Learning and confidence disparities among young women point to an issue that the wealth industry ... [+]
A 2020 report from the consulting firm McKinsey on the amount of wealth women are set to inherit by 2030 has garnered a lot of attention in the wealth management industry. Everyone from asset-management firms to investment advisors is surveying their ability to reach this demographic as, according to the study, roughly $11 trillion of the more than $30 trillion in wealth transferred from prior generations will fall into the hands of women as their husbands and fathers pass away. This is in addition to the $10 trillion in total US household financial assets women already control.
These figures underline the need to prepare your daughters and granddaughters to be good stewards of your family’s wealth. It may seem surprising, but even today, young women often require special consideration regarding their financial education.
First, in group environments, they may not feel empowered or emboldened to participate in financial discussions, particularly in the presence of their more dominating male counterparts. A 2021 article in the Journal of Women’s Health noted that women may limit the amount of time they speak in meetings because they (correctly) fear being “judged harshly” for taking too much time. “Female leaders with high volubility were rated as less competent and less suitable for leadership than either a female leader with low volubility or a male leader with high volubility,” it read. A more recent study of female board members published in Harvard Business Review found that unless women monitored how and when they spoke, they perceived backlash from other directors, which lessened their ability to influence decisions.
I often felt this way in my business-school classes, where participation was required and a significant factor in grading. When professors asked questions of the class, I would take time to consider my answer, and often by the time I felt confident enough to actually raise my hand, one of my male counterparts had already been chosen. Other times I didn’t want to be perceived as aggressive in my attempts to participate, so I would stop raising my hand altogether. In hindsight I wish participation had been structured in a way that everyone, including young women such as myself, would have an equal chance to contribute to the conversation.
In terms of wealth management, a 2022 study by Bank of America
The good news is, that same Bank of America survey found that women aged 22 to 39 feel more comfortable than those 65 and older having financial conversations, including with financial advisors. Starting such conversations early in life can help give young women the confidence they need to make financial decisions down the road. Here are some ideas for how to empower young women to take a seat at the table.
Involve Them Early and Often
Some parents prefer to wait until their children are in their 20s before sharing a glimpse of the family’s financial picture. They may feel their children are not yet mature, experienced, or educated enough to engage in discussions about wealth management, but investment professionals make the case that introducing the topic early on may prove beneficial in the long term. While there is no right or wrong approach, and the decision will be based largely on individual circumstances, it stands to reason that, for women at least, being more familiar with a topic would result in more confidence to speak up.
Building confidence in young women is also a key component of financial literacy, according to a study published in 2021by the Global Financial Literacy Excellence Center (GFLEC) at the Stanford Graduate School of Business. GFLEC found that more than a third of the gender gap in financial literacy can be attributed to differences in confidence between men and women. A report from the research group YPulse found that between the ages of 8 and 14, girls’ confidence levels drop by 30 percent.
Including young women in financial discussions early can not only help counteract this confidence drop, but will also have lasting impacts on their knowledge when it comes to financial matters. Even in grade school, girls can be steered to think in terms of financial management. When out grocery shopping, for example, show your daughter how to compare prices by dividing the cost by the weight of quantity of the item. This can guide her to spend her allowance—earned by doing household chores—more wisely. Establishing a savings account for her at a young age can encourage her to feel satisfaction at watching her money accumulate. Loads of personal finance apps and websites are geared toward helping women, even beginning at a young age, to manage their savings.
Empower Them With Individual Responsibility
Responsibility combined with other good financial-management skills can set a solid foundation for young women to feel more confident venturing into managing their own finances. As they grow older, allow them to research wealth management topics on their own; you may be surprised what they find. For example, if your daughter is studying environmental science, you could ask her to help you identify nonprofits that are supporting local conservation efforts. Encourage her to set aside an amount to donate to a charitable organization near to her heart by vowing to match her donation, then ask her to identify with which group our donation will have the most impact. She can then go off and research the missions, strategies, and financial statements of various organizations and prepare some recommendations. This will empower her with responsibility in an area in which she has some knowledge and interest, paving the way for her to be successful while also introducing a financial topic.
Other ideas include asking her to help you research an investment opportunity in a stock or company based on a product or service she has shown interest in, or even identify ways to support local businesses or female-led investment firms. The GFLEC research found that exercises like this can substantially boost girls’ participation in investing and future interest in wealth management. In GFLEC’s example, trading moderate-stake stocks for just four weeks increased women’s “financial literacy, confidence, and subsequent stock market participation.”
Connect Them With Peers
The 2009 book Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives, by sociologist Nicholas Christakis and political scientist James Fowler, made a splash by showing how much influence peers can have on everything from rates of violence and altrusitic acts to “whether we fall ill, how much money we make, and whether we vote,” the authors write. While the authors don’t specifically address young women’s financial literacy, they give plenty of examples of how seeing our peers interact with money affects our own actions regarding it.
A 2023 report by Bank of America found that 53 percent of women say they find it easier to talk about finances with other women. “Peer groups of women who can share tips and approaches on financial wellness and planning,” the report states, “may make it easier for women to plan.” Organizations such as Invest in Girls, Girls Who Invest, WealthiHer, and Women’s Money Matters offer classes, internships, and financial networking opportunities for women starting as early as high school, with the aim of increasing general financial literacy and expanding the number of women working in finance. Even something as simple as meetup.com can help, depending on your city—a quick search reveals groups called Girls Just Wanna Have Funds! in Washington, DC, Smart Money Chicks in Atlanta, and Women and Shares in Melbourne, Australia. Connecting with investment groups can make learning about money fun, encourage healthy competition around savings and investment, and introduce young women—and older ones, for that matter—to social circles that make financial security a priority.
Identify Female Mentors
Nonprofits like those mentioned above offer mentoring and workshops for women, but you can also reach out to your own network and ask if there is interest from others in coordinating a class or having guest speakers present wealth management topics at Girl Scout meetings, after school programs, or to an on-campus student group. You may be surprised by how many others are looking for the same sort of education for the young women in their lives.
A 2020 study published in Life Sciences Education found that having female peers and a female instructor increased class participation and performance for women. Examples of female peers and instructors in the wealth management industry could be investment advisors, trustees, accountants, attorneys, and even business school professors. Besides your immediate community, you can use social media tools such as LinkedIn to find connections to professional women in your network who fit this criteria and may be willing to speak to young women about their experiences in wealth management.
Learning and confidence disparities do point to an issue that the wealth management industry will likely face as this vast financial power begins to transfer to the next generation. And if daughters, who represent half of the inheritors, are not part of the conversation, what will become of that money?
