Women’s Wealth Grows, Private Banks Respond

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Top banks narrow the gender gap to better serve all investors.

The global head of Citi Private Bank, Ida Liu, has a message for women who dream of being private bankers: Do it. “I really believe our field is a nurturing environment for women,” she says. “Half of our team is female.” 

It has worked for her, anyway. Liu joined Citi in 2007 to build a wealth management practice focused on her former industry, fashion. In April 2021, the bank promoted her to her current position.

Liu isn’t alone, particularly in North America. Rival Goldman Sachs named Stephanie Cohen global co-head of Consumer and Wealth Management last September. Katy Knox has been president of Bank of America Private Bank since 2018. JPMorgan Chase tapped Kristin Lemkau to be the CEO of J.P. Morgan US Wealth Management in 2019.

The top ranks of private banking are still far from reaching gender parity, but they are moving relatively fast, according to Jill Zucker, managing partner of McKinsey & Co.’s New York office. “About one-third of the CEOs who come to our wealth management roundtables are women,” she says. “That’s more than in other parts of financial services.”

The structure of wealth management, where advisers work like independent franchisees, is more female-friendly than, say, investment banking, Liu argues. “You own your own business and have somewhat more control over your schedule,” she says.

However, there’s a more compelling reason why private banks are opening their C-suites to more women: Female representation may be the industry’s biggest problem—and opportunity. The female share of global wealth is inexorably rising, challenging wealth management organizations built largely by and for men. Women in top management won’t solve this problem, but they do send a message that it’s a top priority for financial institutions.

“There’s a lot more work to do,” says Angie O’Leary, head of Wealth Planning at RBC Wealth Management-US. “But compared to the days when there were one or two females in the room, I can feel the momentum.”   

The roots of the women-and-wealth challenge are simple, yet deep. On average, women live several years longer than men and marry partners who are a few to several years older, according to data from the Pew Research Center. The result is five to seven years of widowhood for a typical high net worth woman. “Eight of 10 women in the US will end up alone at the end of their lives,” notes Carey Shuffman, head of the Women’s Strategic Client Segment at UBS.

As the prosperous Baby Boom generation collides with this actuarial reality, trillions of dollars in wealth will pass to widows—and soon, McKinsey finds. Most of these women took a back seat to their husbands in financial management, according to Shuffman. “Our data across 10 regions of the world show very close results,” she says. “Only 20% of couples make major financial decisions jointly.”

Scariest of all for banks, more than 70% of widows ditch the financial adviser they perceive as having primarily advised their late partner, according to advocacy group Widowed Community. Add to this the new wealth that younger women are accumulating around the world and the numbers are impressive: North America, the giant of women’s wealth, has $35 trillion in female hands; Asia excluding Japan is the fastest growing, with $13 trillion in female-held assets increasing by more than 10% annually, according to Boston Consulting Group.

Hiring more women is one way to keep women clients, although female clients don’t necessarily want female wealth advisers. “A lot of research shows women do not have a preference on gender,” UBS’ Shuffman says. “As with a doctor, it’s much more about how the adviser relates.”

The barrier to reaching and retaining affluent women is more profound, because it’s inside many of those women’s heads. “I start with a very unusual statistic,” O’Leary says: “Sixty-one percent of women would rather talk about their own death than talk about money.” Headquartered in Minneapolis, RBC Wealth Management-US recruits heavily from a certified financial planner program at the nearby University of Wisconsin, training female graduates from the ground up.

Ultrahigh net worth women, those with more than $30 million in assets or with family wealth, are different from the Boomer widow inheriting a few million, judging by Liu’s experience. Citi limits its private bank to families with $25 million or more. “The wives are very engaged at our family business summits,” she reports. “In Asia they’re almost leading the charge.”

GOOD WITH MONEY

Contrary to stereotypes, global wealth manager Fidelity found female investors outperforming men by 1% annually, and Warwick Business School in the UK gave women a nearly 2% edge. Why? Women are more inclined to heed research, hold investments and diversify risk; whereas men tend to go with their gut on individual stocks and trade heavily.

Private banks need to get women accustomed to being in the driver’s seat. One way could be to frame the conversation about money within a discussion about the family and its future. “You need to talk about what money means to the client, what keeps her up at night,” Shuffman says. 

Another way is to focus on the good that money can do in society, the loose rubric of environmental, social and governance (ESG) criteria. BCG data show that “investing in thematic topics” is among the top three financial objectives for 45% of affluent women, compared to 30% of men—a gap bankers can market to. “We’ve seen over and over again that women are disproportionately interested in sustainable investing,” says Jackie VanderBrug, head of Sustainable and Impact Investment Strategy for Merrill and Bank of America Private Bank. “They understand they get the future they invest in.”

“Wealth managers need to be life coaches,” McKinsey’s Zucker adds. “We find that clients want broad and holistic advice.”

There are a lot of more prosaic steps to take, such as scheduling meetings when both spouses can make it and looking women in the eye. “Start with the basics,” she says. “How many phone numbers and email addresses do your advisers have of the women in their couples? If you’re being honest, it’s pretty mixed.”

To UBS’ Shuffman, that confirms what private bankers have always known: Money is extremely personal and emotional beneath the numbers. “You could have vastly different perspectives and values within a couple,” she says. “A lot of women say they’re not involved because they don’t want to start arguments over money.”   

The good news is that almost everyone polled by UBS, including 96% of men, agree women should be more involved in financial management. The actionable news is that they will be much more involved whether anyone wants it or not.

Other industries that involve investment, emotions and values–like real estate and auto sales–have transformed their tone in response to women’s market power, Zucker says. Private banking is starting late, with arguably higher stakes. More female managers “can’t hurt” in the race to catch up, she says. They are no silver bullet, though. “The industry, on the surface, absolutely gets it about wealth transferring to women,” the McKinsey partner concludes. “But it’s tough to point to an institution that yet cracked the whole code.” Those who do will reap substantial rewards.

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