Women critical in managing family wealth
RBC study finds 84% of females have joint to full responsibility over household investments
It recently became crystal clear to RBC Dominion Securities branch manager Jennifer Lemieux that women have come a very long way not only in taking the reins on family investments, but in solidifying their children’s financial future.
“A client teared up in my office the other day, telling me a story of how hard her mother struggled to be able to leave her an inheritance,” recalls Lemieux, also vice-president at RBC Dominion Securities.
“She wanted to honour her mother’s many sacrifices and wanted to be able to do the same thing for her own children one day. We decided that it was important to bring the next generation in for a sitdown so that they could hear and understand the history and family values attached to their future inheritance,” she says.
“There was meaning behind it; their mother wanted them to be prepared to handle the responsibility.” According to research from RBC Wealth Management, women play a key decision-making role in managing family finances. In fact, 84 per cent of high networth women now have full or joint responsibility overseeing family investments, says the bank’s Women and Wealth Transfer report.
She said the study also “illustrates that we as women tend to prioritize ourselves last on our very long lists. We expend our energy on the well-being of others. We know that we do this and that it often affects our own well-being, financially and personally.”
The summary of findings on how these women build their financial knowledge, manage their inheritances and transfer wealth to the next generation is part of RBC Wealth Management’s larger Wealth Transfer Report 2017.
RBC recently took an in-depth look at 1,752 high net-worth women worth an average $4.4 million (U.S.) across Canada, the United Kingdom and the United States.
“Women are powerful brokers in household financial management, particularly in households with investable assets exceeding $4 million (U.S.),” says the report.
Notably, 98 per cent of the women studied reported that they are either sole or joint decision-makers on daily banking, and 84 per cent are fully or partially responsible for the family investment portfolio, it found.
Yet it found women and men opt for very different strategies when building their financial knowledge. The women studied focus on core responsibilities — nearly 30 per cent say that a general understanding of financial matters is sufficient, and that knowing the specifics aren’t necessary, compared with 21per cent of men.
“Women are comfortable with being generalists on financial topics, rather than diving into details, and they tend to employ a consultative approach to building financial acumen,” says the report.
Also, some high net-worth women carve out time to manage their own investments or read the financial press, but to a lesser extent than men.
About one in three, or 36 per cent, said they are a self-directed investor, despite having an active role in household wealth management, compared to 49 per cent of male respondents, who said they choose to manage their own investments to improve their financial knowledge.
Those women “seem to prioritize their time differently, and are more receptive to strategic delegation to professionals,” the report states.
Aside from the fact that women lean toward consultation while men prefer autonomy, it found there are few real differences in their paths to learning.
Both women and men begin their structured financial learning — defined as lessons from family members, instruction from professional advisers or learning from financial literacy programs — around 27 years of age.
“Both are primarily taught about wealth through general discussions with various people, from family members to professionals, though a majority of female respondents say that family conversations are a key source of learning,” says the study.
Lemieux says this is in keeping with her experience working with high net-worth women particularly as it relates to the transfer of wealth.
“I’ve found that once women have educated themselves with respect to their financial affairs, it becomes an important priority for them to take their children through the same process to ensure that they are comfortable with their own wealth,” she says. “Women tend to view money in the context of their relationships and how their wealth can benefit the ones they love. There is often a lot of emotion surrounding the issue of wealth transfer for my female clients,” Lemieux adds.
She said that at a recent dinner seminar with a group of women, they had “an a-ha moment ” and asked ourselves: What are we doing to help the women in our own lives do a better job of taking care of themselves?
“Women need to give each other the support and encouragement to slow down, take a breath and to make time to prepare for their own retirement years. And as advisers, it is our responsibility to take care of the people who are the caregivers to everyone else.”
The women surveyed said that they are also likely to receive a significant
“Women tend to view money in the context of their relationships and how their wealth can benefit the ones they love.” JENNIFER LEMIEUX RBC DOMINION SECURITIES BRANCH MANAGER
inheritance at some point in their lives. Fifty-seven per cent said they have already received an inheritance, and a majority of those who had not yet inherited expect to do so in the future.
“Yet the inheritance experience is often lonely and confusing” regardless of gender, the report states.
Lemieux provided some tips for women who are either poised to inherit a large sum of money or are looking to set up an inheritance for their children.
Start the education process with your children early. Numerous organizations in our communities are helping children develop an appreciation for earning their money and of the importance of helping those children that are less fortunate. Ask your network about the pro- fessional advisers they use and then do your own research. Meet a couple of advisers and ensure that you are confident that they understand what is most important to you and have the resources behind them to help you implement a strategy.
Select an adviser carefully. Articulate your vision and values to your adviser. Building a plan around your legacy should be a rewarding experience.
Take your time. Don’t make any major decisions immediately after a major life event. Once the emotions clear, you’ll be in a better position to make sound decisions.
Help others. Once you’ve successfully navigated the process, take the time to help another woman in your life begin her journey to financial confidence.