Wealthy women under the age of 40 are different from wealthy women who are in their 40s and 50s, who are different from wealthy women who are in their 70s and 80s.
That probably comes as no surprise. Generational differences between Americans is a key component of demographic study. The differences between people born in the 1960s and those born in the 1990s is as common a conversation as the weather. Without generational differences, we would not have words like “geezer’’ or “whipper-snapper” in our vocabulary.
But in most cases, any study of generational differences seems to make sense. Older people are more serious, more directed, more conscious of the trappings of time. Young people are more free, more mobile, open to new ideas, and blithely unconcerned.
Which is why Spectrem’s new study on wealthy women is so revealing. In Successfully Growing Your Business with Wealthy Women, the differences between Millennial affluent women and Baby Boomer women with money exist, but in some cases they are not what might be expected.
The study, which surveyed 350 women with a net worth of at least $1 million (not including the value of their primary residence) combines women from the Millennial and Gen X generations and compares them to Baby Boomers and women from the World War II era. The younger women, those under the age of 52, are much different from the older wealthy women in the study.
For instance, the younger wealthy women are far more likely to have completed undergraduate college, and more likely than Baby Boomers to have advanced degrees. They may not be smarter than the older women but they are more educated, which may translate to better informed regarding financial matters and investment planning.
The younger wealthy women are on average more wealthy, more likely to have a household income over $150,000 than the women from older generations. Almost 40 percent of those younger women have household income over $250,000. That obviously makes them a more attractive client as well.
The study also revealed surprising information about the working status of wealthy women. First, almost half of the Baby Boomer wealthy women are either still working full-time or part-time. Although many people from that generation have retired, the women involved are still pulling in a significant income. Their investment needs and opportunities are likely to continue to be in flux at this stage.
Meanwhile, there is a trend toward women being the wage-earner in a one-income household. The study shows that two-thirds of married women live or lived in a household with two incomes, but among the Millennials and Gen X women, when only one spouse works full-time, that one spouse is the woman in 29 percent of the households.
One other key insight from the study which affects advisors is that younger wealthy women are less likely to believe they should help their children financially after the child completes formal education. They are less concerned about leaving a sizable inheritance to their children. It is important for advisors to discuss their financial plans for their children when working with affluent women, and not to assume they are going to have the traditional attitude of providing everything they can to their offspring.
The younger generation of women also expressed a lower level of significance to home ownership. It is clear they have a different set of priorities than the older Baby Boomer and World War II women investors and advisors must be prepared to hear something out of the ordinary when discussing finances with younger wealthy women.