There are wealthy women who are making their own financial decisions and there are those who are making financial decisions with a spouse.
They differ in terms of the financial decisions they make as a result.
Spectrem’s study on women with a net worth of at least $1 million (not including primary residence) revealed a great deal of information regarding the financial decisions wealthy women make.
”It is always revealing to determine how investors make their financial decisions,’’ said Spectrem president George H. Walper Jr. “With the study about wealthy women, it is significant to learn how many make their decisions alone and how many are making decisions in conjunction with a spouse. It is also revealing to determine what role the children of wealthy women play in their financial and investment decisions.”
Advisors can use the information from the study to better understand the way wealthy women deal with their financial issues, and what pressures exist in the decision-making process.
A majority of the women in the study Successfully Growing your Business with Wealthy Women are married, and more than 70 percent of those women pool all of their finances with a spouse. That implies that decisions regarding finances for those women are made with someone else.
In fact, even among those women who do not pool all of their finances, decisions regarding money issues are often made with someone else. More than 80 percent of the married wealth y women make financial decisions jointly. Of those that do not, the decision-making is split, with 7.9 percent of households seeing the husband make the financial decisions and 8.3 percent of households seeing the wife make the decisions.
Wouldn’t it behoove advisors to know which of those three categories their female investor comes from?
The priorities for wealthy women related to finances are not unusual. Asked to rate the value of different financial matters on a 0-to-100 scale, these women placed “planning for a successful retirement” at 94.60, and “teaching my children or grandchildren about the importance of financial responsibility” at 92.14.
But an interest in charitable activities is high among wealthy women at 72.39, while making investments in socially responsible companies is rated much lower, at 58.30.
Among the wealthy women who have not yet retired, the concern that most matters is not entirely financial. Sixty percent of wealthy women still in the workplace worry that health concerns will affect their retirement plans, because health care can be an expensive proposition. Among women who are already retired, 48 percent are worried that health concerns will affect their retirement finances.
However, when it comes to spending and investing, 33 percent of women who still work worry they will be overwhelmed by financial concerns in retirement and will not spend the money they have. Even 32 percent of the women who are retired have that concern.
Only 22 percent of wealthy women who have not yet retired worry about running out of money in retirement. A nearly equal percentage of those women worry that they won’t be able to find enough to do with their free time.
Women are historically more conservative and risk-adverse than men in terms of investments, but the issue should not be as prevalent among wealthy women, although the research indicates it is. Advisors working with women with a bank account that will allow a looser purse or wallet should present the case to their female client to relax that concern.
What do wealthy women plan to do with their investable assets in the next year? The Spectrem study shows that 41 percent plan to invest in equities, and almost 30 percent plan to invest in short-term cash investments.
Top Takeaways for Advisors
The Spectrem study was designed to explore the spectrum of issues facing wealthy women, and as such, it can be very informative to advisors who work with women with a net worth in seven figures. The overwhelming takeaway from the study is that wealthy women are a diverse population but have many similar problems related to their wealth status, their appreciation of their wealth status, their parenting and work-life balance issues, and their thoughts about retirement.
©2017 Spectrem Group