Haleh Moddasser is managing partner and senior wealth management advisor of Stearns Financial Group, where she works with clients of all ages and in all stages of life. Haleh also leads Stearns women’s advisory practice where she focuses on issues surrounding women and finance, as well as ESG investing as a tool for creating social change.
Russ Alan Prince: How would you define “women of wealth,” and how does working with this demographic differ from any other?
Haleh Moddasser: I would define “women of wealth” as a woman who has $500,000 or more in her own name. This is a very important segment since these women currently control the majority of the nation’s “wealth”—up to $20 trillion dollars and moving higher. By 2030, the expectation is that women will control two-thirds of the nation’s wealth or close to $30 trillion in assets.
Most of these assets are now in the hands of boomer women either through their own earnings, through inheritance from parents or their deceased husbands. As women, this group of investors generally appear to care more about their long-term financial security than generating alpha. They also care deeply about the greater good and the world their children will inherit.
We recently conducted a study of over 500 HNW women from across the country, assessing their views around money and investing. What we found was very interesting. For example, although the group was equally divided between Democrats and Republicans, we found that 80% of these women had the same views on the top social issues facing our country. Equally stunning, only about 30% of these women (ages 55-75) believe either government or not-for-profits can help solve our country’s social issues. However, more than 60% believe public companies can. This explains why women and millennials are so interested in investing in alignment with their values—they believe the role public companies play in society matters.
Prince: Why do you feel women of wealth are underserved within the financial services industry?
Moddasser: Generally, women feel talked down to, or talked over, when meeting with financial advisors, most of whom are still male. Often, they are made to feel risk averse or even “stupid” when asking questions. Ironically, in our study, we found that only 12% of boomer women think men are more prudent investors than women!
I was particularly shocked by this finding, given most boomer women delegate the role of investment management to their husbands, sons, dads, brothers and ultimately, their male advisors. It’s possible this age group doesn’t feel it’s socially acceptable to oversee their own investments. With that said, 95% of women die alone, ultimately managing all the family finances following either a divorce or the death of a spouse.
I also think many women want to do more with their money than simply generate a return, yet they are unable to get the advice or support they need from the financial services industry. Our study showed 80% of women are interested in investing in alignment with their values, but nearly as many didn’t know how. There are so many ways women can promote their values with their investments. They can opt out of certain industries, opt into others, hold sustainable portfolios, directly invest in thematic investments seeking to generate alternative fuels…the list goes on.
Prince: What are some of the educational barriers that are unique to this group and how do you help dismantle them?
Moddasser: Boomer women, born between 1946 and 1964, clearly came of age in a different era. Particularly in the high-net-worth space, many of these women have never worked. The division of labor was more clearly defined in that era than it is today, say for millennials. In that time, it was the man who dealt primarily with the money and the woman took care of the house and kids. Therefore, at widowhood (or post-divorce), many of these women are completely in the dark when it comes to the family’s finances. More importantly, due to their lack of prior experience, they often feel less confident about their ability to manage their wealth going forward.
As an advisor to many single, boomer women, I always start with the long view—that is the financial plan. Will she be financially secure through to her age 100? Will she be able to leave the legacy she desires, either for her kids or her charities? And, finally, are there social causes she wants to support with her investment dollars? If I can get her comfortable with these issues, then the investing is almost secondary.
Ironically, and this has been proven out over multiple studies, women end up being better investors, earning at least 1% more per year in returns. This is due primarily to their less frequent trading and their ability to focus more on the long term, rather than trying to time the market or buy a stock based on a tip. Women, in my experience, are generally more holistic in their approach to money and finances. Therefore, as advisors, we need to be more holistic too.
Russ Alan Prince is a strategist for family offices and the ultra-wealthy. He has co-authored 70 books in the field, including Making Smart Decisions: How Ultra-Wealthy Families Get Superior Wealth Planning Results.