The Growing Influence of Wealthier Women

Over the next decade, wealth in the U.S. – and globally – will be increasingly generated by women. Women currently control more than $10 trillion in household assets in the U.S. and that number is expected to multiply over the next several decades.

“We are in the midst of a historic generational transfer of wealth — $84 trillion is expected to pass from Baby Boomers to Generation X and Millennials through 2045.  Of that, $72 trillion is expected to transfer to heirs, while $12 trillion is expected to go to philanthropy. More influence and control of this transferring wealth is shifting to women due to several factors,” said Lisa Behun, private client advisor at Bank of America Private Bank in San Diego. “First, more females are graduating from universities and entering the workplace into higher paying professions. As this happens, our culture is shifting to increased male participation in child rearing, freeing women to work in even more full time and higher-level professions.”

Carrie Vilaplana, vice president at J.P. Morgan Private Bank, noted that companies today are placing an increased focus on supporting women in their income-earning years.

“From increased wage gap transparency, to improved family leave policies, substantive DE&I programs, even dedicated inclusive investing efforts to help women manage their personal financial lives while they juggle the competing demands on their time,” she said. “It is important for institutions to continue finding ways to support their diverse and changing workforce to ensure they attract the best talent.”

U.S. Bank Private Wealth Advisor Managing Director Rachelle Tubongbanua also cited a number of factors driving women’s wealth generation.

“Women are more financially independent than past generations,” she said, adding that 40% of U.S. businesses today are owned by women – a 58% increase since 2007. Women are also “the sole or primary income source in 40% of U.S. households” and according to the U.S. Bureau of Labor Statistics made up 57% of the country’s workforce in 2022.

Women Thriving Across San Diego Industries

Tubongbanua added that women are thriving across all of San Diego’s key industries of manufacturing, defense, tourism, technology and life sciences.

“I’m seeing women in these industries take on progressive roles and leadership positions at a quicker pace than ever before,” she said. “More women are now the key decision-maker in households, the workplace and even more so in political roles that have direct impact in our communities. The impact and influence of women in the San Diego community will only grow stronger, and the opportunities are limitless.”

UBS Financial Services Senior Vice President of Wealth Management Matt Hansen shared examples of women entrepreneurs that are leading the way for women’s wealth generation in San Diego.

“I have met with a number of female founders in the life science/biotech space as well as technology/SaaS and even in the venture capital space who are thriving,” he said.

“One of my very good friends helped launch the Rady’s StartR incubator program at UCSD, [and] has been on the board of a number of startups prior to her career as a tech entrepreneur,” he said, adding that his friend is also involved in a local venture studio and co-founded an AI company building technology to create an alternative credit scoring system for female and minority business owners “whom for decades have had challenges with access to capital and lending solutions to help their companies grow.”

Hansen also pointed out how female entrepreneurship in venture capital is paving the way for more opportunity for wealth for women.

“Recently I had the honor of meeting with two female co-founders of a life science/tech incubator and mentoring program in San Diego who have also launched their own venture capital fund that’s focused on early-stage tech and biotech companies,” he said. “Their aim is to help female- and minority-led startups build out technology, create a business plan, locate capital and collaborate with investment banks and lenders to help these companies grow.”

Jennifer Perkinson, wealth management advisor at Merrill Lynch in San Diego said those opportunities for women’s wealth generation extends beyond the C-suite as well.

“Women are increasingly adding board member roles to their current careers and this increases income in the form of stock options. In San Diego, this is especially true in the tech/biotech area,” she said.

Vilaplana also cited life sciences as a major driver of wealth generation for women in San Diego.

“In addition, women entrepreneurs and executives in tech companies are a growing demographic,” she added. “San Diego also has a vibrant real estate market, and many women are involved as investors, developers, and real estate professionals. The growth in property values has been a significant factor in wealth accumulation for women in this sector.”

A ‘Challenging Reality’ in Household Wealth Management

Although women are increasingly becoming a dominant force behind wealth generation, there is a lag in progress in terms of who decides how that money is managed.

“The challenging reality and what we are seeing in our UBS research is that women continue to not be as involved as they should be in long term financial decisions,” Hansen said. “Our latest research shows that 30% of women are the breadwinners in their relationships. However, only about half take the lead on financial responsibilities, including short- and long-term decisions.”

The UBS research showed several reasons for women not leading financial decisions at home, such as traditional roles and expectations and gender stereotypes.

“For example, less than half of women breadwinners said they prefer being in this position, compared to almost 90% of men breadwinners who prefer it,” Hansen said. “Many women breadwinners said friends and family assume their male partners are the primary earners, and about half of these women don’t correct these assumptions by their social circles.”

Changing roles and reversing old stereotypes has also created insecurities in men who are not breadwinners, leading to relationship tensions, the research showed.

“Women breadwinners also face the highest levels of distrust from non-primary earning partners when it comes to their spending and investing habits,” Hansen said.

Stereotypical roles also play a role in who has the time in a relationship to dedicate toward managing finances and investments.

“In this latest research, women breadwinners told us they take on more of the household responsibilities and childcare responsibilities compared to men breadwinners,” Hansen said. “So, while there has been tremendous progress, there is still a lot of work to do for women and the opportunity for their wealth.”

There are signs that women’s opportunity for wealth is progressing along generational lines.

