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Globe Wealth Equal amount of women are creating wealth as those inheriting it, survey finds

Female investors are in greater control of their wealth now more than ever as the younger generation experiences a shift in the way women make their money.

Half of millennial women reported that they created their own wealth through business, while half said they accumulated it through inheritance, according to a survey released on Tuesday by the Economist Intelligence Unit in partnership with RBC Wealth Management.

In comparison, 56 per cent of baby boomer women (which the study identified as those born between 1946-1964) say they accumulated wealth through inheritance, while only 37 per cent say they gained wealth through business.

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“Women are entering the work force at an earlier age, building their own wealth and making those financial decisions at an earlier age in comparison to the baby boomer women, and the result is they are now contributing to making financial decisions on a more equal basis than their male counterparts,” says Abby Kassar, vice-president of high-net-worth planning at RBC Wealth Management.

“The wealth management industry needs to look after these women and address how [their] needs are different from their male counterparts.”

The survey, which collected answers from a total of 1,051 high-net-worth individuals with US$1-million or more in investable assets, included both men and women located in Canada, the United States, Britain and Asia, and found that while there continues to still be more high-net-worth men than women, the prominent role women are assuming in the high-net-worth universe will continue to rise given the number of younger women who see significant opportunities to generate wealth.

Globally, the wealth-management industry is preparing to see major generational shifts in the way women earn and manage money. In the survey, less than half of the boomer women indicated they are their household’s primary decision maker for financial planning; for millennials – those born between 1981-2000 – that number jumps to 72 per cent.

“Moving forward, we are going to see a lot more involvement by women in making financial decisions, whether it is by themselves as the primary decision maker or if they are coming to meetings with a spouse,” says Susan Latremoille, director of wealth management with the Latremoille Begg Group at Richardson GMP in Toronto. “We are seeing more baby boomer females entering phases of widowhood and being forced to take the driver’s seat in their finances, as well as grey divorces leaving women having to stand on their own two feet.”

In 2015, women held 30 per cent of all wealth controlled by individuals or families, up from 28 per cent in 2010; while 44 per cent had grown their wealth independently as entrepreneurs, according to data by Boston Consulting Group.

By 2020, women are expected to control US$72-trillion, 32 per cent of all wealth and up from US$51-trillion in 2015.

With the shift in control also comes a shift in the way female investors plan to use their money. Women tend to be more driven to socially responsible investing and don’t take as many risks as male investors, says Ms. Latremoille, whose practice consists of slightly more than 50 per cent female clientele.

“We don’t find as many women who are ‘swing for the fence’ type of investors as we do men,” Ms. Latremoille adds. “I think today, especially in the younger women, they are much more purpose driven and only want to invest in things where they can see impact, or [are] socially responsible. They have a greater concern for human relations, the environment and for diversity.”

When looking at investment vehicles, stocks play a larger role in the wealth portfolio of male Canadians than female Canadians, with men indicating their portfolios are made up of 69 per cent stocks, versus women using only 50 per cent equities, according to the RBC study. When it comes to real assets, such as real estate or artwork, Canadian women held 21 per cent within their portfolios, compared with their male counterparts who held only 9 per cent.

Younger female investors are also taking a new direction with their legacy planning. While 41 per cent of boomer women expect to give their wealth to their children, only 15 per cent of millennial women indicate the same. Rather, 24 per cent of millennial women suggest they plan to give their wealth to a foundation or an endowment, compared with only 5 per cent of boomers.

Among Canadians, female investors are more likely to distribute their wealth equally during and after their life, than pass it to the next generation, Ms. Kassar says.

“Men are looking to build their legacy and then pass that wealth on to the next generation or leaving a bequest to their will,” she adds. “Whereas women want to feel the satisfaction of sharing their wealth with their families and communities throughout their lifetime.”

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