Ellevest’s Sallie Krawcheck: Looking at the ‘great wealth transfer’ through a gender lens

As older Baby Boomers approach 80, the greatest intergenerational transfer of wealth in history is close at hand.

For years, the conversation has focused on the younger Gen Xers and Millennials and their windfall inheritances, but the generational lens is not the only one worth paying attention to. The industry overlooks the gender lens at its peril: women are expected to gain control of most of that wealth — at least $30 trillion — and much of it by 2030.

Kelly Baldoni, head of Global Women’s Strategies at Impax Asset Management, spoke with Sallie Krawcheck, founder and CEO of Ellevest, to discuss how the industry, and specifically advisors, can approach this transfer of wealth with a gender lens — and why it is an essential opportunity to contribute to and participate in a more equitable society.

Kelly Baldoni: Sallie, we’ve been hearing about this impending generational wealth transfer for years: it’s finally underway but what is it exactly?  

Sallie Krawcheck: A few years ago, we were talking about Boomers transferring wealth to their kids. I would add a couple of nuances. While Boomers have indeed accumulated record amounts of wealth which will eventually go to the next generation, there’s a wrinkle: first, it typically goes to the wife. In fact, 75% to 80% of women die single.

And then it goes to the next generation of women, since both the sons and daughters inherit. And there’s another nuance: women are making economic strides themselves. More college and postgraduate degrees in the U.S. now go to women than men.

So, women are inheriting money, but they’re also putting themselves in positions to earn more money relative to men. These factors combine to produce what we’re calling the ‘feminization of wealth’.

And you certainly see evidence that women are using their money differently than men; spending it differently, and investing it differently, with a focus on sustainability. Finally, one of the most interesting insights from our recent Ellevest research is that women, through the very act of getting money, become more confident.

KB:  It’s clear the role of the advisor will be critical in helping women invest this windfall. Is there a better approach (knowing that women tend to feel underserved by their advisor, if they have one) that more advisors should consider?

SK: I think it’s being a holistic advisor, talking to the whole person, and putting the pieces together. Some of it is putting financial planners on your team and really focusing on planning. It’s fascinating to me that financial advisors tend to be men, but financial planners tend to be women.

Not so long ago, a very successful advisor said to me, “I tried to talk stocks with her, she’s not interested.” And that is exactly the point. She’s not interested in talking stocks. She’s interested in talking about her family and her aspirations. What is important to her? Ask how she wants to use her money.

What we found in the research is that women don’t want to build wealth just to build wealth. It’s not, “I need to retire with two million dollars.” It’s values-based conversations, which could drive growth for sustainable managers: “These are the things I have done and want to do, and I want to be able to do it without a stress ball in my stomach.”

It’s more financial planning oriented. “I want to buy a home. In 10 years, I want to have two kids. I’m OK retiring later, but I want to have a “grandma on a Vespa in Italy” retirement. And while I’m doing these things, I want the earth to be a stronger and better place.”

I think the industry needs to take some warning. If we do it well, we retain the assets and there is increased demand for impact and sustainable investing.

KB: What does a successful transfer look like, specifically for women? Could this close the gender wealth gap?

SK: It will get more money in the hands of women, so I like to say women’s longevity is going to quietly do what the ‘Lean in’ movement didn’t.

But those that keep it in the bank and don’t invest are not building wealth, so they can slip back, right? You miss a few years of compounding, you miss quite a bit, so it’s important that women put their money to use, by investing to build wealth.

Right now, the industry is not set up to fully benefit. Our research found only one-third of women say they know where to turn when they receive a financial windfall. These are people receiving hundreds of thousands or even a million dollars, so many have a family financial advisor.

In contrast, many advisors are complacent. Since many of us in the financial services industry have worked in a bull market for much of our careers, I think there are many advisors who think, “My business has been growing. I’ve got a great relationship with him. She seems great. All will be well.”

Whereas she may be saying, “If I get this money, I don’t know where to go,” even with an advisor right in front of her.

It’s about trusting your advisor. You may chat with a guy on the golf course and have shared experiences. But if she doesn’t want to do that, how do you build that trust? By being hyper alert, paying attention, and talking to the whole family from the beginning (or at least from now on).

Read more: $30 trillion in U.S. wealth will transfer to younger women in the next 10 years

This interview originally appeared on Impax Asset Management’s website.