Nicola Langridge, a Certified Financial Planner at Private Client Holdings
When it comes to wealth and investing, understanding what women want is simple. They want the same as a man – sound financial advice that secures their financial well-being today and into the future.
“But there are unique considerations for women compared to men when it comes to building wealth,” says Nicola Langridge, a Certified Financial Planner at Private Client Holdings, a Cape Town based company recently awarded Top Boutique Wealth Management firm in South Africa in The Krutham wealth management and private banking survey 2024. “Women face distinct challenges and opportunities during their wealth creation journeys, which can influence their financial strategies. Financial advice and wealth planning for women should be tailored to meet their unique circumstances and be sensitive to their approach to finances and investing.”
Langridge refers to the following factors that women face, which should be incorporated in a robust wealth management plan.
Income gap & career interruptions
Income disparity is one of the most significant differences in financial planning for women who on average earn less than men. This is often compounded by the fact that women are more likely to take career breaks to bring up young families or care for elderly parents, which affects their ability to save and invest for the future, making tailored financial strategies more relevant.
Longevity
Women tend to live on average 6 years longer than men, which has profound implications for retirement planning as their savings and investments must support them for an extended period. Healthcare costs also increase with age, which also requires careful planning.
Tolerance for risk
Studies show that women tend to be more risk-averse than men, which can influence their investment decisions as they tend to safeguard themselves from risk rather than chase gain. But women also have the right balance between ‘greed’ and ‘fear’ and tend to filter out market noise and stay the course. While a conservative investment approach can provide stability, it must be balanced with growth-oriented investments to achieve long-term financial goals. “Women should focus on long-term goals and strategies to accomplish what they want out of life – two things that shape the approach taken by a financial planner,” cautions Langridge.
Financial confidence gap
A 2022 survey by Fidelity Investments found that 70% of high-net-worth women reported feeling less confident about their financial knowledge compared to 60% of high-net-worth men. “Empowering women with financial knowledge and building their confidence when it comes to managing their money is critical,” says Langridge who believes that these hurdles can be overcome through education, mentoring and access to professional financial advice.
What role can a family office approach play?
Family offices have traditionally been associated with managing the wealth of ultra-high-net-worth families. In recent years, the role of a family office approach in supporting women in managing their wealth, has gained prominence. Women increasingly own equity in the businesses where they are employed, which results in more complex tax and asset management needs, which are well suited to a family office approach to wealth management.
Holistic financial planning
A family office offers holistic financial planning that includes investment management, estate planning and tax optimization. “For women, this comprehensive approach ensures that their unique financial needs and goals are addressed in an efficient and organised manner, and that their life circumstances and aspirations are considered,” says Langridge.
Tailored investment strategies
By understanding individual preferences, such as risk tolerance and long-term objectives, and providing personalized advice, a family office can help women to build diversified portfolios that balance growth and security.
Succession planning and legacy building
A key function of a family office is to assist with succession planning and legacy building, which is particularly relevant for women who want to leave a lasting impact. A Family Office provides guidance on estate planning and wealth transfer to the next generation, ensuring that a woman’s values and intentions are preserved.
Support during life transitions
Women can experience significant life transitions throughout their wealth creation journey, such as marriage, divorce, motherhood, widowhood and career changes. A family office offers support during these critical periods, by providing financial advice and resources to navigate complex situations effectively.
Financial education and empowerment
By working with an empathetic, caring financial planner who is supported by a team of specialists, women can be empowered with financial knowledge, which promotes confidence and independence in managing their wealth.
Networking and mentorship
A family office often has extensive networks of professionals, and advisors that women can benefit from through mentorship opportunities, professional connections and access to a community of like-minded individuals.
In Lou Ann Lofton’s book, ‘Warren Buffett Invests Like a Girl and Why You Should Too’, she proposes that many of the attributes which make Buffett one of the best long-term investors are natural to women. “As more women take control of their financial futures, financial advisors need to adopt a nuanced approach when it comes to financial planning for their female clients, one that incorporates factors such as income disparities, longevity, career interruptions and risk tolerance,” says Langridge. Together with the support of a family office approach to wealth management to deliver holistic financial planning and tailored investment strategies, Langridge believes that women are well positioned to achieve their wealth management goals and build lasting legacies.
ENDS
