Oliver Helbig/Getty Images
- Women's share of retail financial assets in the US and EU is set to reach between 40% to 45% by 2030.Factors like declining marriage rates and higher earnings have played a role in the trend.Commentators say women invest more cautiously than men, focusing on goals and values.
Women are becoming richer, and they're changing the face of wealth.
According to a report by McKinsey published last month, women control about a third of all retail financial assets in the US and the European Union.
By 2030, that proportion is expected to rise to between 40% to 45%, wrote Cristina Catania, global co-convener and European lead for the risk and resilience practice, and Jill Zucker, senior partner and co-leader of McKinsey's global growth transformation service line.
The report is based on a survey of about 13,000 American and European investors, nearly half of whom were female financial decision makers. It found that between 2018 and 2023, global wealth rose by 43%, but jumped by 51% for women.
Women's expanding control of assets is being driven by a combination of factors, including a continuing decline in marriage rates, the ongoing boost in women's average earnings, demographic trends like longer life expectancies, and a broad shift in attitudes about women managing their own finances.
Risk doesn't equal reward
As women become wealthier through investing, it's becoming clearer that they don't approach it the same way as men.
"Women are much more risk-aware," Anna-Sophie Hartvigsen, cofounder of financial education and investment platform Female Invest, told Business Insider. "I would like to call it much more realistic in their own ability to invest."
She said women are less likely than men to invest emotionally.
"On average, men trade a lot more often than women because they believe they can beat the market or they read something in the news, and they get pumped up or afraid, and then they invest based on that," Hartvigsen said. Female investors, in her view, tend to be more calm, more realistic, and better at assessing risk.
However, Katie Geery, an advisor at Rise Private Wealth Management, says being more cautious can also hold women back by leading them to miss out on opportunities to build wealth.
"It is important to work with a trusted financial advisor who understands your risk tolerance and can walk you through making well-educated investment decisions based on your long-term goals," she told BI.
Returns aren't everything
The aims of investing also sometimes differ between men and women.
"Women prefer to invest toward achieving specific goals rather than chasing the highest returns," said Avanti Shetye, financial planner at Wealthwyzr.
Geery said female investors tend to be more focused on philanthropy and gifting. They often consider their values when buying stock and want their purchases to help make a better impact on the world.
"Women often seek financial advisors who are empathetic and take the time to get to know them on a more personal level to gain a deeper understanding of their goals and values," she said.
On Female Invest, Hartvigsen said the principles its members care about the most include climate, especially a firm's carbon footprint, and diversity in leadership, in terms of a board having a good gender balance.
Start investing early
For Shetye, it's important to start investing early.
"Women tend to be primary caregivers for children or aging parents and often take unpaid time off," she said. "Not only that, women statistically live longer than men, which implies that women would need to invest as much as they can as early as possible so that their portfolios last them through retirement."
Hartvigsen said long-term financial planning is vital: "When you do that, it doesn't matter what happens today."
Both agree that this plan should be grounded in expert advice.
"Working with a financial planner whose planning process is rooted in financial education can help provide comfort and security to stay consistent even in the roughest of markets," Shetye said.
But she also believes that practice is more important than perfection.
"You are never going to know everything there is to know about investing," Shetye said. "The key is consistency, and time will do the heavy lifting."
Hartvigsen advises her clients to invest monthly on the same day and to diversify their investments. "If you do that, historically, it has been near impossible not to make money in the long run."
