Wealth in Women’s Hands

Your money, your rules: a woman's guide to financial planning and the approaching wealth transfer to women

As women stand to inherit a substantial portion of the nation's wealth, a new era of financial opportunity is emerging. This seismic shift is poised to redefine wealth management as we know it. Discover how we're leading the charge in supporting women's financial journey.

The Great Wealth Transfer

The Great Wealth Transfer marks a significant shift in wealth ownership across most developed nations, including New Zealand. Currently, about half of the nation's wealth is held by Baby Boomers (“Boomers”), but over the next two decades, this wealth will be passed down, resulting in unprecedented inheritance amounts.

This transfer of wealth is unfolding in three key ways:

1. Women tend to outlive men, which means more Boomer women will independently manage their inherited wealth.
2. Concurrently, substantial amounts of wealth will be passed down through generations. Gen X will receive a portion, but the larger millennial cohort, with its considerable numbers, stands to inherit the majority.
3. Boomers are gifting money to their kids to help them purchase a first home (bank of Mum and Dad). The money is usually gifted to the family member and not to his or her spouse. The gift of money is akin to an early inheritance. In New Zealand, hundreds of millions of dollars are annually being passed to women via this early inheritance.

Importantly, this wealth transfer isn't a distant prospect — it's happening right now. By 2030, American women alone are expected to oversee at least $30 trillion of this wealth, marking an unprecedented societal and economic shift that surpasses anything witnessed in recent memory. At home here in New Zealand, its predicted $1 trillion will be passed on by Kiwi’s in the next two decades.

Big Shifts in Wealth Management Are Coming

It's fascinating to consider that this has never happened before, so we can't be certain how women will choose to use their money. Yet, there's a wealth of research available that offers glimpses into how things might unfold. The future could hold some intriguing possibilities.

From a young age, it could be women have been taught to prioritise others' needs over their own as they might traditionally take the role of a family carer, potentially leading to detrimental outcomes in retirement when their own plans have been neglected. However, on a societal level, research shows that women, especially those with greater wealth, tend to be more altruistic and often allocate more funds towards their families, communities, charities, and invest in initiatives to combat climate change.

Women are inclined to support other women, potentially increasing their representation in positions of power. This shift could reduce attacks on women's rights and foster greater focus on preventative care and wellness, countering pervasive negative narratives. Societies which empower women are found to be more peaceful than those that do not.

Wealth transfer aside, several other areas in New Zealand are starting to look great for women, too. For example:

• Over 60 percent of university students are women. This should lead to increased earning power for graduating women.
• Only 1 out of every 10 people that die at work are women. It should go without saying, but to build wealth, you need to survive the workday!‍
• More solo women than solo men own homes.

While closing wealth and power gaps won't resolve all issues perfectly, it's evident that the world faces numerous crises — both actual and symbolic — that won't resolve on their own. The great wealth transfer and some of the other data suggests we may be starting to head in the right direction.

One Size Financial Planning Doesn’t Fit All

The financial services industry is increasingly taking into consideration women’s differentiated needs, preferences and behaviours when it comes to managing money. Women are actively pursuing new wealth management relationships that truly cater to their needs. Research shows that women prioritise relationships with financial advisers who understand them on a deeper level—a partnership that goes beyond numbers to support their personal and financial goals.

Don’t Confuse Confidence and Capability

Did you know that already women wield significant economic power, controlling an estimated 85% of global consumer spending according to the World Economic Forum? Despite the global consumer economy being fuelled by the purchasing decisions of women, women's relationship with money is often a nuanced blend of emotions and anxieties. A New Zealand study from Massey University tracking the evolving financial knowledge, attitudes, and behaviours of Kiwis reveals an encouraging overall improvement in financial literacy and confidence. However, it also highlights a persistent gender gap, with women still lagging. Exploring the causes and factors behind this gap is complex and warrants deeper investigation and another blog itself but a staggering 60% of Kiwi women regularly worry about their financial situation. The issue often boils down to confidence, not trusting themselves in making the big financial decisions. 

