Of the $41 trillion (Dh150.6 trillion) in global intergenerational wealth to be transferred over the next four decades, women will inherit 70 per cent, or a staggering $29 trillion. While the responsibility of managing and preserving family wealth is increasingly in the hands of women, some work is required to ensure they are prepared, informed and supported.
Let us start with the numbers — RBC Wealth Management’s Wealth Transfer Report 2017 looked at High Net Worth Individuals in North America and found that 98 per cent of women are either the sole or joint decision-makers on daily banking, while 84 per cent are fully or partially responsible for the family investment portfolio.
Like most analysis, the numbers become more interesting through comparison. While GCC-specific figures are hard to obtain, it is fair to assume the gender gap would be even more pronounced.
What is noticeable about these numbers is that, while women are creating and controlling more wealth than ever before, they are less prepared and receiving less guidance than their male counterparts. A large part of this gender gap is driven by confidence — of which experience and education play an integral role.
In this context, women may choose to manage their own investments and conduct independent research less frequently than men, but for any progress to be made they need to start being more active with their investment approach. This requires both personal dedication, and an external environment that is conducive to — and supportive of — such action.
Education plays a crucial role in this. Typically, those with the greatest confidence in their financial literacy have been educated since childhood: 66 per cent of those who received structured financial education before the age of 18 were confident in their grasp of investment matters. This figure drops to 41 per cent among those who receive financial education in their 30s. By bringing children into conversations about money and wealth at an early age, they are better positioned to make informed decisions to build, preserve and grow their wealth across the generations.
In a discussion with Zahraa Al Fardan, member of the finance committee at Al Fardan Group, UAE, she noted: “My father, the patriarch of our family, taught us the importance of education from a young age. He constantly reminds us that knowledge is the most valuable tool, which is not simply limited to academic degrees. Political awareness as well as self-development are just as critical.”
Education through experience is also a great way to learn, yet one of the challenges that females face in this region is when external meetings are predominantly male. Ms Al Fardan stated, “It feels intimidating at first to be the only female in a room filled with males. The thought of my ideas or suggestions getting rejected because I’m a woman would cross my mind every time I wanted to voice an opinion.”
A final point to note is on the differing approaches from each gender. With regards to decision-making and increasing knowledge, women lean toward consultation and collaboration, while men prefer autonomy. This collaborative approach also extends to investment types, with interesting ramifications for impact investing. Roughly half of affluent women are interested in environmental or socially responsible investments (compared to one-third of men), and women tend to donate more to philanthropic causes than men do.
While there is a fair amount of work to be done in the Middle East with regards to female-oriented wealth management, positive steps are certainly being made. History has repeatedly taught us that the empowerment of women is a successful strategy for achieving sustained economic growth and productivity. Fortunately, the support for gender equality from the country’s leadership has given females greater exposure to and capability of excelling in leadership roles, which helps contribute to wealth creation.
Rachel Pether is a member of the CFA Society Emirates and a Director at Heirloom Investment Management.