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Jun 1, 2020

Mind The Gap Women’s Growing Financial Power And What It Means

by Rita Silvan

Rita SilvanFor eons men have controlled the money. They’ve made it, inherited it, invested it, and spent it—in whichever ways they saw fit. In contrast, women and children might have benefited from the patriarch’s wealth—or not. Either way, whether as happy beneficiaries of his generosity or as collateral damage to his financial duress or miserliness, rarely could women handle the money.

In a welcome change, today, a growing number of women “touch the money”. We are making it, inheriting it, investing it, and spending it. Welcome to the evolution. This change in who gets to make financial decisions is having dramatic effects on, not only the women themselves, but also on the wealth management industry, and society at large.

Let’s look at the numbers: According to a recent survey from CIBC, Canadian women currently control approximately $2.2 trillion (not including the primary residence). By 2028, that number is set to grow to $3.8 trillion, or one third of all financial assets in Canada.1 The steep uptick is due to several factors:

Double Dip Inheritors

As wealthy boomer men begin to shuffle off their mortal coils, wealth will pass first to their wives, who live an average of four years longer, and then their children. In fact, given the propensity of boomer women to marry older men, the larger age gap means wives will outlive their husbands by an average additional period of 16 years.2

Boomer and GenX women will also inherit wealth from a secondary source: their parents. By one estimate, over $400 billion will be transferred which will leave 90 per cent of Canadian women as the sole financial decision maker at some point in their lives.2

Education and Career Ladders

As more women enroll in higher education, their career prospects expand, along with their paycheques. According to a U.S. study, the number of women enrolled in MBA programs has nearly doubled since 1980 to near parity with men.3

In Canada, the number of women with post-secondary school education is rising at almost double the rate of men. More women have advanced degrees (63%) compared to men (50%) and more than 61 per cent of women are employed.4 All of this additional education adds up. College-educated workers earn an average of 81 per cent more than those with only a high school diploma.5

Despite the wage disparity between women and men—on average, women earn 87 cents for every dollar a man earns—the earnings gap is closing within households with 31 per cent of women earnings as much, or more, than their husbands.5,6

Financial Power

Although there are obstacles still to overcome, women’s growing financial clout is already making an impact.

Not so very long ago, the focus of “wealth management” was sales. Compensation for brokers and advisors was primarily based on the “eat what you kill” model of transactional brokerage commissions. Financial products salespeople dangled “hot stock tips” at cocktail parties and at the golf course. The focus was on competition—to make as much money as possible (“double or triple baggers”), or simply do better than the “other guy”. Rarely did the advisor insist on family-based discussions about shared goals, family values, and raising the financial literacy level of family members.

That’s about to change.

Woman Driver

Because it’s no longer polite to say, “women are not good with money”, or “it’s unfeminine for a woman to be interested in money”, women are being served up more subtle forms of sabotage. Are any of these familiar to you?

  • “Women have lower financial literacy than men.”
  • “Women are more risk-averse.”
  • “Women are more at risk of outliving their money and becoming bag ladies!” And, here’s a good one:
  • “Women are more likely to develop cognitive impairments.”

While you can always find a study or survey to back these up, these comments are self-serving to the financial services industry. Real life is considerably more nuanced, and actually, women are doing quite well, thank you very much.

Yes, there are observable differences between how women and men handle money, and these are often in women’s favour.

  • Women tend to trade less, thus avoiding the missteps of trying to time the market and also avoiding excess trading fees, taxes, and other frictional costs.
  • Women are more likely to take contrarian positions, so are less susceptible to investing in crowded trades and hot stocks.
  • Women do their research and are risk aware.
  • Women invest to reach life goals, not to make the most amount of money.

Services Not Sales

One impact of women’s growing financial power on the wealth management industry is the need for advisors to pivot from selling to servicing. Increasingly, advisors will be working with women who are educated and informed, financially literate, affluent, and confident. Being able to service this type of client requires a holistic view of wealth. This will need to include, not only an ability to wisely and profitably invest the assets, but also how to support the client and her family to achieve their life goals. Financial planning services, separate from investment sales, will be in growing demand.

Advisors who address comments only to the male in the room or patronize women with lines such as, “Don’t worry, I’ll take care of everything for you”, will no longer cut it. Women appreciate a collaborative approach and seek to enhance their learning. They’re not afraid to say, “I don’t know. Explain it to me.” Advisors better be ready to step up their game.7

Wealth management professionals will also need to expect questions around sustainability and governance regarding the types of investments they recommend because women consider these key factors in their decision making.

It’s important to remember that women are people, too. In other words, we are also susceptible to the impulses of greed and fear and euphoria and pessimism. We make good decisions and bad ones. Nevertheless, women’s growing financial power can only be a good thing for the wealth management industry by forcing it to address the role of money in people’s lives—not simply as a race to acquire more of it.

Rita Silvan, CIM, is the former editor-in-chief of ELLE Canada magazine. She is a freelance financial journalist and the editor-in-chief Golden Girl Finance (, Canada’s leading digital magazine about women and financial matters. She is based in Toronto and can be reached at

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