Creating Your Own Opportunities

The only constant in life is change. And while change is ongoing in the financial planning and investing world, the past decade has been particularly notable for women and wealth.

Change Happens

Women are more prominent and active in managing personal and family wealth than ever before. Consider this: Women today control more than half of all personal wealth in the United States, and that share is projected to grow to two-thirds by 2030.1 Factors contributing to this growing shift include women’s longevity compared to men’s, as well as an increase in women’s participation in business as owners and senior executives. Women add more than $5 trillion to the wealth pool globally every year, outpacing the growth of the wealth market overall.2

Interestingly, when asked about their confidence in managing their investments, only 52% of women say they are confident compared to 68% of men. And this remains true when women and men post the same financial literacy scores.3 Contributing to this lower confidence, especially among older women, was the lack of exposure to money-related conversations in families. Many baby boomers and earlier generations were raised with the understanding that money was not an appropriate topic of discussion. When these conversations did take place, daughters were often excluded.

Recent generations don’t feel as constrained in discussing personal finances. Financial information and tools are more readily available, and smartphones have made it easier to connect, making knowledge-sharing among women and men simpler.

A Destination Reached Via Many Paths

There is no one-size-fits-all description of how women build and acquire wealth — each woman’s path is unique. Three primary approaches outline typical paths to wealth accumulation and help shed light on the course of women’s financial journeys:

Personally originated wealth: A substantial and encouraging trend is the increase of female representation as business owners and decision makers in corporate America. Today, women hold 25% of all Fortune 100 C-suite positions — a significant and growing shift over the past decade.4 Women-owned businesses represent 42% of all businesses in the U.S. and generate nearly $2 trillion in revenue annually.5 As women continue to create new businesses and increase their representation in the C-suite, their share of overall wealth will remain on its upward trajectory.

Life-event-sourced wealth: Significant life events, such as marriage, divorce or loss of a spouse, can result in a sizable change in personal wealth. Sadly, estimates show that 7 in 10 female baby boomers can expect to outlive their husbands — and half of these women will be widows by age 65.

Additionally, approximately half of all first marriages and a greater percentage of subsequent marriages end in divorce. For women age 55 to 64, the divorce rate has tripled since 1990; for women 65 and older, it has increased sixfold.6

Women who experience a divorce or the death of a partner often need to take on a larger wealth management role for themselves and their families. The transition from joint to individual wealth can encourage a more active and engaged role in their investment and wealth transfer strategies.

Generational wealth transfer: Whether from parents, grandparents or others before them, beneficiaries of a significant wealth transfer can assume the complex and serious role of steward. Women’s investment confidence can vary depending on the number of generations removed from the source of wealth. However, as beneficiaries they remain unified in their core objective to effectively steward and grow their financial resources for the benefit of current and future generations.

"By 2030 women in the U.S. will likely control nearly two-thirds of baby boomers’ $30 trillion in assets. ”

The paths to managing significant wealth can vary, but what unifies many women is a strong desire to expand their knowledge of how investing, planning and wealth management can help them achieve their long-term goals for their families and other causes and organizations that hold special significance to them.

Meeting women on their journey

A person’s financial journey is not necessarily a straight line — there will likely be peaks, valleys and pivots along the way. However, four distinct activities can help you meet your financial goals while on your path.

Embrace planning: Successful women have used planning as a tool to achieve greater ambitions beyond wealth. Planning can be the impetus for identifying and articulating aspirations and goals. You are positioned to take the next step when you understand what you want to achieve. With a plan, you have the framework for the actions you should take, giving you greater confidence in your ability to accomplish your goals. A person’s financial journey is not necessarily a straight line — there will likely be peaks, valleys and pivots along the way. 

Pick your team with care: Creating a holistic plan requires expertise in a diverse set of topics, including investments, trusts, and other structures to protect and transfer wealth, charitable giving and taxes. Therefore, it is crucial to build a team of advisors who can share their knowledge and work with you to help you meet your goals. During the planning process, it’s important to be honest about issues and challenges in your life and family, and the dreams you hold dear. Therefore, you should feel comfortable on a personal level working with your advisors.

