Women, Wealth and Investing—A Story of Evolution

In my more than 20 years at Morgan Stanley, I’ve had a front-row seat for the evolution of women as increasingly effective and influential investors. Today women are managing more wealth than ever before, investing confidently across complex asset classes, and influencing major policy decisions and financial markets as shareholders and corporate board members.

The progress is stunning when we consider how much female investors and leaders have had to overcome. Wealth management and finance have historically been male-dominated professions. And just a few decades ago, women investors were regularly overlooked by financial advisors and researchers or viewed as a monolithic group. In fact, many financial professionals viewed women investors as less financially confident, less sophisticated and more risk averse.

As a result, many women became underinvested or underplanned, with negative financial consequences that compounded over time.

Recognizing these facts and historical stereotypes puts us in a position to better educate and empower female investors, especially those who have been underserved by the wealth management industry. Acknowledging women’s unique attitudes toward money and incorporating that into our approach is an important part of my vision and how we as a firm can help women achieve better outcomes for their portfolios, their families, their businesses and, of course, themselves. 

Women investors are not a niche demographic; they’re already a major force in wealth management. Women control a third of total U.S. household financial assets—more than $10 trillion. By 2030, women in the U.S. are projected to control much of the $30 trillion in financial assets that baby boomers will possess.¹ Women are also the largest beneficiaries of the current transfer of wealth, living an average of five years longer than men.

With wealth comes influence, as women today control more investible capital, voting shares of stock and corporate board seats than ever before. In 2021, the percentage of director roles held by women on the boards of S&P 500 companies reached an all-time high of 30%.² That means the unique perspectives of our mothers, wives, daughters, colleagues and business partners are increasingly moving the markets and changing the ways we talk about money.

Many of our female clients have built or led companies. They’re bringing those leadership skills to bear on their investments, whether as shareholders or board members. In those seats, they are actively applying lessons from their own careers to catalyze the changes they want to see in companies and industries. Critically, they’re helping the companies they invest in make more rapid progress toward meeting the needs of women, as well as those companies’ increasingly diverse employees and customers.

In recent decades, a growing wave of shareholders, funds and organizations that believe in Impact Investing has changed the way many companies do business. And they have driven changes to how the broader investing community looks at the practices of the companies that they invest in.

For clients who seek to make a difference not only at the corporate level but also with their wealth, we can use Morgan Stanley’s Investing with Impact Platform and thematic toolkits to align their values with their money while striving for competitive performance. 

Despite progress at the corporate and board levels, challenges like underinvestment remain for female investors.

There are many reasons why financially savvy women may still not be investing at the level they’re capable of. Female investors often want more information before moving into a new asset class, and simply don’t have the time to do the necessary research between business and caregiving obligations.

No matter the reason, the risk of underinvestment often seems small to ultra high net worth investors. But as they start to look at strategies for preserving wealth for multiple generations, many see the staggering amount of growth they could miss because of underinvestment.

While most ultra high net worth women may have experience trading securities and managing their family’s assets, they may not have the recommended exposure to important alternative asset classes, such as private placements and hedge funds. More than just a source of diversification, these alternative investments can help women take advantage of some of the broader trends in the economy. 

Take private equity, for example. Today, the average company stays private for 11 years compared to just five years a decade ago.³ By investing in private equities, female investors can tap directly into companies at an earlier stage and share in more of their growth.  Depending on the company, investors might have the opportunity to contribute to the direction of that company’s growth, a major plus for female investors who seek to have an impact with their funds.

As we help build the confidence of our female clients, we are also able to elevate the complexity of the financial dialogue. Our goal is to help ensure our clients not only understand the importance of long-term, alternative products in their portfolio but also can share in the value created by them.

Female leaders and “CEOs of the family,” as they’re called, often tell us there isn’t enough time to think long term about their estate planning strategy. Again, this lack of time and focus can be a sizable impediment to total financial empowerment that extends beyond wealth and into complete confidence for all a family’s major decisions.

Building a goals-based plan with the help of a private wealth adviser is an integral step to making sure work, life and family are watched over and in unison. Even when your business or family requires your full attention, your Private Wealth Advisor can track the stability of your plan and your progress toward your goals. Trusting them for education, wealth planning strategies and investment implementation has allowed our clients to focus on their passions: their businesses, families, and philanthropic missions. . 

If the last 20 years are any indicator, the future of wealth, and to some extent the future of financial markets, will be written by women.  

The next generation of women is inheriting very different attitudes and tools for investing and influencing companies. They’re demonstrating that women can simultaneously be caregivers, CEOs of the family and financial decision-makers. As Private Wealth Advisors, the firm needs to look at their individual needs and empower them in every role they serve.

I’m excited to see what the next 20 years will bring in the evolution of sophisticated, forward-looking female investors–and for the evolution in values they’re bringing to wealth preservation and creation.

This article appears in Insights & Outcomes, a magazine from Morgan Stanley Private Wealth Management providing industry insights, analysis and thinking from our Firm’s leading specialists.