Despite these challenges, a survey by a Wealth Management firm Ellevest argues that this confidence issue stems from not having the funds to make the bigger decisions. It is expected that as women start to inherit wealth, their confidence with money will increase and this can lead to changes in how their use their inherited wealth.

Despite this, it is still evident women's financial confidence currently needs a boost. Which is where partnering with a financial adviser such as the team here at Become Wealth can be transformative, offering women a structured plan and enhancing their decision-making confidence. Financial advisers have the opportunity to play a crucial role in guiding women through financial complexities, empowering them to achieve their goals, plan for retirement, and confidently invest in their futures.

Essential Planning Strategies for Women

When it comes to financial planning for women, there are several key considerations that can make a world of difference to secure a prosperous future:

• Women typically experience different career and earnings trajectories compared to men. Whether due to career breaks for caregiving, industry disparities, or other factors, these unique paths require personalised financial planning that adapts to changing circumstances.
• Women generally have a longer lifespan than men, typically outliving men by about six years, (JAMA Internal Medicine research report) which means planning earlier and more effectively for retirement and beyond is crucial. This longevity is a gift, and with thoughtful planning, it can lead to a fulfilling and financially secure later life.
• Studies consistently show that women tend to earn less over their lifetimes than their male counterparts. This income gap underscores the importance of strategic financial planning to maximise savings, investments, and overall financial well-being.
• Women often exhibit a more risk-averse approach to investing and financial decision-making. This cautious mindset can be an asset when balanced with informed guidance that helps women navigate investment opportunities and achieve their long-term financial goals without unnecessary exposure to risk.
• The New Zealand financial services industry is dominated by men, only 23% of New Zealand financial advisers are women. 

A Roadmap to Financial Success

Here are some practical tips you can start incorporating into your own financial plan today. 

Financial Education

Knowledge is power. Investing in financial education equips women with the tools and understanding needed to make informed decisions about their money. Whether it's understanding investment options, budgeting effectively, or planning for retirement, education lays the foundation for financial confidence and independence.

Take Control of Your Finances

It's empowering to take an active role in managing finances. This includes tracking income and expenses, setting financial goals, and regularly reviewing and adjusting your financial plan as circumstances change. Taking control ensures that your money works for you and aligns with your personal aspirations.

Negotiate

Negotiation skills are invaluable when it comes to maximising income, benefits, and investment opportunities. Whether negotiating salary raises, better terms on loans, or favourable investment terms, advocating for yourself financially can significantly impact your long-term financial security.

A Holistic Approach to Investing

This is about diversifying your investments beyond traditional savings accounts. By allocating funds into a variety of opportunities, you can leverage the power of compound interest and market growth to achieve your financial goals, whether it's buying a home, funding education, or securing a comfortable retirement. However, financial security is just one piece of the puzzle. A holistic approach also emphasises investing in yourself, your health, education, and relationships. By prioritising personal fulfilment and societal contribution alongside monetary returns, you can create a more balanced and sustainable future. This empowers you to achieve financial goals while nurturing your well-being and overall quality of life

An Emergency Fund Is a Financial Lifeline

Especially in times of unexpected change. Relationships can be unpredictable, and having a robust financial cushion can provide the freedom and security to make difficult decisions without financial strain. Whether it's leaving a toxic relationship or facing an unforeseen life event, a strong emergency fund empowers women to prioritise their well-being and financial independence.

The Bottom Line: The Women Wealth Transfer

The journey to financial independence for women is filled with potential. By taking control of your finances, seeking knowledge, and building a strong support network, you can navigate this new era of wealth with confidence. Remember, your financial well-being is an investment in your future and the future of generations to come.

Take the first step towards financial empowerment today. Start by assessing your current financial situation, setting clear goals. Your financial journey is unique, and with the right strategies, you can create a prosperous and fulfilling future.

We would love to be alongside you on this journey – book your complimentary initial consultation with one of our financial advisers today. If you’d prefer to meet with one of our female financial advisers, just let us know.