Studies show that women invest more carefully But wealthy women’s wealth strategies have at least one significant blind spot. It’s a wealth plan.
new UBS report Among high-net-worth investors, 56% of women don’t know how much they can leave to their heirs, according to “Women and Investing: Legacy Planning,” released March 6. compared to only 47% of men.
Additionally, 55% of women planning to leave a legacy have no plans to do so. Among men, it was just 41%, the report said. Fidelity International study.
“With poor financial planning, women risk inheritance wishes not being respected and risk paying too much inheritance tax,” the UBS report said.
This came as a bit of a surprise to Marianna Mamou, Head of Advice Beyond Investments at UBS Chief Investment Office and author of the report.
“They may be hesitant to invest, but once invested, they tend to research and plan more. They are more disciplined,” Mamou said of the women.
Not having a real estate plan might seem to contradict this trend of planning, but Mamou believes the cause is probably a lack of awareness among women, suggesting that advisers can help improve.
Advisors should, at a minimum, ensure that women have a will and are assigned an executor, the report said. The next priority is to add powers of attorney and advance directives in case of illness. Then separate your assets, set up a trust or foundation to help better manage distributions to beneficiaries, and consider life insurance options.
“Combined with life insurance can provide additional liquidity, either to ensure a more balanced inheritance among heirs or to meet specific financial needs related to inheritance. It could prove to be an efficient way to deal with it,” the report said.
Mamou said there is a large gender gap in life insurance coverage, citing industry research showing that women are, on average, worth half as much as men in insurance policies.Life Insurance and Markets 2021 Studies show that women have life insurance at a lower rate than men. Study Group.
Mamou said some women may not only be uninformed about life insurance, but may also “disregard the financial contributions” they provide to their households.
However, “Even if you don’t work, say at home, you are still contributing. In your absence, it would have been a financial cost to replace the contribution,” she said. rice field.
The report found that wealthy women were more interested than men in transferring less liquid assets such as real estate and private equity, as well as fine art. These areas are available for advisors to research and discuss more with their female clients.
Mamou said this reflects a preference for stability and tangibility biases by female investors, with people perceiving physical objects such as houses and paintings as safer and more stable. increase.
“Real estate is their favorite asset class,” Mamou said of the wealthy woman. She added that her 61% of women surveyed expressed interest in learning about investing in illiquid markets, compared to just her 50% of men. The report recommends allocating up to 40% of the “endowment portfolio” to the private market.
Women also report increased interest in various forms of philanthropy. The trend has increased since the start of the COVID-19 pandemic, with women stepping up their charitable giving, according to the report.
“However, only 14% of women have spoken with a financial advisor about charity planning strategies compared to 20% of men,” the report said.
Advisors can also reduce inheritance tax burdens by supporting female clients in philanthropic endeavors such as private foundations and donor-advised funds, or by donating directly to charities.
For women in other wealth segments, many of the report’s findings may still be relevant. ,” said Carrie Schaffman, UBS’s women’s division, in an interview.
Susan McKenna, CEO of Fidelity’s eMoney Advisor, said:
women tend to make men live longer Many women stand to inherit from their male spouses who inherit property.but they may not be ready To handle their wealth and fortune plans alone.
“It’s pretty staggering. Eight out of 10 women in the United States will at some point find themselves in a position where they will have to take control of their financial lives,” Schaffman said. .
The report shared a previously unpublished breakdown of data by gender. UBS Investor Watch Survey In October, we measured the wealth planning needs and concerns of 4,500 high net worth individuals with at least $1 million in investable assets. We also consulted similar reports by industry peers such as Fidelity and RBC Wealth Management.