Women have long been relegated to the sidelines of the financial services sector, where advisers have traditionally focused on men and their money. Now the tables are turning and wealth managers face an unprecedented transformation as more women outlive their spouses, hold an increasing share of jobs and take greater control over family finances.
The result is an industry scrambling to cater to people like Lynda Cronin, a retired public policy consultant in Victoria.
Ms. Cronin saved diligently throughout her career, but with no company-sponsored pension plan, she worried about whether her money would last. “A lot of my women friends have that same sort of fear. Am I going to be able to do this, and am I going to be okay when I’m 70? And 80?” Ms. Cronin said.
After meeting with two male advisers who either talked more than they listened or pushed her toward greater risk than she was comfortable with, Ms. Cronin found Sybil Verch, an investment adviser at Raymond James. The two clicked immediately and Ms. Cronin, now 65, doesn’t worry about money any more. The relationship worked so well, Ms. Cronin’s husband was enticed to move his investments to Ms. Verch as well.
“Specifically, I like the fact that she listened better,” Ms. Cronin said. “She asked questions about my life that I thought were really relevant. She got me.”
Ms. Cronin is typical of the demographic and cultural changes that are sweeping across the wealth management business. And the industry is racing to keep up, rethinking how they communicate with female clients and who they hire to advise them. There is pressure to get it right. Wealth management growth has become critical to many financial institutions’ bottom lines as other sources of income level off.
Women already control about one-third of all financial assets in North America, according to research from Boston Consulting Group. That translates into an estimated $3.2-trillion in total assets and $1.1-trillion in financial wealth alone when applied to the Canadian environment, based on figures compiled by research group Investor Economics. And those numbers are expected to grow in the next decade.
A lot of that wealth will also soon be in older hands. The first baby boomers hit retirement age in 2011 and as the number of retirees swells, more households will transition from saving to the “payout phase,” which means living off their accumulated assets. Retirees will control nearly $2.6-trillion in financial wealth by 2022, according to a report by Investor Economics. “Nearly $5 out of every $10 held with wealth managers will be owned by senior households,” the report says.
For many retired couples, it will be women who manage family finances. Widowed baby boomers outlive their spouses by an average of 16 years, according to research commissioned by Toronto-Dominion Bank. That’s in part because women outlive men by an average of four years and they tend to marry older men. And researchers say that 90 per cent of Canadian women will have total control over their finances at some point in their lives.
Investment adviser Catherine Laurin is seeing the shift first hand. When an older male client who had chiefly managed family finances experienced health problems, his 85-year-old wife took an active role in managing the couple’s cash. “As he became blind, all of a sudden she became the one engaged. I was so impressed to learn there’s no age [limit] to learn the right thing,” said Ms. Laurin, who works for BMO Nesbitt Burns.
Older Canadians are only part of the story. The next generation of female bread winners is also accumulating significant wealth and looking for financial advice. Female graduates are outnumbering men at most colleges and universities and the number of women in the work force is steadily rising. The employment rate among women soared 16 percentage points to nearly 58 per centbetween 1976 and 2012. There’s also a growing number of female entrepreneurs, and more than one-third of all wives now out-earn their husbands.
All of which is forcing the financial services business to adapt.
“There’s a groundswell in this movement,” said Julie Barker-Merz, head of wealth direct investing at BMO InvestorLine. “I just find that everywhere I turn there’s some ground-breaking work happening around women, and we’re breaking through some of the barriers that have been there for a long time.”