Over the past three years I’ve spent time with financial advisers discussing their wealth transfer strategies and how these impact their businesses.
What’s become apparent is that perhaps instead of wealth transfer we should refer to wealth retention, because in addition to helping families to understand how wealth will move across the generations, the challenge can be retaining that wealth within an adviser business.
Without family engagement and a connection to the next generation, advisers might find that they are managing a dying business. According to research, while 76% of those inheriting wealth indicate that they want to speak to an adviser when they inherit, 65% of inheritors will move from their parent’s adviser at the point of transfer.
If this depletion of assets from a business takes place at the point when an adviser is trying to maximise the business value for a sale, then it’s not a great situation. Even if we don’t own the business we all want to work for thriving and not dying businesses, and protect the income stream.
However, many commentators including myself may have missed a vital point – the influence of women!
Consider the following:
- Two thirds of baby boomer wealth is in joint households
- The first point of transfer in the baby boomer generation is typically from a husband to their wife
- 70% of baby boomer widows will leave their partner’s adviser within a year of their death
Maybe we have an issue - why is this happening?
In order to explore this further we engaged Dr Eliza Filby, a historian of generations who advises on demographics and societal change, to undertake some research.
She interviewed a representative mix of high-networth women: widows, singletons, divorced, married and remarried. They talked about their attitudes towards money and investment and shared their stories and experiences with financial advisers. Eliza also spoke to financial advisers to get their views.
Our full report on female clients and the transfer of wealth can be downloaded here but Eliza’s key points were as follows:
1. Understand these women
- 80% of women will be solely responsible for their finances at some point in their lives
- Women live longer, earn less and move in and out of employment more
- They are society’s carers: many support ‘30-something’ children, grandchildren and husbands
- Many women are working beyond retirement age. The ONS expects the UK over-65 workforce to grow by 20% in the decade to 2024, women over the age of 50 are responsible for 42% of that growth.
2. Smash the stereotypes – understand these women!
- Property is perceived as a low-risk investment option; 50% of landlords are now female - but bankruptcy in women has increased by 88% in the last decade
- While potentially risk averse, advisers identified that ‘female maverick investors’ are on the rise
- Female boomers married young but were the first generation where divorce was easier, hence the rise in blended families
- Dual income households are in the majority in the UK, but joint bank accounts are on the decline
- Widowhood can present newly found confidence - 77% of widows reported discovering courage they never knew they had
3. Their financial plans
- Women are more likely to pass on wealth in their lifetime than men
- ‘Granpreneurs’ are out there – there has been a 67% rise in females over the age of 55 opening business accounts and a 132% rise in those aged over 65
- Social care – women outnumber men in care by 3 to 1
- They don’t want to feel an ‘appendage’ to their husband and want tailored education
- Women want to know more about ESG and investing sustainably
- They want to use their money to help children and grandchildren, to travel and pay for help (cleaners, gardeners etc)
- Communication is important to them – some find the scene setting, content and tone adopted by financial advisers as alienating, while others see the financial adviser as a ‘family friend’
4. Suggested action plan
- Get to know women’s stories
- Bring spouses into the conversation from the outset
- Get to know their support infrastructure
- Provide a structured financial education programme
- Practise emotional empathy
- Understand the level and type of communication required
- Engage more female advisers
Building strong relationships with both partners in a couple through understanding their individual needs and matching them to a tailored service offering gives you the best chance of keeping assets within your business when they transfer from one partner to the other.
Click here to download a copy of ‘Female clients and the transfer of wealth’ report.
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