U.S. Bank’s most recent survey, Tubongbanua said, found that Gen Z and Millennial women “have more investible assets, were more likely to invest money saved during the pandemic, and were more likely to consider themselves wealthy than any other generation of women.”

Gen X women, by contrast, have the least amount of investible assets among any generation or gender and are “significantly” more worried about retirement than their male counterparts, she added. “And just 28% of Gen X women feel financially prepared to cover future financial needs – the lowest of any generation or gender.”

Women’s Wealth Impacting Investments

With a greater share of investable assets, younger, wealthier women are shaping the future of impact investing, or ESG (Environmental Social Governance) investing.

“Now more than ever, women are using their valuable time, financial clout, and purchasing power to put their money towards the causes most important to them,” said Hansen, pointing to a recent UBS report titled “Women on Purpose” that highlights the different ways women are increasingly motivated to align their actions with their values. “The research also illustrates the tremendous potential of women leaders, investors, consumers, philanthropists and advocates to drive broader economic and social progress.”

The report found that 79% of women cited ESG investing as particularly relevant and Millennial women lead other generations in values-based investing, with more than half aligning their investments that way.

A U.S. Bank survey conducted earlier this year also found that younger investors – women and men – put a higher premium on investing in causes they care about.

“In addition, 85% of Gen Z investors and 83% of millennial investors would accept a return  below 11.9% on their investment— less than the average return of the S&P 500 for the past 10 years,” Tubongbanua said. “In California, 85% of Gen Z active investors and 77% of Millennial active investors say they only make investments that are consistent with their values and principles.”

In addition to making investments in companies based on values, Vilaplana points out that women are increasingly more engaged in philanthropic leadership roles and as major donors.

“Women now lead approximately 45% of the top 25 largest foundations,” she said. “Studies show that women consistently make more philanthropic gifts than men and their philanthropic power is rapidly growing as women have more of their own money to spend.”

Financial Advisors, Wealth Managers Court Women Clients

Another trend that showed up in U.S. Bank research is that women are less likely to use the services of a financial advisor than men. And for women who inherit an existing advisor, that relationship usually is short lived.

“In the industry, we’ve seen that a very high percentage of older generations of women – 70% – leave their financial advisors once their husbands pass away because they were left with an advisor who never included them, and they felt undervalued, and underrepresented and they often go to a female advisor,” Tubongbanua said.

Reversing that sense of a lack of inclusion and representation felt by women is something the financial industry is putting an effort toward.

“A case can be made in the wealth management industry, that the female entrepreneur, executive and ultra-high net worth individual is drastically underserved, while at the same time being the future of business leadership both in the U.S. and globally. We have known this for many years and have made it a focus of our practice, and the wealth management industry, as a whole, is slowly catching on,” Hansen said. “For the last six years, UBS has worked tirelessly to gain a deeper understanding of how women engage in their finances so that we can be best positioned to help women address the unique financial needs that they have throughout the course of their lifetimes, and so that we can better serve our female clients, prospective clients and communities.”

To better serve women clients, UBS has set goals is to bring more women to the financial table, support women who are already there, and to make that table “a more inclusive place for women,” he added.

Vilaplana said the wealth management and private banking industry continues to be male dominated because of barriers such as gender bias, lack of mentorship, and work-life balance challenges for women — but there are signs of progress.

“In recent years, there has been a gradual increase in the number of women advisors entering the field along with women in leadership roles as firms increasingly recognize the need for diversity in leadership positions,” she said, adding that “there is evidence of a growing preference, especially among women, to work with women advisors as they are often perceived as being more empathetic, good listeners, and more inclined to take a holistic approach to financial planning. There’s also an increase in the number of women obtaining relevant degrees and certifications … which is helping to boost their position in the industry.

“Studies have shown that women financial advisors often perform as well as or better than their male counterparts, debunking stereotypes about gender and performance in the industry,” she continued. “At JPMorgan Chase, we have a strong belief that our workforce needs to appropriately reflect the diverse client base we serve, and women are an important focus.”

Making the financial industry more inclusive “is particularly important for women, who live about six years longer than men and therefore must make their retirement savings last longer,” Tubongbanua said. “Women who work with a financial advisor are more confident and have more saved than those who don’t.”

In addition to help preparing for their longer retirement, wealthy women can also benefit from wealth advisors in preparing their estates.

“My team at BofA is female-led and we recognize that female clients often indicate increased interest in generational wealth transfer and estate planning issues, in addition to investment management,”  Behun said.

According to Bank of America’s “Study of Wealthy Americans,” among parents reported to have spoken with their children regarding their estates, 76% of the conversations were female-led.

“Our focus is to include the entire family where possible, in all wealth discussions, and we are making it a priority to include both spouses in the investment philosophy as well as wealth transfer decision making dialogue,” Behun added.

To better serve wealthy women in growing their wealth, planning for retirement, and setting up their family estates, banks are also increasing representation in their workforce. Tubongbanua pointed out that in 2022 U.S. Bank staff was 58% women and 63% of new hires across the bank were women.

Merrill Lynch’s Perkins explained that in the “largely consultative and service focused” wealth management industry, “it is an incredible time for women.”

“We are able to act as educators, planners, coaches and friends – and I truly believe that gives us an edge,” she said.