Forty-Something Females – Are Wealth Managers Doing Enough?

Lee Goggin is co-founder of findaWEALTHMANAGER.com, the free, independent online matching service for high net worth individuals and wealth management providers. Here, he explains the factors prompting women to seek professional financial advice earlier than ever before.

Over the past year we’ve noticed a significant rise in the number of younger women coming to findaWEALTHMANAGER.com. Whereas the average age of our male users has stayed stable at 52, our female users are now coming to us at an average age of 43. Since our launch in 2012 our female users have consistently been a few years younger than their male counterparts, but now they are almost a whole decade younger and we think this forms part of a very interesting trend.

Part of the reason we are able to see such trends as they emerge is the combination of quantitative and qualitative methods we use to match HNWIs with wealth managers. Our proprietary algorithm narrows down the list of appropriate wealth managers, on the basis of the individual’s profile and needs, and then our in-house experts further refine these matches during an in-depth fact-finding conversation. This process gives us an invaluable client’s eye view of the factors which drive them to find a provider more suited to them, or indeed to start thinking about wealth management at all: we’re averaging over 3,000 users a month now and while we consistently find that around a third are unhappy with their current provider the majority – two-thirds – currently have no wealth manager at all.

In our conversations with women, we’re hearing about many factors which are driving them to seek financial advice sooner. These issues are certainly nothing new, but the ongoing media attention they are receiving seems to be making many younger HNW women in the UK start to think seriously about their financial future.  First among these issues is the looming pension’s crisis. Women now in their thirties and forties can be only too aware that the state pension age is set to rise to 68 by 2046 (and in reality probably higher than even that) meaning that those who don’t wish to work into their dotage need to be thinking about funding an earlier exit from work. If we add to this equation the fact that women live an average of four years longer than men then the challenge of funding what might turn out to be decades without employment income becomes even more acute. At the same time, the lifetime pension contribution allowance has been progressively reduced to now stand at £1.25m. While this might seem like a lot, commentators have been quick to point out that an initial pension pot of just £72,000 could compound to take savers over this limit in thirty years (assuming 10% annual growth). Affluent people across the board are being forced to look for alternative ways to save for their retirement and it’s increasingly on the agenda of those still only in their mid-thirties.

Of course, it’s not just funding an appealing retirement that’s on people’s minds. What Americans call “elder care” is also high on the agenda because of coming Care Bill reforms which could mean those with over £118,000 in assets have to meet the full cost of residential care – expenses which can come to an eye-watering £25,000 a year. The burden of care fees, whether for their parents or eventually themselves and their partner, is something likely to trouble everyone with an eye to the future. And the issue is likely to be even higher on the agenda for women, simply because they tend to find themselves “sandwiched” between caring for the needs of their parents and young adult children. Studies suggest a tenth of such women are providing some kind of financial support to both parents and children. Most are probably very happy to do so, but having to provide for dependents in both directions clearly calls for careful financial planning well ahead of time. We’re hearing far more of these kinds of concerns from our female users now. Indeed, it is often the case that a simple – yet emotionally loaded – goal like wanting to help children get on the property ladder is the driver behind women seeking a wealth manager for the first time.

It hardly needs to be said that in matters of wealth the arrival of children is a big wake-up call for parents of both genders. But our experience over the past year is that certain emotive issues really strike a chord with affluent women in particular. Planning for retirement and elder care are certainly such issues, but another has been the rising cost of private education. The broadsheets recently revealed that families today commonly have to offer equity from their homes in lieu of fees and this kind of coverage seems to resonate with women in particular. Many helpful articles have outlined some of the strategies wealth managers can deploy to help families defray the cost of funding their children through their entire education. Thanks to these, we now have female users coming to us asking for providers with specific capabilities – advice on setting up offshore trust funds being a case in point.

In fact, I would say that this speaks to a far wider and more significant trend. From what we are seeing women are taking control of their financial wellbeing earlier than ever, but more importantly they are really opening their minds to all that a good wealth manager can do for them. It’s well known that women are generally far more reluctant to become investors than men, with studies usually finding that a perceived lack of knowledge or fear of losses are the biggest barriers to them. (Interestingly, research also suggests that these cautious tendencies make them better investors.) But things are changing. As with falling pension allowances, the persistently low interest rates on savings mean that more and more women are coming round to the notion that they must invest proactively if they are to achieve their financial goals. The wealth managers on our panel also report that their female clients are becoming much more open to taking on the necessary level of risk to get the desired return.

Of course, none of this is to imply that women are only just coming round to the concept of wealth management nor that institutions are neglecting to target the UK’s growing ranks of female HNWIs. On the contrary, most institutions are acutely aware that women hold more wealth independently than ever before and have developed specific offerings for them. They also know there’s no such thing as a “silent partner” when it comes to marital wealth – something which is underscored by the fact that several of our female users have been acting on their partner’s behalf. What our user analytics do suggest is that for women their early forties is when the desire for proper wealth advice really kicks in. Around this time they may be approaching the height of their earning power or their children might be about to start school; they may be contemplating a career change or they may have gone through a divorce (significantly, 42 is the average age for divorce for UK females). For many women, their fifth decade heralds major life changes, but for still more it seems to be a time when the future starts to loom larger and the need for advice becomes more apparent, urgent even. That’s certainly what female HNWIs are telling us and it will be interesting to see how the industry responds to what we predict will be an ongoing trend.