Men control the vast majority of US household wealth, but that’s changing.
A massive transfer of wealth is under way as male baby boomers die, leaving assets to spouses, and as more women become breadwinners. The shift is expected to put women in charge of about $30 trillion of assets by 2030, roughly a $20 trillion increase from 2016, according to projections from McKinsey, the consulting firm.
Demographic changes underpin much of the trend. Baby boomers account for about 70% of affluent US household wealth, some two-thirds of which is held by opposite-sex couples in which women aren’t the active financial decision makers. Much of this wealth will eventually pass to female spouses who tend to be younger and live longer. (By 2030, all baby boomers will be age 65 or older.)
Changes in the workplace are also a key factor. Women are climbing higher in corporate America, with a corresponding boost to their personal incomes, and 30% more married women are making financial and investment decisions than they were five years ago, according to McKinsey research.
Wealth management has traditionally been male dominated—most financial advisers are men, and most of the decision makers for household finances have been, too. Research suggests women aren’t satisfied with many of the existing wealth management arrangements, according to Jill Zucker, a managing partner at McKinsey in New York. When women take control of the finances, nearly three-quarters of them switch advisers within a year of their partner dying. “We know women are voting with their feet and saying ‘you’re not serving me well,'” she said in a telephone interview.
Women tend to approach money management differently than men in some important ways, according to McKinsey research. They are more likely to seek out professional advice, and are less likely to feel confident about their financial choices. Women are often less tolerant of risky portfolios, and are more focused on life goals, like retirement and being able to afford healthcare.
Despite the sheer amount of wealth that women will soon oversee, financial institution haven’t cracked the code when it comes to attracting them with their services, Zucker said. “We haven’t yet seen a winner emerge at the institutional level of really figuring out how to serve women,” she said.