We are about to come into the largest transfer of worldwide wealth in the history of humankind. All of this money has the opportunity to come into your practices or your successors’ practices. There will be trillions of dollars passing between generations, and women are poised to become an even bigger force within the wealth management market with all of the money in motion passing between generations and spouses.
Therefore, the opportunity to work within this powerful demographic is huge for all advisors, and the more we know about the nuances of this target market, the better equipped I believe everyone will be to work with women in the wealth market.
Let’s look at the overall scope of the female economy from both a global perspective and in North America. Women now drive the world economy and represent the largest market opportunity. According to the Global Entrepreneurship Monitor (GEM) Women’s Report (2016/2017), the global female economy represents a bigger opportunity than China and India combined. Internationally, women control $40 trillion — or approximately 30% of the world’s wealth. In 2016, an estimated 163 million women were starting or running new businesses in 74 worldwide economies, and an estimated 111 million were running established businesses. Not only does this show the impact of women entrepreneurs across the globe, but it also highlights their contributions to the growth and well-being of their societies.
Women entrepreneurs and their businesses provide incomes for their families, employment for their communities, and products and services that bring new value to the world around them.
In North America, a Women and Wealth report (IPC Private Wealth and Strategic Insight) predicts that from 2016 to 2026, women in Canada will inherit financial assets of approximately $900 billion in personal wealth.
In the U.S., women currently control 51%, or $14 trillion, of personal U.S. wealth, and this amount is projected to reach 66%, or roughly $22 trillion, by 2020. They call this transfer of wealth directly to women “money in motion.”
Think about what may be some of the contributing factors to this significant transfer of money. What do you think are some of the reasons all of this money will be changing hands?
FACTORS AFFECTING TRANSFER OF WEALTH
- Greater participation in the workforce
- Far higher levels of professional responsibilities
- Increase in women entrepreneurs
- Beneficiaries of a disproportionate share of wealth transfer
- Mothers to daughters/grandmothers to granddaughters
The report found that today women represent a greater overall participation in the workforce, and they are rising to far higher levels of professional responsibilities within organizations, although in many people’s minds, this is still at a pace that is not fast enough. There has been a significant increase in women starting their own companies. And I am proud to share that I came across an interesting report, which stated that in December 2017, Canadian women were the most active women entrepreneurs in the world (GEM Canada 2018).
Women are also the beneficiaries of a disproportionate share of the wealth transfer that is underway. However, before the intergenerational transfer of wealth takes place, assets are frequently passed between members of the same generation, often from husband to wife or from partner to partner. A substantial portion of this wealth will be transferred from mothers to their daughters or grandmothers to their granddaughters.
Hear more in the new episode of MDRT Presents: