Practice Strategies

Stepping Up To Serve Female Wealth: Barclays Study

Jackie Bennion Deputy Editor 16 December 2020

Stepping Up To Serve Female Wealth: Barclays Study

Tapping the trillions that are coming into female hands over the next decade is possibly the largest advice gap waiting to be filled, a new report finds.

With around $15 trillion in global wealth set to transfer to the next generation over the next decade, a global study has revealed how wealth - increasingly in female hands - is being served. The spoiler is not very well, according to a deep dive by Barclays Private Bank released this week.

For its Smarter Succession series, Barclays interviewed more than 400 global high net worth families about their ideas on succession planning and where wealth management is coming up with solutions and falling short. It found that eight in 10 women in HNW families are in line to inherit substantial wealth over the next 20 years, and that four in 10 of those are already involved in family investments and business decisions. This means that 60 per cent are not.

It also found that women are closing the gap on men for holding similar levels of direct ownership in family businesses (54 per cent for women versus 57 per cent for men). But it also reported that wealthy women are more than twice as likely as men not to have a financial advisor.

Most striking is the opportunity awaiting private bankers and wealth managers who can capitalise on a slow but sure shift away from long-held patriarchal succession views. Bearing in mind that the private bank spoke to families in France, Germany, Hong Kong, India, Italy, Qatar, Saudi Arabia, Switzerland, Singapore, the UAE and the UK in the second quarter of this year, it reported that an overwhelming majority of parents (80 per cent) said that they hold traditional beliefs, but just a third (35 per cent) said that their children hold those same beliefs.

The survey found that two in three families believe that women have a core role in running the business. While this view drops to 20 per cent for families in the Middle East, "both bankers and experts believe that equality is on the rise globally," the report said.

For now, however, 80 per cent of the main family decisions are made by men. Whether these main decision-makers are men or women, they are "twice as likely to look to their sons rather than their daughters on matters of wealth, finance and investment,” the bank said.

The growing share of wealth in female hands is not to be trifled with. It has risen sharply over the past decade, growing fastest in Asia, with a third of the world’s wealth currently under female control. Furthermore, women are increasing their wealth at a faster pace: adding roughly $5 trillion to the wealth pool globally each year.

This study found that women are also gaining agency in family business decisions as more take on postgraduate degrees (43 per cent) compared with 14 per cent for their parents' generation. The question is how well advisors are responding to this trend and bringing female members deeper into the family wealth picture.

Barclays found that fewer than half of women were involved in the day-to-day running of the family business (see the breakdown chart below). Because of this, women are far more likely than men not to be involved when decision-making powers are passed down, it said.

Keeping pace with clients
The intelligence coming from these globally dispersed families holding at least $5 million in wealth is that as female wealth rises and family dynamics change, banking relationships need to change with them, greeting the arrival rather than racing to catch it.

Women warned that financial services have not adapted yet to their rising stature, with more than half believing that their advisor treated them differently to men.

One female HNW told the study: “Some advisors in the past, one or two of them, have been a bit chauvinistic. Perhaps they would have talked to my husband and not me. You’ve got to work with someone that you can form a relationship with, who understands you and looks out for your needs, not what the bank wants to provide you with, but what you actually need.”

HNW women also told Barclays that they are less likely than their male counterparts to feel that their advisor understands their investment knowledge or their tolerance for risk. This was probably why 22 per cent of wealthy women do not currently have an advisor.

“The industry needs to overcome existing biases, work to deliver services and advice that are the equal of those presented to their male relatives and provide women with the base to support their role as global business leaders of the future,” said Dr Ylva Baeckstrom, a behavioural finance and gender expert, and contributor to the report.

Baeckstrom, who lectures in finance at King’s College Business School, said professionals in the industry have been asking women to succeed in an environment that’s "not optimised" for them. "Then we’re asking female clients to come into that environment and be comfortable in there,” she added.

Industry: wise up, staff up
“The growing global influence of women is going to be “a major economic force over the next decade, redefining areas that have historically been focused on and dominated by men,” Lisa Francis, head of UK Private Bank and Crown Dependencies said.

She said that the bank engages both women and men from the inheriting generation in succession planning and broader wealth management decisions as part of setting the long-term security of the family legacy. “For us it’s a priority to make sure that they have the knowledge, confidence and support to feel comfortable leading the next generation of family wealth and shaping it towards their individual ambitions.”

Baeckstrom added: “The financial world has historically been male gendered. It was created by men, for men, to suit their purposes, in both subtle and fundamental ways. These established systems mean that women have been excluded from finance until relatively recently and are still treated differently.”

Where it has left women: “Many haven’t gained the financial confidence and independence that is going to be crucial as many more come into wealth,” she said.

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