How Women Should Prepare for the Great Wealth Transfer

In a potentially historic moment, women take the financial reins

According to a 2020 McKinsey & Company report¹, the aging Baby Boomer population is expected to transfer roughly $30 trillion worth of wealth assets in the next ten years.

In this “Great Wealth Transfer,” women will likely emerge as the biggest beneficiaries. But are women ready for this tremendous change?

Whether you’re hesitant or confident to hold your family’s financial reins, below are three main ways you can prepare for this unprecedented financial shift.

Creating conversations, competence and confidence

Aging Boomer parents often resist talking to their adult Gen X and Millennial children about their finances. And vice versa. After all, it can be a delicate, sensitive topic since it involves contemplating one’s own mortality or that of a beloved family member.

But having a conversation about money is vitally important to ensuring that the transfer of wealth is transparent and seamless — and in keeping with everyone’s best intentions.

“Often adult children have no idea what accounts their parents have. And they may not even know the name of their financial planner, lawyer or accountant,” said Terence Powell, Jr., AIF^®, Investment Program Manager at RBFCU Investments Group. “No doubt talking about money with aging parents is difficult, but it is essential to estate planning and wealth transfer.”

In the short run, it’s helpful to assess where funds are located, who can access them, and what instruments (e.g., trusts, wills) can be used to disperse money as the elder family member sees fit. There may also be conversations to be had around leaving a legacy to a beloved charity or favorite university, too.

In the long run, women who will become beneficiaries of these inherited assets may also want to think through how to transfer their own wealth following their own passing.

And then there’s the opportunity to spark age-appropriate conversations with younger generations, too, so that the entire family grows confident around the topics of money and finances.

In fact, Powell encourages all parents to normalize talking to their children about money and investing — yes, even with young children and grandchildren.

“You don’t have to share actual numbers with young children or teens. You might just talk in percentages about how your money is allocated. As they get older, you may want them to also know the professionals in your life who are helping you manage your wealth,” he said, adding that the “important thing, especially for girls and young women is that we normalize talking about money, including the best ways that they can build, grow and manage it.”

Moving from “heirs” to “investors”

For many women who inherit substantial money from a parent or grandparent, they’re also busy raising kids and building careers. Still, it’s important to take some time and consider how they might use money they’ve inherited to grow their own wealth, be it to plan for retirement, travel widely, launch a new business or fund college tuitions for the next generation.

With the right financial advisor, many women discover that their clear, focused vision for financial success coupled with a willingness to be patient make them good investors.

The strength of goal-based investment versus a “beat-the-market” approach is that women are more likely to ride out the market’s inevitable peaks and valleys. They tend to worry less about trying to predict market moves.

Because this approach is driven more by logic and less by emotion, Powell said “I think goal-based investing will ‘win’ the majority of the time.”

“With emotions driving people's decisions, greed and fear being the main ones, you tend to invest differently. When the market is doing well, the greed part kicks in because you have all this growth and an investor might think, ‘I'm not going to be conservative with my investments.’ But then the bottom falls out, like in 2007 and 2008, and now the investor is reacting in fear and trying to sell everything.”

Powell advises women to clearly define their personal long- and short-term goals. “A long-term goal might be when you’d like to retire. A short-term goal might be when you’d like to purchase a house. Both types of goals are equally important and deserve you and your financial advisor’s attention.”

Finding the right financial advisor

Whether she’s a successful businessperson, a full-time mom, a long-term caregiver — or, more likely, a person with a combination of important jobs to do, each woman deserves to be heard when it comes to financial decision-making.

Powell emphasized that a good financial advisor is going to agree with that statement.

If you find yourself preparing to manage inherited funds, it’s smart to have already established a good relationship with a financial advisor. And although only 15 percent of financial advisors nationwide are women, a good financial advisor (male or female) is going to create a relationship built on strong communication and trust — the same key traits women value when working with doctors, accountants and lawyers.

“I'm proud that our operations and financial advising teams are culturally diverse and are a mix of men and women,” said Powell, adding that RBFCU Investments Group not only offers one-to-one financial advising but also webinars and learning opportunities to help potential clients get acquainted with the team.

“Providing guidance and building relationships are essential to the work we do,” Powell added. “My best advice for women facing wealth transfers within their families? Have an initial consultation with one of our financial advisors. It’s free, and it may prove to be an important first step toward financial satisfaction and confidence.”

To begin, schedule a no-cost, no-obligation initial appointment. Visit rbfcu.org/investments or give us a call at 1-888-294-0202.

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¹Women as the next wave of growth in US wealth management. (2020). Retrieved September 15, 2022, from mckinsey.com.

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