Women and wealth planning: a more
active role awaits
Why female wealth owners should take a more active
role in wealth and succession planning
Conversation with Nataliia Luzina
Women are a growing economic force, holding more wealth than ever before. They’re also becoming more financially independent, and better represented in the workforce – across all levels of seniority.
What’s more, women are due to receive significant private wealth as part of the anticipated Great Wealth Transfer – when the “Baby boomer” generation transfers its wealth to the “Millennial” generation.
But despite this – and the plethora of tailor-made financial products aimed at women – we still find that women are left out of the wealth planning process.
We spoke to our Co-Founder Nataliia Luzina on the challenges female wealth owners face – and how they can start to overcome them.
1. What do we mean by “female wealth owners”?
That’s an important question to start with.
Of course, women are not a homogenous group. Instead, there are perse cultural, social, and inpidual factors that shape the role a woman plays in her family.
Some women are breadwinners. Others are household managers, or mentors, or responsible for the well-being of their families. And, as is the same with anyone, sometimes these roles may overlap.
But I’d like to focus on the “caregiver”: the role wherein a woman is responsible for the wellbeing of the family – physical, emotional, and financial.
2. Why is it important for female caregivers to take a more active role in their family’s wealth planning?
In my experience, female caregivers tend to bring a different perspective to the wealth planning process.
Typically, this process can be seen as a purely technical one. But at Conduct, we believe that successful wealth planning also requires emotion and empathy, alongside careful consideration of relationship aspects and nurturing meaningful family connections.
It’s here where female caregivers can be invaluable.
They typically bring a more multi-generational perspective to wealth planning and can see the impact on generations to come.
At the same time, female caregivers are often better placed to balance the interests of various parties in the planning process. They often possess strong empathy and communication skills, enabling them to take all family viewpoints into account.
In addition, caregivers often face a multitude of vulnerabilities in the context of wealth planning. They need to ensure their own financial independence, as well as financial stability of the family as a unit – especially during moments of transition and unexpected events.
3. Could you tell us more about these contingencies and risks?
As we often say to our clients, life is full of what ifs.
- What if a wealth owner is suddenly incapacitated?
- What if the family business faces unexpected upheaval?
- What if the spouse or children need to quickly access liquid funds?
These are the kinds of questions that a female caregiver is most concerned about. And yet, unless they are brought into the wealth planning process, they can’t find the answers. Even worse, they can’t ensure the necessary arrangements are in place to manage caregiving responsibilities.
4. What are the challenges that female caregivers face in the wealth planning process?
In our experience, we see the following main challenges:
- A lack of financial independence
- A lack of open dialogue about family wealth
- A lack of knowledge about the family wealth and clear vision about the wealth plan
Let’s start with a lack of financial independence.
Spouses are often given funds for those they care for (e.g. children or parents), but rarely a separate fund for their own security.
A separate fund not only allows caregivers to meet their own financial needs – it also enables them to actively shape their own future. This fund can be a safety net, a way to meet personal goals, or address unforeseen financial challenges.
The first tool to consider for this is a matrimonial agreement, which can seem more straightforward (and less complex) than setting up a trust, for example.
Unfortunately, quite often, matrimonial agreements tend to be considered at a later stage, when the family wealth structure is already highly complex, or even completely overlooked. This is particularly relevant for the first generation of wealth, created gradually over decades without proper attention to structing formalities.
But I would argue that matrimonial agreements – such as pre- and post-nuptial agreements – are essential for future planning process, from both perspectives – for the caregiver, and her spouse.
When devising a nuptial agreement, it’s important to consider various “what ifs” scenarios and the potential new role and responsibilities of the caregiver, in case something happens to the spouse. Thoroughly thought-through matrimonial agreements provide the caregiver with financial security and equality – and, perhaps most importantly, clarity during any potential disputes or contingencies.
Matrimonial agreements are equally important for the entrepreneurs and family breadwinners, particularly in countries where there is a community of property regime – which means that certain transactions, as well as setting up corporate and fiduciary structures, may require spousal consent.
In our experience, it’s often discovered too late these structures are defunct because the various agreements have not been co-ordinated.
5. What about the need for open dialogue?
It’s important for families to be able to discuss sensitive topics like wealth, and how to plan for contingencies.
But, in my experience, this rarely happens – at least on a regular basis. This is critical for the whole family, but particularly for the female caregiver.
If she can create a culture of open dialogue, the female caregiver provides the whole family with a forum in which they can raise questions and concerns. She enhances the family’s awareness of the patriarch’s plans, and his vision for how roles and responsibilities will be allocated in any legacy.
After all, women are often more focused on long-term sustainability – and, as such, are perfectly placed to consider the family’s preparedness for unexpected events.
6. Do some female caregivers lack knowledge about their family wealth?
Yes. Which isn’t to say that there is a lack of appetite or capability.
But female caregivers simply lack access to the full inventory of family assets – and often there is no comprehensive inventory.
This means female caregivers don’t know the composition of the family wealth, the value, the location, the ownership structure, formal and informal arrangements with business partners and the contact details of trusted advisers.
This brings two risks: first, that the woman becomes entirely financially dependent on the spouse. And second, that the spouse is the only person who knows what to do in the event of something unexpected – which therefore creates a risk for the family.
7. And what about the lack of a clear vision?
If female caregivers lack a clear understanding of the family wealth plan, this can lead to several issues later on – including:
- Missed opportunities to protect family members and family wealth in contingency scenarios
- A lack of time (and skills) to prepare for a future role as the responsible wealth owner
- Failure to raise concerns, challenge decisions, and stress test the existing plan
Ultimately, this risks building an unbalanced and unsustainable wealth plan.
Whereas, if the female caregiver is able to contribute her perspective and share in the decisions, misunderstandings can be avoided, and relationships strengthened.