Managing family wealth is a complex balancing act that requires the agreement and co-operation of multiple generations over many years, and in most cases women take responsibility. From daily routines to long-term planning, they carry family values and family protection in their heart, and that gives them an undeniable advantage.
Because we believe in women’s skills – and because our family office happens to be managed by women, for women – we decided to explore an important question: Do women make better wealth managers?
In general terms, women are much more adept than men at nurturing relationships. They intuitively understand when relationships require attention and consequently are better equipped to handle the complexities of family needs when shared wealth management is involved.
Perhaps because of the central role they play in their own families, women are also more collaborative by nature: they are more open to asking for advice and to making joint decisions. As a result, women are naturally prepared to pursue agreement at every stage – and from all participants – an exhaustive and time-consuming process that is central to achieving a satisfactory compromise to match every family member’s individual expectations.
As previously discussed, family funds are designed to protect and grow financial reserves to benefit multiple generations. Therefore, the overwhelming goal must be a conservative, long-term approach to fund management. And here again, women have a significant advantage when it comes to managing family wealth.
In our experience, women tend to build financial plans around specific life goals for themselves and their families instead of focusing predominantly on investment performance. Said differently, they are much more inclined to view money as a means to protect and care for their family rather than an end in itself.
As such, women also assign far greater significance to long-term goals such as retirement, education, and legacy planning. From an investment perspective, women are often considerably more risk-averse, hence they tend to be better diversified in their portfolios than men and typically place a higher premium on asset protection and preservation.
These important behavioral tendencies—patience, a goal-based perspective, and risk-aware diversification—comprise the essential foundational elements of any successful long-term investor.
These female characteristics tend toward a conservative investment strategy that is well suited to the needs of family funds. In particular, the ‘Buy and Hold’ approach favored by traditionally-minded female investment managers translates into identifying a promising investment, purchasing and retaining it for the long term, regardless of short term market conditions
This logic-based approach avoids the testosterone-fueled need to take risks and then flee the market when volatility strikes: women tend to take the time to plan carefully and make deliberate decisions in a more far-sighted approach. Women also largely avoid market timing – instead, their instinct is to follow a goal-based plan; buying and selling assets accordingly.
Taking rationality to the next stage, women also tend to concentrate on asset allocation rather than individual stock picking. This ensures a focus on goal-setting and logical asset selection in either stocks, bonds or cash.
A cautious, budget-minded approach also leads women to watch fee levels in order to avoid un-necessary profit erosion. They are less inclined to chase hot stocks or try and beat the market than men and consequently are able to maximize the profitability of their investments on behalf of family funds. After all, beating the index is extremely difficult and the difference between success and failure is a game of marginal gains.
Much of the world’s wealth is controlled by women and this pattern has been part of a steady shift in financial and economic power over recent decades.
Today, more than half of all personal wealth in the U.S. is controlled by women. Women are more educated with many holding undergraduate and advanced degrees, they are more independent-minded and more committed to their careers than ever before.
As a result of this emerging financial empowerment, fewer women accept a passive role in the management of their family’s growing wealth. In fact, increasingly women are getting involved professionally in managing other people’s wealth – which is why we, at Jia, work hard to build a Family office managed by women, for women, with a view to bring back what matters at the center of our industry. What matters in a family office ought to be the family, don’t you think?