Fintech
Has wealth management been ridiculed?
Women control an ever-increasing share of the world’s wealth, but is the wealth management industry adapting to the change?
Gemma Livermore, founder of the award-winning community Women of FinTech and Head of International FS Marketing at Seismic, She is a passionate advocate for gender equality and inclusion, while fostering growth and nurturing impactful communities.
In this article he analyzes the points at which wealth management must change.
The tectonic plates of wealth management are shifting, heralding significant changes that could reshape the industry. Despite its apparent stability, with predictable earnings attracting Wall Street, the industry’s growth has largely been driven by the performance of capital markets. According to Society Capital markets were responsible for 70% of asset growth from 2012 to 2021.
However, the industry’s organic growth story is less clear-cut. With many experienced professionals aging (50 percent over 55, according to Cerulli Associates) and diversity issues persist, the industry faces significant challenges. One large group I met with recently had more financial advisors over 70 than under 30, underscoring the need for new talent and diverse perspectives.
We are in the midst of what financial experts are calling “the great wealth transfer,” a colossal shift in assets that is setting off a major chain reaction. Cerulli Associates reports that more than $84 trillion will change hands by 2045, with nearly $12 trillion going to charity and the rest going directly to heirs. This shift marks a seismic shift, led by the aging baby boomer generation transferring wealth to Gen X, Millennial, and Gen Z families, who bring different perspectives on wealth, prioritizing sustainability and social responsibility.
Slow to adapt
Despite these monumental changes, the wealth management industry has been slow to adapt to the changing needs of female clients. Women increasingly control wealth, but their experiences with financial advisors often leave much to be desired.
Many women report feeling neglected and disconnected from their family financial advisor, especially in cases of widowhood or divorce. According to Ellevest According to one study, only about half of women know where to go with a financial windfall, compared to 72 percent of men, resulting in women often moving their money into safe but non-growth-oriented bank accounts.
Women are looking for different qualities in financial advisors: less jargon, less risk-taking, and more emphasis on financial planning, purpose-based investing, philanthropy, and investing that is aligned with environmental, social, and governance policies. Increasing the number of female advisors who understand their clients’ experiences is critical.
Without significant strategic changes from wealth management groups and changes in the demographics of their workforces, the industry may struggle to sustain its historical growth. Women, often overlooked in financial advisory relationships, may choose to leave their joint advisors after becoming widowed or divorced. This disconnect highlights the need for a more inclusive approach.
A new era
Successfully addressing these needs goes beyond profitability. Wealthy women tend to be more philanthropic, politically moderate, and community-focused, driving meaningful social change. The “feminization of wealth” could usher in an era of moderation and sustainability.
Is the industry ready for this change? Not yet. Inflection points are hard to identify, but the cost of missing them could be significant—for all of us. To prepare, families should prioritize open discussions about their financial plans, values, and legacies, potentially with guidance from a financial advisor. This proactive approach can help navigate the emotional and practical complexities of large-scale wealth transfers.
As women continue to gain control of more wealth, the industry must evolve to meet their unique needs and preferences. The future of wealth management depends on it.