Women and wealth | A new era of financial empowerment?

This article was published by Professional Adviser on 13th December 2024.

Women and wealth: A new era of financial empowerment?

Helping women build confidence and craft long-term strategies

Financial planner Olivia Perry looks at the shift of wealth into the hands of women and says advisers can be valuable allies…

It shouldn’t be forgotten that until 1975, UK banks could still legally deny women the right to open their own bank accounts without a man’s signature. Just fifty years ago, legal and societal barriers often kept women on the sidelines of financial decision-making. For members of the Silent generation (1928 to 1945) and Baby Boomers (1946 to 1964), these restrictions had a long-lasting impact, reinforcing a legacy of financial inequality and a lack of confidence in managing long-term finances.

The stereotype that women are less adept with numbers than men continues to be amplified by online trends like ‘girl math’, and as a result, can still discourage women from taking charge of their money.

However, society is in the grip of a major, perhaps historic shift, especially for Baby Boomer women. With an unprecedented wealth transfer anticipated over the next few decades, women are positioned to inherit vast sums of wealth, mainly due to their longer life expectancies. Allianz’s 2024 Global Wealth Report highlights that in the UK, Baby Boomers are the wealthiest generation in history – and much of their £5.5trn in assets are set to transfer to their children and grandchildren by 2050. Even as early as 2025, it’s projected that ownership of 60% of the UK’s wealth will have passed to women. This represents a remarkable turnaround for a generation who remember the need for that male signature.

What does this wealth transfer mean?

For many women, it represents their first real opportunity to take control of significant financial assets. Yet, a financial knowledge and confidence gap persists, Aegon’s financial wellbeing index found that while 61% of men report being on top of their long-term finances, only 36% of women feel the same. Allowing for the fact that men will typically overstate their confidence or expertise about a given topic, this still represents a dramatic gap. This imbalance manifests itself further with the same research showing that only 36% of women have sought help from a financial planner compared to 46% of men.

These are issues that need addressing quickly but for an industry historically used to dealing with male clients and having a hugely disproportionate number of male financial planners, this could be a challenge. According to numbers from the Personal Financial Society (PFS) currently, 84% of planners are male, and by any standards, this is a worrying statistic.

It is worth mentioning Don MacIntyre’s observation (former PFS interim CEO), “…financial planning is only 6 percentage points ahead of Formula One racing when it comes to female representation. While the famously male-dominated motorsport now has the F1 Academy to propel female drivers and reports 40% of its audience to be women, there has been little conversation about how our profession can attract female talent and position them to excel.”

There is some positive industry news though. At the Chartered qualification level, female representation rises from 16% to 23%. Similarly, five of the six individual PFS Award winners in 2023/24 were women, and women have also won the most prestigious PFS Awards category – the Chartered Financial Planner of the Year – for three consecutive years. Hope for the future perhaps.

The shift in financial power towards women could have a considerable impact on society, as women tend to direct their wealth differently to men. Research shows they often view finances through a more holistic, purpose-driven lens, often prioritizing family, well-being, and meaningful goals over purely financial ones, such as maximising return on investment. They also tend to look at the short rather than long-term. It’s important that planning firms recognise these differences and learn to tailor support and advice accordingly.

Financial planners can be valuable allies, helping women build confidence, craft long-term strategies, and establish tax-efficient intergenerational plans. With the right support, this wealth transfer could be a game-changer, permanently enhancing financial security, freedom, and agency for women today and for future generations. What’s key now is that the financial planning industry is wise to this new financial world and in a position to proactively deliver that support.