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August 17, 2017 at 09:31 AM
A recent report by RBC Wealth Management looks at how high-net-worth women — key decision makers in managing family finances — approach building, preserving and transferring wealth.
The study comprised 1,752 women and 1,321 men across the U.S., Canada and the U.K. worth $4.4 million on average.
RBC reported that in households whose investable assets exceed $4 million, 98% of women said they were either sole or joint decision makers on daily banking, and 84% were fully or partially responsible for the family’s investment portfolio.
As women’s share of global wealth and earnings increases, they are becoming the world’s largest emerging market, according to one expert.
In accumulating financial knowledge, women and men differ. According to the RBC report, women are comfortable with a general understanding of financial matters rather than delving into details.
In addition, women tend to adopt a consultative approach to advance their understanding of wealth and money. Fifty-five percent said they turned to knowledgeable individuals to build their financial acumen, compared with 47% of men.
In contrast, men prefer autonomy. Sixty-four percent of men said they preferred to conduct their own research, a preference of 50% of women in the study.
Beyond these different approaches to becoming financially knowledgeable, few real differences exist between women and men in their path to learning, the survey found.
Both start their structured financial learning — lessons from family members, instruction from advisors or learning from financial literacy programs — at age 27. Both learn from general discussions with various people, though a majority of women said family conversations were key for them.
Some women use their time differently and are more inclined to delegate to professionals. About a third of female respondents described themselves as self-directed investors, compared with half of male respondents.
Women as Inheritors
Fifty-seven percent of women in the survey had received a transfer of wealth, and most of the others expected one in the future, according to RBS, which noted that the study focused only on linear transfers, from older to younger generations.
The inheritance experience, RBC found, was “often lonely and confusing” because inheritors, regardless of gender, were “generally unprepared, uninformed and unsupported.”
Earlier research showed that many rich families transfer wealth absent context, conversation, guidance or accountability.
A big majority of inheritors in the RBC poll who reported having advance conversations with their benefactors knew in advance the monetary value of the assets they would receive. However, they had little understanding of what the benefactors wanted them to do with the assets or of the structures used to transfer assets or the advisors who would facilitate the process.
Women in the survey were less likely than men to receive information about their inheritance. Thirty-six percent of female inheritors said they had received no professional or family guidance at all.
Moreover, just 29% of women had benefactor guidance about how to use the assets, compared with 37% of men. Yet, 19% of women who expected to receive an inheritance said this was an important part of their preparation, and 21% said some investment education would be the most valuable type of guidance.
