Women & wealth: Be prepared!

By Caro U. Rock

In the past few months, the subject of women and wealth has come up frequently in my conversations with friends and colleagues. This is a timely topic indeed. According to Diane Doolin of the Doolin Group at Morgan Stanley, “The greatest wealth transfer in history is under way, and research tells us that women will control 70% of the nation’s wealth by 2030.” In keeping with the Girl Scout motto, “Be prepared,” women must educate themselves about the challenges they will face.

Doolin presented a session on financial readiness for women at our recent Transitions West conference, held in San Diego. According to Doolin, many women have not met with their family’s trusted financial adviser, nor do they have access to key records, passwords and documents. This can be a critical issue when facing the sudden death of a spouse or partner. She poses some questions: Are you aware of all your financial assets? Do you have life insurance, a will and a tax plan? Have you informed your children about your estate plans?

Having a family business further complicates the situation. What is the family’s policy toward married-ins? Where are the key documents? Who owns the stock? What trusts have been set up?

Women must ensure their children and grandchildren are prepared to be good stewards of their wealth. Regular family meetings with financial advisers are a good place to start. Often, until a death or divorce occurs, most children have not met with their family’s adviser and have not been part of the planning process. Early communication and financial education are necessary to have a successful wealth transfer. Otherwise, Doolin warns, the family faces a universally lamented fate: “shirtsleeves to shirtsleeves in three generations.” (A similar saying in Chinese translates to “rice bowl to rice bowl.” In Italy, it’s “stables to the stars to the stables.” In Brazil, it’s “rich father, noble son, poor grandson.”)

“It is critical for women to participate fully in decisions about planning and their financial futures,” says Adrienne Penta, senior vice president of private banking at Brown Brothers Harriman.

“Families make better decisions when all stakeholders are at the table,” Penta says. “Unfortunately, women sometimes opt out of these conversations because many feel as if they are not heard or they are misunderstood. In fact, 67% of women feel as if their adviser doesn’t understand their values or objectives.” This drives the need to create an inclusive and dynamic environment for conversations about wealth that, in the end, will provide a foundation for preserving family wealth over generations, she explains.

Women who work in their family business or are active in family governance tend to be better prepared for their future roles as inheritors. The rest must begin the process of educating themselves. If you cannot answer all of the aforementioned questions, start asking for help now.

Copyright 2018 by Family Business Magazine. This article may not be posted online or reproduced in any form, including photocopy, without permission from the publisher. For reprint information, contact bwenger@familybusinessmagazine.com.

Article categories: 
January/February 2018

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