Why are so few people talking about the massive wealth transfer to women?

Until astonishingly recently in the sweep of human history, women in the United States had little control over their financial assets, and despite the reality that they make fundamental spending decisions, many sectors of our economy continue to cater to men. If McKinsey is to be believed, that is all about to change and in a big way, very soon.

Have a guess at when women in the United States legally had the same decision rights over property as their spouses?

What would you think? The 50’s? 60’s? What if I were to tell you that it wasn’t until the 1980’s that some fundamental cases were settled that would change women’s rights to their own property forever.  

The Equal Credit Opportunity Act was passed in 1974, but its implementation was glacial.  Indeed, a 1977 New York Times article describes a young engaged couple inquiring about obtaining a mortgage, only to be told by the banker they were consulting with that the woman’s income could not be counted in the application, “because she was of child-bearing age.”  At the time there was no prohibition against this.  

It wasn’t until the following year, 1978, that the Pregnancy Discrimination Act was passed, a law that was “so riddled with loopholes that pregnancy discrimination remained rampant” according to Dina Bakst, co-President of a national advocacy group.  

The Supreme Court had ruled in 1973 that employers could no longer post jobs targeted only at one gender or another. Despite those protections, platforms such as Facebook target job ads by gender, with the result that women simply don’t even see ads employers consider more suitable for men, Propublica has found. It’s still happening today.  

This brings us to the 80’s and a famous court case, Kirchberg vs. Feenstra. A Louisiana woman named Joan Feenstra accused her then-husband of molesting their daughter.  Her husband, Harold, hired a lawyer, and to pay for the lawyer, unbeknownst to Joan, put a mortgage on the family home.  She was in the dark for two years, until the (now ex) husband’s lawyer threatened to foreclose to receive payment.  What Harold had done was perfectly legal at the time. Under a doctrine called the “Head and Master” rule, men had the right to dispose of all jointly owned property.  Joan filed a lawsuit, arguing that the law was unconstitutional.  The Supreme Court eventually agreed, issuing a ruling on March 23, 1981 that finally established a women’s equal right to her own property.  

Even academic research in psychology didn’t include female study participants or else treated them as anomalies.  Erik Erikson’s famous 8-stage model of human development was based on studies of white, middle-class males.  Kohlberg developed a theory of moral development based on interviews only with men.  And Perry, in the development of a model of intellectual development did actually interview women but ended up discarding those data points as they didn’t fit neatly with his resultant theory.  As famed psychologist Carol Gilligan later observed, “men are not a representative sample of humans.”

My point is that until very recently, adult women in the United States often had little control over their own wealth, with knock-on effects. The financial advisory business basically sold to men, as did many other sectors, as Caroline Criado Perez documents in her scathing book “Invisible Women: Exposing Data Bias in a World Designed for Men.”  And it is even worse in many other countries.  

This is about to change

Baby Boomer women were born between 1946 and 1964.  The oldest of them would have been 35 and most likely married by the 1981 Kirchberg vs. Feenstra decision. The youngest would have been in their late teens, coming of age when the practical effects of legislation promising financial equality for women were just beginning to become reality.  

A 2020 McKinsey report suggests that this is going to change, and soon.  McKinsey found that “an unprecedented amount of assets will shift into the hands of US women over the next three to five years, representing a $30 trillion opportunity by the end of the decade”  

Roughly 70 percent of US affluent-household investable assets are currently in the hands of baby boomers, they conclude.   And that means that demographics can tell us a lot about who will control those funds in the future.  Two-thirds of baby-boomer assets are currently in households with both a man and a woman present, with financial decisions typically being made by the man in the relationship.  Women tend to be younger than the men they marry, and they tend to live about 6 years longer.  When the men pass on, control of those assets is ceded to their partners.  What that means, McKinsey argues, is that by 2030, American women are expected to control much of the $30 trillion in financial assets that the baby boomers possess, “a potential wealth transfer of such magnitude that it approaches the annual GDP of the United States,” as they put it.  

So what would a world in which women genuinely control the majority of financial resources look like?  How would their buying, investment and political choices be different than those being made today?  One can speculate.  

Women are likely to use their wealth to see changes they want in the world

A report by UBS in which the results of thousands of interviews were summarized, women since the pandemic have increased their emphasis on purpose-related activities, including contributing to philanthropic organizations that align with their values and doing more volunteering.  Women are also much more likely to use their wealth to support community associations they care about, invest in social goods and have an interest in seeing the impact their resources can have.  

Those seeking to sell to women are likely to be have to take into account more variables then market metrics and to be able to tell a good story about what the money is going to accomplish.  

Women’s health issues may finally begin to get the attention they deserve

Just as the psychologists I referenced above found it easier to simply drop women out of their samples, in medical field after medical field, issues specific to women were simply ignored.  The most common reason given?  Because women (especially of child-bearing age) experience hormonal changes, research is harder and aren’t men the standard human for care anyway?  

As a researcher with the RAND corporation points out, this is not just unfair, it’s bad science and a tremendous missed opportunity.  And as more women attend medical school and become doctors, this, coupled with the demands of increasingly affluent older women who are likely to be interested in medicine for themselves but also in their communities, could create major change.  And of course the battle over reproductive rights isn’t going away, with Ellevest founder Sallie Krawchek noting that abortion bans and other reproductive rights restrictions cost the economy $105 billion.   

The financial advisory business is likely to go through a sea change

Younger women, as well as older ones, are beginning to get a lot more savvy about managing their finances and they want different services than their male counterparts.  They’re looking for trust and personal relationships with their advisors.  They care a lot more about what money will do for them than beating an index. They are often less risk tolerant than men and will trade off the chance of a windfall for safety.  Ironically, in a landmark study, researchers found that because men tend to be overconfident about their investing acumen, they actually have less attractive returns than women because they trade more frequently while women tend to be more patient with market ups and downs.  

As with any inflection point, opportunities are there if we prepare

Bringing on more female employees, creating gender balance in research studies, recognizing that women care about relationships and as Avivah Wittenberg Cox says, becoming “gender bilingual” are all major opportunities.  But organizations can’t just continue the status quo to capture them.  

Indeed, we’re seeing many examples of how younger women are starting to take control of their financial lives, but in a way that differs greatly from how men do it.  Tori Dunlap is an example.  Determined to save $100,000 before she turned 25, she became a popular role model for young women determined to fight financial inequality and take control of their finances.  

And, as she says, the point is not to talk about money.  It’s about what the money can do for you – whether that is travel, causes you support, and the ability to be independent.  

We’ve sure come a long way from Kirchberg vs. Feenstra.