For boomer women, personal finance has come a long way. Fifty years ago, if a woman wanted a credit card or a loan, she had to have a man cosign. That didn’t change until 1974 and the passage of the Equal Credit Opportunity Act. The aging boomer generation controls trillions in wealth. That generation has been a mainstay for banks, but one demographic within the boomers might be worth a closer look: women.Baby boomer women, who tend to outlive their husbands, are in line to receive $40T in wealth transfers over the coming years. That will leave widowed boomer women increasingly in control of vast sums of family wealth. One thing is clear: women who suddenly find themselves in control of family wealth aren’t shy about asserting their new authority. According to an often-cited study, 70% of women change financial advisors after a spouse dies. That situation means community financial institutions (CFIs) will have an opportunity to offer tailored banking and advisory solutions to them as they look for help in managing all that money.It is not only the boomer women who need to be considered. These women will also be preparing to pass on wealth to their heirs, which requires still more financial services and advice. Therein lies another significant opportunity for CFIs. Yet, to capitalize on the shifting nature of financial relationships of these boomer women requires not just an understanding of their needs but the ability to capably meet those needs. Meeting Boomer Women’s Financial NeedsThere are several factors that CFIs should consider when trying to engage with boomer women who may be gaining new or expanded control of family wealth. Here are some tips for understanding boomer women’s financial service needs:
- Providing wealth management services. CFIs have been expanding into wealth advisory, but as of 2023, only about one-third offered this service. In a previous posting, we discussed two main models for wealth management: in-house or outsourced. If you choose to provide wealth management, you’ll want your services to be at least comparable to what other banks and financial firms offer. That means not just digital solutions, but real advisors that customers can meet with.
- Tailoring services to women. The vast majority of wealth advisors in this country are men, so hiring women wealth advisors might be an advantage. Even more important is to have advisors who understand the subtle differences in how women approach wealth management. According to McKinsey, women tend to be less risk tolerant and more focused on life goals. They also tend to have lower confidence in their own investment abilities than men and seek a personal relationship with their advisor. That should be an advantage for CFIs, which are known for their banking relationship abilities. A number of banks have rolled out initiatives aimed at women, including CNB Bank, which started a division dedicated to serving women called Impressia Bank.
- Catering to seniors. The boomer women are, of course, mostly senior citizens, so it is important to understand how seniors may view investment and money management. For starters, there is a general aversion to risk and a desire for adequate cash flow to meet needs, including health care. Sharp portfolio losses are particularly unnerving to this demographic, and there is the need for strong estate planning.
- Understanding widowhood. Many of the boomer women who are inheriting wealth will do so because of the death of a spouse. One reason the rate of switching advisors is so high may be because advisors don’t understand the trauma and confusion that may swirl around the death of a spouse and what that means to survivors’ immediate needs regarding finances. Kathleen Rehl, who lectures on the subject, says advisors need to understand grief. At first, a widow just needs sufficient cash flow and to get a grasp of the assets she controls. Advisors who try to immediately set out goals and strategies can seem pushy and frustrate the customer. The ability to listen is essential.
- Offering a broad menu of services. Ultimately, these boomer women need a variety of services. The more you offer, the more opportunities for cross-selling you have. In addition to wealth management, there is the need for trust services, estate planning and management, and basic banking services.
- Promoting your expertise. Once you have your bank situated to work with these boomer widows, the next step is reaching out to them. Tailored marketing campaigns can be effective. For example, TD Bank maintains a web page called Banking Advice for Seniors that includes a range of services and tips on banking and finance, including a click-thru connection for investment advice. Other opportunities include sponsoring informational sessions for seniors and women that offer coaching on managing money and wealth.
Engaging with boomer women to provide wealth management services can result in new and profitable relationships and open the door to other banking services. Similarly, existing bank relationships can be expanded to include wealth advisory. Establishing a wealth management relationship with a boomer woman can lead to extended banking and financial relationships with her heirs, who may be in line to inherit wealth.Indeed, a huge wealth transfer is already underway from boomers to heirs — mostly millennials and Gen Xers — who stand to inherit $72.6T by 2045. Engaging with boomer women would be a good entrée to that next generation. Boomer women are in line for a huge wealth transfer, which gives them much greater control of considerable financial wealth. CFIs that offer the right products and are able to market their services to meet boomer women’s unique financial goals can win new and important customer relationships that can then be passed to the next generation.
