Women, Wealth and Investing

Finance | Provided by Katie Robinette

Men and women often have different priorities, approaches and philosophies for investing, which inevitably lead to different outcomes.

American women today are more financially powerful than ever, controlling an estimated 51% of the country’s wealth[1]. This figure is expected to grow to over two-thirds by 2020. As of 2016, women control $39.6 trillion or about 30% of the world’s wealth, up 25% from 5 years prior[2]. And the numbers are on the rise: it is estimated that by 2020 women around the world will control $72.1 trillion[2].

The number of wealthy women investors in the U.S. is substantial as well. Women account for 40% of all Americans with gross investible assets of more than $600,000 and make up 48% of the country’s millionaires[3]. Put simply, female wealth is significant and growing.

Now more than ever, women are stepping up to successfully manage their financial futures, taking paths that reflect their personal values. This is particularly good news when we consider that if a woman is not currently in control of her family’s finances and investments, she is highly likely to have control in the future. Women are four times more likely than men to be widowed, and widows typically survive their husbands by 14 years. Plus, many women will become single at some point in their lives due to divorce. This means nearly 95% of women will be their family’s primary financial decision maker at some point in their lives[3].

As a financial advisor focusing on serving high net worth women, I see firsthand how women’s perspectives on money often differ from those of men. Understanding these differences can help women of all financial means best plan for and secure their financial futures.

Let’s start by acknowledging the physiological differences between men and women. From bone structure to the endocrine system and brain composition, men and women have a variety of biological differences. These biological differences also yield implications for the different psychological dispositions of men and women.

Men tend to think linearly, and often focus on the competitive nature of investment management. They are motivated to “keep score” by measuring a growing net worth, and are statistically more likely to take greater investment risks.

Women, on the other hand, process information circuitously. They are usually more open to receiving financial education and will more readily consult with trusted advisors (much like the woman in the car seeking out directions).

This holistic approach to wealth management plays out in differences between how men and women invest. Many women prefer a steady investment approach that brings them some peace of mind. They take time to make investment decisions, maintain a long-term perspective, maintain a more stable risk profile, and trade less frequently than men.

Women tend to think broadly about money and its role in their lives and their families. They think deeply about life goals – whether those are to leave an inheritance to their children, contribute to the community through philanthropy, or other priorities – and how their financial strategies align with and advance them. Their financial objectives are often focused on how to make the most of what they have, and how to make sure their resources are helping, not hindering, their families. They build plans that properly steward great wealth while also inspiring their children to have a strong work ethic and an appreciation of their resources.

I particularly enjoy working with my female clients because we have so much common ground. Our conversations may start with the numbers, but often quickly transition into shared challenges, such as how life changes – including marriage, pregnancy, illness or divorce – may impact investment priorities. We offer networking opportunities for our women clients so they can become more educated about finances, ask questions in a safe environment and meet other like-minded women in a social setting. All of this builds toward effective, empowering financial plans that protect and grow these women’s resources into the future.

What does all of this mean for today’s woman of wealth? It’s never too early (or too late!) to start to understand the framework of wise wealth and investment management. Although the responsibility may sound daunting at first, it is a rewarding experience to steward your family’s wealth for the benefit of those you love.

Linda Olson, CFA, is a Managing Director, Client Manager for Cornerstone Advisors in Bellevue, one of the top RIA’s in the country with over $3.4 billion in assets under management as of 12/31/2016.

1. Why Has Women’s Economic Power Surged? Five Stats You Need to Know. Forbes. Jan 31, 2017.
2. Women’s Wealth Growing Faster Than Men’s. Money. June 7, 2016.
3. What do Breadwinner Women Want? Family Wealth Advisor Council. 2015.