Why women will lead the intergenerational wealth transfer

One of the understated themes from the Federal Government's 2023 Intergenerational Report was that, over the past 40 years, women have transformed Australia's economy and workforce.

In 2023 we saw the workforce participation rate for women hit record highs, and the report goes on to say this structural shift in our nation has been a major driver for prosperity, higher-paid jobs, and access to a wider range of global goods and services.

In October 2023, the Women's Economic Equality Taskforce released its final report - a 10-year plan to "unleash the full capacity and contribution of women to the Australian economy".

That plan includes unlocking $128 billion in GDP annually by "removing the persistent and pervasive barriers" for women to contribute to Australia's economy.

Putting a price tag on what the taskforce considers will be a fundamental pillar of our society over the next decade is bold.

Extend this out over the next 20 years and women will unlock $2.5 trillion in GDP and see 9.2 million jobs created, using the Taskforce report's figures.

Combine this with the Productivity Commission's 2021 estimate that younger generations will inherit $3.5 trillion in assets by 2050 and it sets the scene for how women are well placed to lead, or at least be on equal footing, when it comes to this intergenerational transfer of wealth.

We must take action

There are two gaps where I believe women can really take the lead in wealth generation over the next five to 10 years. They are also two pillars of Australia's wealth ecosystem - shares and superannuation.

According to Insignia Financial's 2023 Financial Freedom research, which surveyed 2511 Australians, only 16% of women were likely to invest in shares to strengthen their financial position over the long term. Similarly, that's a poor reflection on the financial services industry's more recent attempts to empower women and their financial futures.

At the recent Australian Financial Review Super and Wealth Summit, the industry identified two areas where it must do better for Australians - communication and advice.

As an industry we need to be communicating to superannuation members much earlier about the action they are taking (or, more importantly, not taking) to build their retirement nest egg.

Advice can be affordable and beneficial to many, but it's clear the perception of wealth management only being for the wealthy remains.

All Australians need to have access to some form of advice from budgeting to retirement planning. Rather than focusing on the hurdles, we need to communicate to women (and men) the scope and modes of advice available.

The good news is there are positive shifts already occurring when it comes to women's wealth. The Financial Freedom research showed women's biggest aspiration is to be financially independent.

More than half (57%) are cutting back spending on non-essential items, 56% have a budget, and 55% shop around for the best deals.

These efforts, alongside women's increased investment in superannuation and shares, will not solely drive the wealth transfer.

But women's increasing workforce participation, easier access to investment products and other goods and services as well as targeted government policy (e.g. expanded Paid Parental Leave, Child Care Subsidy) will all work in parallel to make a difference.

With the right policy, product, and advice, we can make wealth-generation strategies equally accessible to all genders and truly unlock the barriers for more women to be financially independent.

Women of influence and growing the wealth circle        

From Taylor Swift cutting out the middleman to premiere her new film to Gabrielle Judge spurring the Gen Z 'lazy girl job' phenomenon, women are sharing their journeys as they forge their own path.

Over the past decade, Australia has seen an increase in women-led finance communities where members follow respected financial commentators, advisers, or money coaches to better understand and practice the principles of wealth generation.

We know that women place greater value in these communities than men, and several studies repeatedly show that people tend to lean on a trusted circle of influence (think family and friends) when it comes to financial decision-making.

The Financial Freedom research found that 52% of women aspire to have a trusted group of friends and family, compared with 36% for men.

But who should be in your trusted group and when is the right time to add or cut to the group? It comes down to regularly assessing who is providing value and whether they're genuinely interested and aligned to your financial goals.

It doesn't mean excluding people from your friendship group, rather who can support you in your journey to financial independence without breaking the bank.

And while this trusted circle will never constitute proper financial advice, they will be there to provide independent views and emotional support. Women's trusted circles and networks will continue to be crucial as their financial knowledge and wealth grows together.

Young women already paving the way

It may astound you that the first-born Millennials (Gen Y) are now 43 years of age, and the eldest of Gen Z are 27. Like many Australians, our younger generations are greatly exposed to the issues of housing affordability, rental and cost of living crises, increasing interest rates and inflation.

Unfortunately, gender inequality still holds women back in the workplace; and they still do the lion's share of unpaid work and caring responsibilities (e.g. children, aged and disability care etc.).

The Intergenerational Report and the Taskforce report point out those barriers too, acknowledging it hasn't been, and will not always be, a rosy path to unlocking women's wealth.

However, there is comfort in knowing Gen Y and Gen Z are taking action to educate themselves on a better financial future, and women are leading this generational shift.

Of the 1130 Gen Y and Gen Z Australians surveyed for the Financial Freedom Report, 79% planned to increase their financial knowledge in the next 12 months - with women more likely than men to do the research to improve that knowledge and enhance their financial state.

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