Invest with intention: Despite lower confidence levels in wealth management, studies have shown women investors consistently earned slightly higher returns than men.8,9 In addition, the same studies report women investors are more concerned about achieving specific personal and family goals. In contrast, men tend to focus primarily on investment performance and returns. If you want to make more intentional decisions about your wealth, then seeking information and education from a trusted advisor can help close any knowledge gaps.

“I was lucky to be part of a business-owning family where my father encouraged me to get involved in the business and step up for development opportunities. I took on a finance role, despite my limited knowledge, yet the exposure I was given to ideas and issues has made me more confident in dealing with my family’s wealth.” – Second-generation business owner

Create an impactful legacy: For many women, wealth provides opportunities for their families and the ability to have an impact on local communities. For example, women frequently take the primary role in raising financially responsible children. And when it comes to serving their communities, over 93% of women give to charities, more than half volunteer their time and a quarter serve on boards of nonprofit organizations.10 To help ensure success in these endeavors, creating a plan is a critical step in creating your legacy.

Our role at City National Bank

At City National, we strive to be your trusted advisor. We’re here to encourage and support you along your journey and deliver engagement, information and inspiration at every step. We are familiar with the different factors that may make a woman’s financial journey unique. Our teams are experienced at working with women and are ready to provide you insights and advice for building and managing your wealth. We can work with your other advisors to keep parties informed and help coordinate plan execution. We consider how the components of your plan work together, watching for unintended conflicts with other elements of your strategy. We want to help you be engaged, informed and inspired as we help you reach your goals.

Engaged: We recognize that each client chooses a level of engagement that fits their needs and interests, and we are prepared to work with you as you desire. From planning through execution, we listen intently to your personal goals and aspirations and make it our priority to help bring those dreams to life. We want you to see your relationship with City National as an opportunity to use your wealth to support your goals and aspirations.

Informed: Managing wealth is complex, and additional knowledge is always beneficial. Regular communication helps ensure you understand your portfolio’s performance compared to your plan goals, and recommended adjustments help keep your portfolio on track. We’ll connect you to the information and resources you need to feel confident in your choices and decisions about your wealth. In addition to one-on-one conversations with members of your relationship team, you have the opportunity to participate in client roundtables and webinars to expand your understanding.

Inspired: Your personal financial journey has already begun. By working with City National, we hope you further realize how your wealth creates many opportunities for you and those you cherish. Whether your primary goal is to make a difference for your family and community, enhance your own life, or provide for future generations, we are here to support you and your dreams.

1 RBC, Women and Wealth: A Planning Workbook, 2020

2 Boston Consulting Group, “Managing the Next Decade of Women’s Wealth,” April 9, 2020

3 RBC, Women and Wealth: A Planning Workbook, 2020

4 Stanford University, Diversity in the C Suite, April 2020

5 American Express, 2019 State of Women-Owned Business Report

6 Transamerica, “The Future of Wealth Is Female,” 2021

7 Transamerica, “The Future of Wealth Is Female,” 2021

8 Wells Fargo/Gallup Investor and Retirement Optimism Index, February 2021

9 Warwick Business School, “Are women better investors than men?” June 2018

10 2018 U.S. Trust Study of High Net Worth Philanthropy

City National Bank, its affiliates and subsidiaries, as a matter of policy, do not give tax, accounting, regulatory or legal advice, and any information provided should not be construed as such. Rules in the areas of law, tax and accounting are subject to change and open to varying interpretations. You should consult with your other advisors on the tax, accounting and legal implications of actions you may take based on any strategies presented, taking into account your own particular circumstances. This material is being delivered for informational purposes only and should not be considered tax advice. This information is subject to change, and City National Bank has no responsibility for informing you of any future changes.