In February 2021 Whitney Wolfe Herd, the CEO and founder of Bumble, became the world's youngest self-made female billionaire. With Bumble’s share price soaring, Wolfe Herd's stake is now valued at $1.6 billion. Forbes’ 2021 list of the World’s Billionaires featured over 300 women, up more than a third from the previous year.
Women are making up a greater proportion of high wealth and ultra-high net wealth individuals around the world. As of 2020, 15% of UHNW individuals were women. One estimate predicts that by 2025, over half of the UK's millionaires will be women.
Why is this, and how should the private wealth industry accommodate this changing demographic? It could be tempting to "pink wash" the issue by assuming that female clients automatically prefer female advisers, or that private wealth held by women is intrinsically different from private wealth held by men. Surveys have shown that men and women can have differing approaches to wealth management, and that women are more sensitive to gender bias. However, gender is not the defining factor, nor should it be.
The rise of women in private wealth is due to a combination of factors, including better education, shared wealth (5% of the entire world's wealth is held by "super rich" households), inheritance, and entrepreneurship.
Considering inherited wealth first, women live, on average, almost 9% longer than men. This means that a good proportion of the "super rich households" could eventually be "super rich women" if women outlive their husbands. Women may also experience an increase in individual wealth following the split of such households through divorce. For example, author and philanthropist Mackenzie Scott is ranked 22 on the Forbes Rich List 2021 - her ex-husband Jeff Bezos makes an appearance in the top spot. Melinda French Gates' recent divorce from Bill Gates will also split another super rich household.
There will also be a generational shift. Over the next 25 years a "great wealth transfer" is anticipated where $68 trillion will change hands between various generations. The generational shift could spell the downfall of the "traditional" family adviser who previously may have been in the habit of only engaging with male members of the family. Evidence suggests that more than half of women who inherit wealth change their investment adviser because they do not feel they can relate to their existing adviser. When coupled with the anticipated great wealth transfer, the private wealth landscape could experience a seismic shift in the coming years.
Female entrepreneurship is also on the rise: one in three entrepreneurs are women, and 33% of businesses are owned by women globally. There is also increased confidence in financial planning, as 40% of younger women are confident with investing compared to just 29% of their mothers and grandmothers.
Advisers are now expected to provide a more inclusive and holistic service. Although the statistics above are helpful, it does not tell the full story. The unwritten and often under-appreciated factor for inherited wealth (which affects both men and women) is that individualswill naturally stand to inherit at times of great emotional vulnerability. In addition, although female entrepreneurship is on the rise, female led companies only attract half the level of investment as male led companies. Women are also more likely to feel "imposter syndrome" – in the UK only 27% of women have above average self-esteem, compared to 54% of men.Clearly, despite some promising statistics, there is still work to be done to promote the interests of women who are wealth creators, inheritors and investors.
It is therefore vital to fully appreciate the circumstances around each client to be able to relate to them as individuals. The highest levels of professional and technical expertise are expected, but there is no substitute for personal chemistry and genuine rapport, and the latter is easier to achieve with a wide range of advisers to choose from.