Why the Great Wealth Transfer is a boon to US women

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Fri, Mar 1, 2024, 11:05 AM

Women are poised for a massive payday as the Great Wealth Transfer will see $84 trillion to $129 trillion passed from Baby Boomers to younger generations. Ellevest CEO Sallie Krawcheck joins Yahoo Finance Live to discuss why women will feel the greatest impact.

Krawcheck notes women, on average, outlive male partners, meaning wealth will generally transfer "from him to her." With this shift, she expects women to control more than half the wealth in the US. The "feminization" of wealth will also provoke more charitable giving and values-based investing, Krawcheck says.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Angel Smith

Video Transcript

AKIKO FUJITA: Well, the great wealth transfer is expected to hand over up to $129 trillion from baby boomers to younger generations, with women expected to be some of the biggest beneficiaries.

Ellevest's recent women in health survey finds 45% of women have already received or expect to receive that financial windfall. We are joined now by Sallie Krawcheck, Ellevest CEO, on the recent survey, and how women can work to close financial gaps.

Sallie, good to talk to you today. Let's talk about this great wealth transfer. It is about the transfer of wealth from generation to generation. But you've said that this has the potential to reshape society. How?

SALLIE KRAWCHECK: Absolutely. Now, it does have the potential to go from generation to generation. But before it does, it goes from him to her. And recall, women tend to live six to eight years longer than the men in their lives, half of marriages end in divorce, 80% of women die single.

And so we're going to see with the great wealth transfer is, it's going to go from him to her and then to the kids. And the result of which is that women will control more than half of the wealth in this country.

And so we're going to move from a world in which men control the money to women control more. We at Ellevest are calling it the feminization of wealth. And when that happens, I'm not going to say everything changes, but a lot of things are going to change.

AKIKO FUJITA: So let's talk about some of those things that you do expect to change, because the backdrop to all of this is, of course, when you look at pay, for example, between women and men, there's still a gap there.

And so if it is that transfer that happens for women to control more money, how about some of those fundamental issues? What changes there?

SALLIE KRAWCHECK: Well, so let's start to be a little cheeky. The great wealth transfer should do for women, what Lenin did not. And by the very fact of that money coming to her, what we're finding, which is really interesting, is women become more confident.

We've always thought that, oh, gosh, we hear about the money confidence gap for women. And so women don't have as much money as men do, because they're not as confident. They don't ask for that raise. They don't invest as much as the men do.

But what we're finding is it's the other way around. The research demonstrates that when they get that money, they become more confident. So it goes from something like 45% of women, a minority of women saying, I feel confident around money, if they're not getting a wealth transfer to 80% plus do feel confident, which is actually more than men.

What happens when you have a bunch of confident women? Well, one thing, they'll be talking about money a lot more. But another thing is they're more likely to leave their partners and spouses. Particularly, younger women say if they get a wealth transfer, a third of them say they would consider leaving their partner.

So things are going to be different, including, by the way, women tend to give more to nonprofits. Women tend to believe more in climate change than men do. You see this big donation from Dr. Ruth Gottesman to wipe out tuition for medical students. That's the kind of thing we can start to look for.

AKIKO FUJITA: So more financial independence. What does it all, ultimately, mean for the economy?

SALLIE KRAWCHECK: Oh, as we say at Ellevest, nothing bad happens when women have more money. When that money comes to them, they will spend it. We know of the research that says, if you want to improve society, you want to improve a community, you get money to women, because they're more likely to invest it in their families.

They'll be more likely to invest it for positive impact. Women tend to, more than men, say, yeah, I want to invest. I want to invest for a financial return. But I'll take an impact return as well-- thank you very much-- without giving up on one or the other.

So the ripple effects here with this feminization of wealth can be really tremendous. Now, the red flag here is that women don't have the financial support they need fully. That most women do not have a financial advisor. And when, and if they come into money, they don't know where to turn.

And, again, it's the reason for Ellevest being to support women in investing and help them to invest. But this is happening while the industry is looking a little bit the other way.

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