Times, and the face of asset management, have changed. According to a BMO report, women are the primary breadwinners in approximately 40-percent of American households. While the scales aren’t completely even in this department just yet, the fairer sex also controls 51-percent of personal wealth, which amounts to around $14 trillion.
By 2020, experts estimate women will control approximately $22 trillion in personal wealth. Asset management companies, especially fee-based financial advisors, will play a key role in helping women achieve high-net-worth and ultrahigh-net-worth status, as well as in growing what they’ve worked so hard to earn.
Experienced Asset Management Companies Offer Tailored Solutions
There are a lot of ways in which men and women handle money differently and, in all fairness, most systems are still geared towards male consumers. Some of the basics related to this are outlined in “How Men and Women Invest Differently,” an article written by Trevir Nath for NASDAQ, but it boils down to women being more concerned with long-term results, safety, and security.
Women save 8.3-percent of their earnings, whereas men only set aside 7.9-percent. Men also adjust their portfolios 50-percent more often than women do and they’re more prone to taking risks as well. Nath doesn’t include any stats related to this, but a whitepaper from Spectrem Group indicates that 55-percent of high-net-worth women prefer a guaranteed return rate on investments, but only 46-percent of their male counterparts do.
In other words, it is absolutely essential for an asset management company to offer tailored packages that suit the needs of different clients, but not all of them do. When a woman works with fee-based financial advisors that offers this, she’ll not only feel more confident about how her money is being managed, but is far more likely to come out ahead. Per the NASDAQ article, risky ventures have a median return of less than 5-percent, but conservative opportunities hit 5.3-percent.
Time is Freed for Other Obligations
A lot of people think that women handling household duties and caregiving is an outdated concept, but it is alive and well in America. According to the Bureau of Labor Statistics, women spend 47 minutes more per day on household duties than men do and they also spend twice as much time caring for or helping family members. One would think that as a woman becomes more successful, the amount of time she invests in other duties would decrease, whether because someone else steps forward or because hired help is easier to attain, but the exact opposite is true. NPR Radio aired a show on this topic recently. As earnings increase, the amount of time women spend on domestic duties grows correspondingly.
US Trust also did its own survey involving high-net women and discovered it’s not just child care that ladies shoulder the responsibility on. In addition to the 71-percent of high-net women who are caregivers to children, 39-percent care for an elderly family member. Further insights from the same survey show 71-percent also make the family’s investment decisions, yet, rewinding to the Spectrem research, just 36-percent of women are comfortable overseeing asset management on a daily basis. Some experts conclude this is because women lack confidence in financial matters. While that may be true for some, it’s far more likely that high-net women are facing a serious time crunch between their careers and other obligations. By retaining fee-based financial advisors, these very same women can get the advice they need, freeing them up to make informed and secure decisions on financial matters. “Wives and Entrepreneurs have been much more heavily involved with important financial decisions. Ten years ago, it was common to see man come to a Financial Adivsor’s office to chat, but now, these men are bringing spouses and children to make decisions as a family” says Freddy Martinez, owner of Forem Investments a Miami Wealth Management company.
Reducing Tax Liabilities Provides Substantial Savings
Reducing tax liabilities is on the minds of a lot of high-net-worth women, and for good reasons. There’s simply no reason to pay out hard-earned money when it’s unnecessary to do so. By reducing tax liabilities, more money is available for saving, investing, and spending. This part is fairly obvious, but many of the methods available aren’t readily discussed. For example, Lisa Greene-Lewis of US News Money put together a strong list in “10 Ways to Lower Your Tax Bill.” She includes:
- Earn tax-free income
- Flex your spending power
- Pay child care bills with pre-tax dollars
- Take advantage of home office deductions
However, she leaves out things that are important to high-net-worth individuals, which could include forming LLCs, partnerships, and corporations, creating trusts, and more. An experienced asset management firm is well-versed in all the available options for reducing tax liabilities and will help create a custom plan, so that more money stays in the control of the person who earned it.
While women are closing the gap rapidly in terms of who earns and holds wealth in America, there’s still one more startling statistic worth noting. According to the Institute for Women’s Policy Research, women earn 21-percent less than men, across the board, and it’s true in nearly every industry and position. As frustrating as this is, all is not lost. Men are actually 25-percent more likely to lose on an investment than women are, which means it’s easier for women to come out on top. The key to success is to find a reputable financial advisor and start investing early.
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