunities

Several factors contribute to the investment gap among women, including a lack of understanding of financial planning, representation in the industry, and the language used in financial services. To bridge this gap, the industry must:

• Promote financial planning: Educate women on the importance of financial planning and make these services more accessible. Financial planning should be presented as a vital tool for achieving long-term financial security and independence.
• Increase representation: Encourage more women to pursue careers in financial planning to create a more inclusive industry. Representation matters, and having more women in the industry can help break down barriers and stereotypes.
• Simplify language: Use clear and relatable language when discussing financial matters to make them more approachable. Financial jargon can be intimidating, and simplifying the language can make financial services more accessible to everyone. 

The importance of trust and relationships

Women prioritise trust and relationships when it comes to financial planning. They seek trusted advisers who understand their goals and can help them achieve long-term financial security. Building strong relationships with female clients is essential for the industry’s reputation and for delivering the best outcomes. Trust is built through transparency, communication, and a genuine understanding of clients’ needs and aspirations.

Looking ahead

The great wealth transfer presents both challenges and opportunities for the financial services industry. By focusing on the needs of women and adapting their strategies, businesses can ensure they are well-positioned for the future. As women continue to play a pivotal role in the financial landscape, it is crucial to recognise their importance and work towards a more inclusive and supportive industry. Embracing this change will not only benefit women but also strengthen the financial services sector as a whole.

1. Financial Times
2. Kings Court Trust
3. Financial Times
4. Female Invest
5. Hargreaves Lansdown
6. GovUK
7. Harvard Business Review

Contact us

0203 418 0257

info@onekc.co.uk

References

Source: https://www.brooksmacdonald.com/individuals/resources/insights/empowering-future-role-women-great-wealth-transfer