Issue 23: 2013

insights

Women and Wealth

A U.S. Trust offering focuses on the unique and growing wealth planning needs of women.

PHOTO BY ANDREW FRENCH

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Women have become a powerful economic force. They are earning more money and controlling more of the nation’s wealth than ever before. They are, increasingly, business owners, managers, professionals and senior business leaders. They are also more likely than their male counterparts to be primary caregivers, to face significant retirement income gaps and, if married, to outlive their spouses. As a result, women often have unique and diverse wealth planning needs. And even when women address the same issues their male counterparts face, their attitudes and approaches can often differ meaningfully from those of men — particularly in areas like philanthropy.

U.S. Trust’s Women and Wealth offering focuses on addressing the specific planning issues associated with managing significant wealth for women, as well as the life events — such as the death of a spouse, a divorce, caring for an aging loved one, or articulating and implementing a philanthropic vision for one’s family — that frequently have profound effects on our women clients.

The Women and Wealth offering is part of a broader U.S. Trust initiative that we call Family Wealth Services, the goal of which is to help meet the broad range of wealth management needs of our clients and their families. Current offerings — which draw upon our expertise in wealth structuring, investment management, and credit and banking — are focused on the wealth planning needs of women, next-gen education, eldercare planning and wealth planning for lesbian, gay, bisexual and transgender (LGBT) domestic partners, as well as philanthropic, estate and trust services. We recognize that individual client needs are often closely connected to other family needs. In other words, we know that addressing the financial and planning goals of women will almost inevitably be part of a bigger picture that includes the requirements of their families, their aspirations for the future, and their philanthropic and legacy objectives.

A GROWING ECONOMIC FORCE

The statistics are telling. Today, women account for nearly half of the overall labor force (compared with just over 38% in 1970).1 More than 10 million businesses, or 30% of all privately held firms, are owned by women.2 Women are also managers and senior business leaders; in fact, more than 43% of women are in management roles and 24% are in senior leadership positions. They constitute more than a third of all physicians and surgeons, and nearly a third of attorneys.3

Nearly 1 million women hold more than $2 million each in gross assets, a level of wealth that puts them in the top 1% of the population. All told, 43% of the nation’s wealthiest people are women, which translates to 3.4 million women holding more than $5.2 trillion in assets.4

43% OF THE NATION’S WEALTHIEST PEOPLE ARE WOMEN, WHICH TRANSLATES TO 3.4 MILLION WOMEN HOLDING MORE THAN $5.2 TRILLION IN ASSETS.

Moreover, 2.5 million high-net-worth households, or more than a quarter of such families, consider women to be the most influential family members on financial matters.5 And a 2008 survey found that 88% of women are moderately or highly involved in overseeing the wealth and management of their families’ assets.6 At some point in their lives, nine out of 10 women will be responsible for household finances.7

But perhaps education, a key driver of earnings potential and income, has even more to say about this changing landscape. Women today are not only far more educated than women were in the past; they are also surpassing their male counterparts across all levels of educational attainment. Women now earn more than 57% of all bachelor’s, 59% of master’s and 52% of doctoral degrees, as well as from one-third to half of professional degrees — and in every case, these proportions are increasing.8 This is arguably one of the most significant changes influencing the women’s wealth landscape. Higher academic achievement has raised individual income and spending power among women, has created a generation of professional women and female business and political leaders, and has elevated overall family income and changed the economics of marriage. In the past, the two main avenues to wealth for women were marriage and inheritance, but that’s clearly no longer true.

Bottom line: Women are learning, working, earning and controlling wealth more than ever before, and their wealth planning needs have grown accordingly.

WOMEN, LIFE EVENTS AND PLANNING NEEDS

Marriage and divorce: U.S. Trust has many generations of experience helping clients navigate the complexities of marriage and divorce. Often that includes reviewing wills, IRA beneficiary designations and existing trusts, to help ensure that these documents continue to support a client’s wealth goals. In the case of remarriage, we are also skilled in planning for blended families and the creation of appropriate trusts, such as qualified terminal interest property (QTIP) trusts.

Widowhood: Many married women will outlive their spouses. On average, women live seven years longer than their male counterparts, and women aged 65 and over are three times as likely as men of the same age to lose a spouse (44% compared with 14%).9 U.S. Trust provides services that include post-mortem planning, revocable and other trusts, cash flow planning, successor trustee and agent for executrix.

WOMEN ARE LEARNING, WORKING, EARNING AND CONTROLLING WEALTH MORE THAN EVER BEFORE.

Retirement: Despite being better off than many others, the wealthy still worry about their finances and their retirement prospects. Even financially savvy women executives, confident in both managing their household finances and having profit and loss responsibility at work, are concerned about retirement and find saving for it a challenge. At U.S. Trust, we provide our clients with the broad range of asset management and retirement planning advice and services, including detailed stochastic modeling to test different scenarios and assumptions and help provide clients with confidence in their plans.

