Introduction

Recent studies by McKinsey reveal a significant trend in the rise of female-controlled assets in the United States and Europe, highlighting the evolving landscape of wealth management. With nearly half of the individuals surveyed being female financial decision-makers, the challenge for wealth managers becomes evident: how to effectively attract and retain this burgeoning segment of investors.

Increase in Female-Controlled Wealth

Women currently possess approximately one-third of all retail financial assets in the EU and the U.S., with projections indicating an increase to 40-45% by 2030. Between 2018 and 2023, while global financial wealth rose by 43%, the wealth controlled by women surged by 51%, reaching an estimated $60 trillion as of 2023, accounting for about 34% of global assets under management.

However, a significant gap remains as women are less likely than men to engage with wealth managers. Nearly 53% of women’s assets remain unmanaged—creating an opportunity of around $10 trillion by 2030, should wealth management firms adjust their strategies.

Transformational Trends Influencing Female Wealth

The increase in female-controlled assets can be attributed to several interrelated trends:

• Social Changes: A decline in marriage rates and higher divorce rates have resulted in more single women having financial autonomy.
• Economic Growth: Women’s earnings are on the rise, as they increasingly occupy high-paying roles, contributing to their wealth.
• Demographic Shifts: The concentration of wealth among aging baby boomers and women’s longer lifespans have led to a growing population of affluent widows.
• Cultural Evolution: Attitudes have shifted, with more women expressing confidence in their financial decision-making abilities.

Distinct Financial Behaviors of Women Investors

Data indicates that young women, in particular, show remarkable increases in financial confidence. For example, the percentage of women in Europe comfortable with making financial decisions rose from 45% in 2018 to 67% in 2023.

Women typically favor stable investments and are risk-averse, with 45% of European women categorized as such compared to 38% of men. Their financial goals often prioritize long-term stability and specific outcomes rather than maximizing returns.

Challenges Facing Wealth Managers

Despite the growing influence of female investors, many wealth management firms have struggled to respond adequately. Key challenges include:

• Lack of Diversity: Women constitute only about 23% of financial advisors in the U.S., limiting the ability to connect with female clients.
• Male-Centric Approach: Many advisors still view men as the primary decision-makers in households, which can hinder engagement with women.
• Inadequate Engagement with Younger Women: Wealth managers often fail to connect with younger women early in their financial journey, missing out on long-term relationships.

Strategies for Effective Engagement

To effectively tap into the potential of female investors, wealth management firms must consider the following strategies:

• Diverse Advisory Teams: Building teams inclusive of women and underrepresented groups can enhance connection with female clients.
• Household-Centric Approach: Firms should treat women as equal partners in financial discussions, fostering trust and collaboration.
• Targeted Education: Providing financial education tailored to the needs of women, especially younger ones, can empower them early in their wealth-building journey.

Conclusion

As wealth management adapts to a diverse client base, capturing the estimated $10 trillion opportunity linked to female-controlled assets will require teams of advisors trained to cater to the unique preferences of women. Focusing on the distinct characteristics of female clients and implementing targeted strategies can position wealth managers to thrive in this evolving financial landscape.