In the latest Bank of America Global Research report, research analyst Dimple Gosai and MLI research analyst Key Hope, look at the rise in spending power that is growing among women and why industries in general need to be sitting up and taking notice.
$84 trillion in US wealth is expected to be transferred to younger generations over the next two decades – compare that to 2022 global GDP of $101tn. Some $30tn will be inherited by women in the next decade alone. But that isn’t the whole story. Women now outnumber men in university enrollment globally. They are entering the workforce at higher levels, with greater career aspirations. Women are delaying childbearing and having fewer children. How should industry react to women with more spending power, fewer children, and greater confidence? In a word – quickly.
Women’s wealth is rising globally; Asia overtakes Europe
Women’s wealth was expected to reach $93tn by end-2023 – up $16tn since 2020. About half of this is in the US, although it is growing rapidly in Asia. Asian women have overtaken European women in wealth. Drivers globally include improving wage equality, entrepreneurship, rising political empowerment, and better access to leadership positions. But the Great Wealth Transfer will not be a boon for all. Money will remain concentrated in wealthy countries. Over 40 countries still lack gender-equal inheritance laws; almost two-thirds of these are lower-middle and lower-income countries.
Sisters are doin’ it for themselves: house, car, wealth manager
Younger, well-educated women with higher disposable income are increasingly taking charge of financial decisions traditionally made by men or spouses, such as purchasing property or engaging wealth managers. Our analysis reveals a higher percentage of Gen Z women involved in financial decision-making compared to their male counterparts, marking a shift from previous generations. Bank of America data indicates a narrowing gap in 401(k) balances between men and women over the past three years. Globally, even in less affluent nations, more women are accessing banking services, with 81% of countries reporting increased financial participation among women from 2018 to 2022.
You’re fired: women and investment strategy
Women typically earn less, and they live longer. We also find a lower self-reported risk tolerance among women vs men as they tend to prioritize capital protection. Two-thirds of women who already invest reported trying to identify and invest in companies that reflect their own values. But still, less than 30% of US women feel comfortable making investment decisions, while 70% change their financial adviser within a year of being widowed. Bottom line: Women’s distinctive approach to investing spells opportunity.
What women want – your attention, please
Marketing to women used to amount to ‘shrink it and pink it.’ But women over 50 now have $15tn in spending power, and young women can delay diapers, bottles and car seats in favour of fine jewelry. Now various industries could be impacted by greater female purchasing power.
Main image: katie-treadway-2OOiqCrrGbQ-unsplash
