Women and Wealth - Managing An Inheritance
Forecasters expect to see about $3.2 trillion transferred to the next generation through inheritance in the next few years. Women will inherit the bulk of this fortune for various reasons, including longer average lifespans.
Women should understand that receiving a large inheritance can dramatically improve their lives and those around them. However, sometimes a sudden influx of money may cause stress, confusion, and conflict. For instance, women may have a somewhat different perspective on managing wealth than men in their family or social circle. They may also vary from men in how they seek financial guidance and might struggle to find advisors who understand their unique point of view.
To make the most of a substantial inheritance, women should first consider ways to develop a solid plan to manage their wealth. Women can use this plan to guide their decisions and to communicate their intentions to others, thus maximizing benefits and minimizing disruption.
Action Steps for Women Seeking Wealth Management
Prudent women will develop a plan to manage their finances to maximize the benefits they can enjoy and share with others. Some key considerations can ensure a better outcome and long-term benefits.
Take Time to Process the Implications of Receiving Wealth
An inheritance can offer women a once-in-a-lifetime chance to improve their financial stability and security. At the same time, Experian cautioned that the time right after the death of a loved one might not offer the best opportunity to make rational, long-term choices about financial futures.
In addition to experiencing grief because of a loss, the inheritance may generate additional stress and conflict. Instead of rushing to make choices about using the money, Experian suggested taking time to process emotions and find objective resources to help inform choices.
Consider the Tax Implications of Various Investment Strategies
Prudent financial managers understand that almost every step they take may have tax implications. The deceased person's estate handles federal taxes, but a few states also impose inheritance taxes which beneficiaries must pay. Women need guidance to ensure they're not hit by surprise bills at tax time and understand specific exemptions that their state law allows. Even more, tax obligations can severely reduce the actual returns of some investments.
Women could also consider such tax-reduction strategies as tax-qualified investments, using retirement accounts, and holding long enough to avoid short-term capital gains taxes. Guidance from experienced professionals can help the beneficiaries of large estates legally save millions of dollars over their lifetimes.
Match Investments to Unique Financial Goals
A Bank of America research paper found that women care about stewarding wealth to benefit themselves and their loved ones. At the same time, average women spend more time volunteering and are more interested in sharing their wealth with worthy causes while still living. Men also care about charities but tend to satisfy their concerns more by leaving a legacy after passing on.
Investments that can produce good returns while supporting socially responsible businesses may attract attention from women. ESG funds describe ETFs, mutual funds, and other financial products with environmental, social, and governance objectives. According to the SEC, these types of socially responsible investments have grown increasingly popular recently, just when women have begun to control more wealth.
The government has stated they don't produce any standard of measurement specifically for ESG funds. Therefore, the SEC warned investors to choose these kinds of investments as carefully as any others. Prudent women should seek guidance to find opportunities that will live up to claims that they protect wealth while benefiting society.
How Prepared Are Women to Manage Wealth?
Nobody doubts that women can manage money. Today, women make or offer input for the vast majority of household financial decisions made by individuals and families across the country. Still, competent handling of typical household finances doesn't necessarily translate into the skills needed to manage substantial fortunes.
A US Bank survey found women felt less confident than men about their money management skills. Females also said they were less likely than males to rely on their own research or the advice of friends and family. In contrast, men commonly said they relied upon advice found on social sites, trading apps, acquaintances, or their own opinions.
On the positive side, the old truism says women are more willing to "stop and ask for directions" than men. In other words, more women than men say that consultations with professional financial advisors have influenced their financial planning decisions.
In particular, women value advisors who spend time understanding their unique goals and priorities and can demonstrate their expertise with industry certifications and the testimony of satisfied clients.
Where to Find Wealth Management Advice for Women
In summary, women already demonstrate an aptitude for budgeting household funds but may need guidance to develop plans for managing wealth. Female investors also often prioritize goals and seek financial advice differently than men.
Women seek qualified financial advisors who care about and understand their unique priorities. Thus, it makes sense to assume that women often prefer to speak with female financial professionals. Still, a recent McKinsey survey found only 15 percent of American financial advisors are women, while women already control about thirty percent of the nation's wealth.
If you have already or are about to inherit wealth, it's time for you to meet your Refresh team of financial advisors for women and families. Women started this successful advisory service to improve the financial experience of women and the people and the issues they care about.
Refresh advisors prioritize portfolio efficiency and returns while considering each client's risk profile and preferences. Schedule a call today to finally speak with an advisor who understands you.
Sources:
https://www.usbank.com/wealth-management/financial-perspectives/women-and-money/wealth-and-the-gender-gap.html https://www.forbes.com/sites/maggiegermano/2020/09/22/how-women-can-change-the-world-with-their-money-choices/?sh= Seba9eb 761 38 https://www.forbes.com/ sites/maggiegermano/2020/09/22/how-women-can-change-the-world-with-their-money-choices/?sh= Seba9eb 761 38 https://www.investor.gov/introduction-investing/ general-resources/news-alerts/alerts-bulletins/investor-bulletins-1? utm_source=google&utm_campaign=2022-nonbrand&utm_medium=search
Pamela Chen is the Founder and Chief Investment Officer of Refresh Investments LLC, a fee-only financial planning and investment management firm with offices in Santa Monica and San Diego, CA serving clients throughout Southern California and the United States.
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