Age and health issues: While age and health-related concerns have always been on the minds of the wealthy, they are even more pressing among wealthy women, for whom the health of a spouse, the fear of a family health catastrophe, and caring for an aging parent rank among the top worries. They are also concerned about becoming a burden themselves. At the same time, though, many women feel it is their responsibility to care for their aging parents and other relatives. In fact, many already do provide financial and nonfinancial assistance to family members, often serving as caregivers while simultaneously working.

Family Wealth Services Click to expand

Yet many women have not taken steps to alleviate such concerns. Few women have discussed their long-term-care needs with their spouse, children or advisor. Moreover, according to the 2011 U.S. Trust Insights on Wealth and Worth™ survey, fully 65% of women respondents have yet to establish a plan to care for an aging loved one despite the fact that 66% of all caregivers are women. With 70% of individuals over 65 needing some form of long-term care services during their lifetime, it is surprising that there is still relatively little planning and discussion of the topic.10 Long-term care insurance ownership also remains low despite concerns that healthcare costs will erode women’s assets and cause them to be a burden. Our ElderCare Planning program provides clients with assistance in critical areas, including organizational services, facilitating care coordination, financial planning and estate planning, including trustee and agency services.

The next generation: The financial well-being of children and grandchildren, particularly their ability to responsibly handle the wealth they will inherit, is consistently among the greatest concerns expressed by wealthy individuals. But women tend to worry more about the next generation than men do.11 That said, the results of the 2011 U.S. Trust Insights on Wealth and Worth™ survey revealed that only 50% of women respondents have disclosed their family wealth to their children or had meaningful discussions with them about their wealth. U.S. Trust’s Financial Empowerment program provides young adults in their twenties and thirties with knowledge and tools on a wide range of financial topics to help build the foundation on which participants can manage their financial futures.

U.S. TRUST HAS THE EXPERTISE AND CAPABILITIES TO EFFECTIVELY HELP WOMEN RESPOND TO AND PREPARE FOR POTENTIAL LIFE EVENTS AND ROLES.

Philanthropy: Women have been and remain active in philanthropy. In fact, they drive philanthropic decisions. According to The 2011 Study of High Net Worth Women’s Philanthropy and The Impact of Women’s Giving Networks by Bank of America and The Center on Philanthropy at Indiana University, in 90% of high-net-worth households, women are either sole or joint decisionmakers when it comes to charitable giving. Women account for 62% of donors who make gifts after death, and they give significantly more than their male counterparts. According to the 2012 U.S. Trust Insights on Wealth and Worth™ survey, 75% of the women respondents see giving back as a responsibility of wealth. They also see giving as a way to pass on values to the next generation. This is true even though women in general earn less than men, have less money in retirement and outlive their spouses.

U.S. Trust provides a broad range of services related to charitable planning, charitable trusts, donor-advised funds and private foundations.

SOLUTIONS CUSTOMIZED TO INDIVIDUAL NEEDS

U.S. Trust has the expertise and capabilities to effectively help women respond to and prepare for potential life events and roles. While many planning considerations for women may differ from those facing men, the planning tools that we employ are by and large the same for men and women. The important difference resides in our understanding of the increasing impact of women on our society, both economically and culturally; the issues unique to women; the different approaches to wealth that women may have; and in how we apply planning techniques to successfully address women’s particular — and individual — needs. At U.S. Trust, we serve a diverse client base with an equally diverse range of needs. To be relevant to our clients, we cannot offer one-size-fits-all solutions. We take advantage of the firm’s comprehensive array of wealth management capabilities and apply them to our clients’ situations to develop customized solutions.

1 Bureau of Labor Statistics, 2011.
2 American Express OPEN, The State of Women-Owned Businesses Report, 2012.
3 Bureau of Labor Statistics, 2011.
4 Statistics Income Bulletin, Winter, 2012.
5 Phoenix High-Net-Worth Market Insights, October 2007.
6 Trusts & Estates, May 5, 2009.
7 Bureau of Labor Statistics, 2007.
8 National Center for Education Statistics, 2011.
9 U.S. Census Bureau, 2007.
10 Spectrem, Wealthy Women Investors, 2011.
11 Ibid.

IMPORTANT INFORMATION
Always consult with your independent attorney, tax advisor, investment manager, and insurance agent for final recommendations and before changing or implementing any financial, tax or estate planning strategy.

OTHER IMPORTANT INFORMATION
The U.S. Trust 2012 Insights on Wealth and Worth™ survey is based on a nationwide survey of 642 high-net-worth and ultra-high-net-worth adults with at least $3 million in investable assets, not including the value of their primary residence. Among respondents, 37% have between $3 million and $5 million in investable assets, 31% have between $5 million and $10 million and 32% have $10 million or more. The survey was conducted online by the independent research firm Phoenix Marketing International in March 2012. Asset information was self-reported by the respondent. Verification for respondent qualification occurred at the panel company, using algorithms in place to ensure consistency of information provided, and was confirmed with questions from the survey itself. All data have been tested for statistical significance at the 95% confidence level.