Wealth planning issues of various kinds have been a real feature of our conversations with High Net Worth Individuals in recent weeks.
Growing numbers of female entrepreneurs are coming to us to find investment management and financial planning advice, and for their part wealth managers are certainly seeing business women as a growth segment they need to pay particular attention to. Here, Lee Goggin, Co-Founder of findaWEALTHMANAGER.com examines the trend.
The fight for true gender equality is far from over, as recent headlines will attest. However, the fact remains that these are very exciting times for women in wealth terms.
A quick look at the figures confirms how far the world has come in terms of women having equal access to education and employment opportunities. For instance, workforce participation among US female millennials is 69% today compared to 78% for males, while in 1963, these figures stood at 41% versus 88%. Pay discrimination is also disappearing from view and is now thought that in developed nations as many as 40% of households now have a woman as the primary earner.
Alongside greater education and career aspirations, women now have abundant role-models and mentors in business that are highly visible via social media. This, combined with the fact that women are more inclined to start up new ventures to get the work flexibility they need, means that the number of business people – and therefore wealthy individuals – who are female is growing rapidly, particularly at the upper echelons of wealth.
The growth in the female Ultra High Net Worth population has recently outstripped that for males in several instances, with Asia-Pacific leading the way on wealth creation among women. Today, over half the region’s female billionaires are first-generation entrepreneurs[i].
For our part, we see the number of women coming to the findaWEALTHMANAGER.com site continuing to tick up year on year in both Asia and the UK, with a many of these being either owners of operational businesses or individuals who have created their fortunes through entrepreneurship, rather than them having received money.
In Europe, the amount of wealth created through the business efforts of women has steadily increased, particularly in the years between 2012 and 2016[ii]. In 2012 women contributed just under £3.5bn to the total. This number increased considerably between 2014 and 2015, rising 34% from £4.1bn to £5.6bn, with another jump of 10.8% from 2015 to 2016, to reach a peak of £6.2bn of wealth created. By a long margin, the UK and Germany are the top countries in Europe for female wealth creation, with Italy being another that has seen a significant climb in female wealth recently.
Increased income equality across industries – even those thought of as traditionally “male” – is now also coming through in the sectoral trends of exactly how business women are making their money.
In Europe, the sector with the most successful female entrepreneurs is the media, which has a wealth creation split of 26.6%/73.4% women to men. However, in terms of where most money is being created by women, industrials & chemicals represents the top sector, with a female wealth contribution of 25.1%, followed by agriculture, contributing 21% of value, and the consumer industry at 13.8%. There is also a high proportion of female wealth being created in the technology sector, where women have achieved 12.3% of the total. This looks to be a key growth sector in the coming years as developments in areas like Artificial Intelligence and FinTech take hold.
Growing female financial power and entrepreneurialism is a key trend for organisations of all kinds to understand and capitalise on.
Interestingly, DeBeers recently revealed that female buyers account for a quarter of all diamond sales worldwide and are now well on the way to becoming the primary purchasers of the precious stones as rewards to themselves for achievements – a powerful signifier of economic empowerment. Purchases by women in the world’s top diamond markets of the US, China, India and Japan totalled US$18bn over 2016; notably, in Hong Kong women bought 55% of all diamonds sold.
Wealth managers are moving with the times in ever more inventive ways, for their part. Those targeting female clients know they need to be paying close attention to fast-moving trends, rather than relying on past assumptions about how women tend to become wealthy and how they want to be served.
For example, heightened focus on entrepreneurs has caused a great shift towards institutions providing business networking and thought-leadership opportunities for their female clients and prospects, rather than softer hospitality focused on things like fashion and the arts (although these are certainly still available for those that want them).
On services side, firms are paying greater attention to providing the financial planning and business succession advice that female entrepreneurs can all too often neglect while they build their wealth. Those kinds of issues are typically brought up within the peer groups of male entrepreneurs, meaning that a significant knowledge (and confidence) gaps can exist among women.
A final important trend is the way wealth managers are increasingly focusing on ethical/socially-responsible or impact investing – where investments are intended to generate a positive impact on society or the environment, as well as a financial return. Research shows women tend to define success in far broader terms than men and put more consideration into what wealth is ultimately for, rather than just bare financial results: 69% of women feel it is important that their investment decisions reflect their personal values and philosophies[iii] and twice as many women as men consider the social responsibility elements of their investments (46% vs 24%)[iv].
So, while women have many wealth management needs in common with men, providers are recognising that they do require greater focus in some areas, and a slightly differently “flavoured” offering in a number of ways.
Many of the institutions on the findaWEALTHMANAGER.com panel have specific thought-leadership programmes in place for female clients, and some have dedicated teams which are led by high-flying female executives, to make successful women feel more at home. They have recognised that although women often excel in creating wealth, they are often relatively new to the key concepts involved in protecting, growing and passing it on optimally. If you are a female entrepreneur, there may be a lot that a professional adviser could help you achieve for your business and family.
Our users tend to be extremely time-poor and seeking a quick, reliable way to reach the best-matched advisers for their needs – and female entrepreneurs arguably embody that profile most of all. The good news is that we can provide just the solution they seek.
If you are an entrepreneur seeking expert advice on managing the proceeds of a business sale, or are looking at ways to optimise your personal and business finances while you build a venture up, you should certainly take the small amount of time required to find out what a professional wealth manager could achieve for you. If you would like to start your search for a wealth manager in a few short steps, put our smart online tool to work now. Alternatively, if you would like to discuss your needs with our expert team, please do get in touch.
[i] WealthInsight Study, “Growing number of female UHNWIS create new opportunities in luxury tourism”
[iii] Moxie Future
[iv] Spectrem Group, “High Net Worth Men vs. Women”