Understanding the significant research behind this new power shift | by Cary Carbonaro | Read Original Article Here
Ms. Carbonaro is an award-winning Certified Financial Planner™ professional with over 25 years of experience, and the author of Women and Wealth: A Playbook to Empower Clients and Unlock Their Fortune. Visit carycarbonaro.com/
By 2030, American women are expected to control much of the $30 trillion in financial assets that baby boomers will pass down. This wealth transfer is so significant that it rivals the annual GDP of the United States. This shift represents an unprecedented opportunity for women to shape the financial landscape—yet, the wealth management industry has historically underserved them.
Understanding the drivers behind this transition is crucial for financial advisors, firms, and policymakers looking to adapt to the evolving financial ecosystem.
Why Women Will Inherit the Majority of Wealth
Several key factors contribute to women’s increasing financial power, including longer lifespans, divorce trends, the rise of female breadwinners and entrepreneurs, and generational wealth succession.
• Longer Lifespans and Wealth Succession
Women, on average, live five to seven years longer than men. This means they are more likely to outlive their spouses and inherit wealth. According to research from McKinsey & Company, by 2030, most baby boomer wealth will be in the hands of widows. However, many of these women will seek new financial advisors, as they often feel overlooked or underserved by their current ones.
• Divorce Trends and Economic Independence
Divorce rates, particularly among older adults, have steadily increased, leading more women to manage their finances independently. Known as the “gray divorce” phenomenon, this trend places significant financial decision-making responsibilities on women in their 50s and beyond. Additionally, younger women are entering marriage with financial independence and are more likely to maintain separate assets.
• Female Breadwinners and Entrepreneurs
Women now make up a significant portion of primary earners in American households. According to Pew Research, 40% of mothers are the primary or sole earners for their families. Women also own more than 40% of U.S. businesses, a number that continues to grow. This shift demonstrates that women are not just inheritors of wealth—they are also wealth creators.
• Generational Wealth Succession
Women are not only inheriting wealth from spouses but also from parents and family businesses. The growing presence of female entrepreneurs and professionals means that wealth is increasingly being passed down to daughters rather than sons.
The Financial Industry’s Struggles in Serving Women
Despite their increasing financial power, women often feel underserved by the financial services industry. A Harvard Business Review study highlights that financial services ranks as the industry least sympathetic to women’s needs. This disconnect presents both a challenge and an opportunity.
Key Issues Women Face in Financial Services
- Lack of Personalized Advice – Women want financial advice that considers their longer lifespans, caregiving responsibilities, and career trajectories.
- Communication Barriers – Women are often spoken down to or ignored in financial discussions. Many report feeling disengaged when advisors focus solely on performance metrics rather than holistic financial planning.
- Risk Perception and Investment Strategies – Women tend to approach risk differently than men, favoring long-term security and diversified portfolios over high-risk, high-reward investments. Advisors who fail to address these preferences risk losing female clients.
- Retention Challenges – Studies show that 70% of widows leave their financial advisor within the first year of their spouse’s death. This signals a major gap in how advisors connect with and serve women.
The Business Case for Prioritizing Female Clients
The financial services industry stands to benefit significantly from adapting to better serve women. A Cerulli Associates study found that more than $54 trillion will be transferred to widows through 2048, with over 95% of it going to women. This means that firms that successfully engage female clients will be well-positioned for decades to come.
What Financial Firms Must Do to Win Women’s Trust
- Prioritize education and empowerment
Women prefer financial literacy-focused approaches rather than just product recommendations. They want to know they are OK and don’t want to lose sleep at night. Solve problems and use language that resonates with them. Beating the S and P 500 doesn’t translate for women. - Hire more female advisors
Representation matters—women often feel more comfortable working with female professionals who understand their financial concerns. This is more difficult than it sounds since female CFPs for example are 23.8% out of 100. - Engage in life-centered financial planning
Advisors must look beyond investment returns and help women navigate life transitions such as career changes, caregiving, widowhood, and retirement. You should be able to discuss different life cycles for women like menopause, family planning, childless by choice. - Create supportive communities
Women value financial discussions that foster connection and shared experiences. Firms that build these networks will cultivate stronger client loyalty. Create women-only events. Give women a space to come together and hear them.
What Financial Advisors and Professionals Can Take Away
Advisors must look beyond investment returns and help women navigate life transitions such as career changes, caregiving, widowhood, and retirement…
For financial professionals, Women and Wealth provides a roadmap to adapting their services to meet women’s unique needs. It emphasizes:
- The importance of empathy and active listening when working with female clients.
- How to identify and overcome unconscious biases that may alienate women from financial discussions.
- Practical strategies for engaging female clients across different life stages.
- Ways to improve retention rates and build long-term relationships with women investors.
- Better ways to engage and connect with female clients. Story telling and case studies that work.
Addressing Gender Bias and Promoting Financial Equality
The financial services industry must take concrete steps to eliminate gender bias and create an inclusive environment for both clients and professionals. This is NOT a DEI issue but a dollar and cents issue. Women are going to be the majority of our future clients. This is a trillion-dollar opportunity.
Key Actions to Foster Gender Parity
- Increase Female Representation in Leadership
Women remain underrepresented in executive roles at financial firms. Promoting more women into leadership positions can drive meaningful change. - Address the Gender Pay Gap and Wealth Gap
Female financial advisors often earn less than their male counterparts despite having the same qualifications. Transparent pay structures can help close this gap. - Encourage Financial Literacy for Women
Firms should invest in programs that educate women about wealth management, investing, and retirement planning. - Redesign Financial Products for Women
Financial products should account for women’s longer lifespans, career breaks for caregiving, and different risk appetites.
Conclusion
The financial industry is at a crossroads. With women set to control a historic amount of wealth, financial professionals and firms that adapt their services to meet women’s needs will thrive.
Attracting and retaining female customers will be a critical growth imperative for wealth management firms. In this study ( https://hbr.org/2009/09/the-female-economy)
Financial services wins the prize as the industry least sympathetic to women—and one in which companies stand to gain the most if they can change their approach. Firms that prioritize women as clients will not only foster greater financial equality but also position themselves for long-term success in an evolving market. The future of wealth is female—now is the time to embrace it.
