Many advisors are always attempting to generate more business from the ultra-high-net-worth (UHNW) segment, or those defined as having at least $30 million in investable assets and that definition explains why this is such a desirable demographic for wealth managers.
This is easier said than done simply because the universe of UNHW prospects isn’t large. By some estimates, a mere 1% of all the world’s millionaires are in the “ultra” camp. On the bright side, the U.S. is home to more than a third of the world’s UHNW investors and their population has been increasing in recent years.
Women are contributing to the growth of the UHNW cohort and yes, some of that is attributable to the Great Wealth Transfer, indicating advisors would do well to bolster their services and strategies for Gen X and millennial women.
Good Reasons to Cater to UHNW Women
Just as the math is straight-forward regarding the definition of an UHNW investor, it’s equally simple as to why advisors should focus on women in this segment.
“Taking a closer look at the UHNW population, gender data points to compelling reasons to focus on ultra-wealthy women,” notes Fidelity. “At first glance, the numbers seem low. Though the proportion of UHNW investors who are women saw a gradual upward trend between 2018 and 2022, women comprised only 11% of all global UHNW investors as of 2022.”
Don’t scoff at that 11% because it’s on the upswing. That uptick is assisted by factors such as the Great Wealth Transfer, which includes Baby Boomer women, broadly speaking, outliving their wealthy male counterparts.
“According to Cerulli, of the wealth that will eventually be passed to next-generation households or charities, $54T will first be passed along to widowed spouses, 95% of whom are women,” adds Fidelity. “Nearly $40T of these spousal transfers will be going to widowed women in the Baby Boomer and older generations. It’s important to note that women in these cohorts lived through a time when it was illegal to open a bank account for themselves, making the impending wealth transfer a momentous shift in more ways than one for this population.”
Understanding Sources of UHNW Women’s Wealth
Some advisors may not focus on how a woman or any other client enters UHNW territory, opting to emphasize the fact that the client meets that definition. However, it is worth ascertaining how a client got there and that’s true with women just as it is with men.
The primary legal avenues through which one becomes an UHNW individual are earned income, business ownership and inheritance. On the surface, it may appear as though that trio aren’t related or are rarely tied together, but advisors would do well to not make that assumption.
“First, they aren’t mutually exclusive in practice. For example, someone who starts their own company may have done so with money they inherited,” concludes Fidelity. “Second, these categories can offer a view into how individuals might handle their wealth, but they don’t dictate a universal approach by any means. Spending decisions, lifestyle habits, and approaches to investing goals offer a more complete picture of these individuals.”
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