Women and wealth: philanthropy, risk and choosing trustees

While the pandemic and economic headwinds are likely to slow women’s wealth, it’s expected to be a bump in the road, rather than lead to any significant drop in the number of wealthy women or slow the growth rate of women (U)HNWI’s in the long-term.

Philanthropy

Increasingly, philanthropy is a key consideration for any UHNWI. Exactly how much wealthy individuals give to charity is unknown, but some estimates suggest that as much as 10% of personal wealth is donated over the lifetime of a (U)HNWI.

Wealthy men and women both like to give to various causes and may well set up philanthropic entities like foundations to leave significant amounts to causes close to their hearts. For many families or couples, decisions about which causes to support are likely made together. Where an individual controls wealth, men and women tend to have different attitudes and support different causes. Women can tend to show an affinity to give to arts and culture, women’s education and equality issues, and may well choose to volunteer for leadership positions with charities.

Choosing a trustee

For women, a positive relationship with their appointed trustee is essential, and they are likely to spend some time thinking about who they appoint and weighing options if they are structuring a trust. A corporate trustee is often chosen based on shared values and good feeling, as much as professionalism and experience. Women are more likely to consider more trustees as part of the shortlisting process before choosing a corporate trustee.

Any shortlisted trustee’s attention to detail, professional approach and commitment to building a long-term relationship with a client is usually considered. ZEDRA aims to create a space in which clients can disclose as little or as much of their motivations as they want. When we have an understanding of what is driving a client’s experiences and wishes, we are better positioned to be able to provide the best service in a way that resounds with them, which is particularly important for women. Our ability to listen and taking the time to understand desires are often a key part of our female clients’ decision-making process.

Risk

We see some broad trends when it comes to the differences between men and women and their approach to wealth. For women who have built up a company, securing the legacy of their firm can be a crucial priority. It can mean that they start planning structures for succession earlier, for example.

Women can be more risk-averse, but it isn’t a tendency that should only be thought of in financial terms, however. Women may focus on different risks than male counterparts or choose to tackle them differently.

Family harmony and protecting beneficiaries is key to most clients regardless of whether they are men or women, but women approach the topic differently. Women might choose to place specific limits for beneficiaries, which might be asset protection provisions, considerations of beneficiary maturity or other factors. Men may approach this differently, by organising for mentorships or more education around financial planning for example. Both approaches can be very successful and are likely to have a similar outcome but having a trustee in place who understands and notices subtleties such as these is always beneficial for our clients.