SUMMARY
Financial wellness is vital to human wellbeing. Our white paper explores its significance for ultra-high-net-worth individuals, and particularly the women who are leading a revolution in wealth globally.
Wealth ownership is undergoing a worldwide transformation. For most of history, men have owned and controlled the lion’s share of wealth.
Now, though, that is changing. Women are generating and overseeing wealth at unprecedented rates. Flourishing female entrepreneurship, successful corporate careers, and inheritance are among the factors at work here. For example, we believe women may receive a substantial majority of the $100 trillion wealth transfer from the baby boom generation that is currently underway.1
While potentially offering many benefits, this revolution also creates challenges for the new owners of wealth. These include pursuing and sustaining financial wellness.
Our new paper addresses this challenge from the perspective of ultra-high-net-worth individuals and particularly for members of our Women in Wealth community.
What is financial wellness?
Financial wellness is an evidence-based understanding that present and future financial needs can be met. Of course, everyone has their own set of needs.
For ultra-high-net-worth individuals, these may typically include:
- Maintaining an accustomed standard of living
- Putting in place health, life and disability insurance
- Meeting education costs for successor generations
- Having the wherewithal to deal with large, unforeseen expenses
- Supporting cherished philanthropic causes
- Funding passions and interests that fuel self-fulfillment
- Securing the ability to make gifts and transfer wealth to beneficiaries
There is often an assumption that ultra-high-net-worth individuals must be financially well by default, given the scale of their income and assets.
In fact, members of this community can succumb to financial unwellness just like anyone else. Financial unwellness is a state of anxiety that stems from the knowledge that personal finances are neglected and/or in poor shape.
The reasons leading to financial unwellness are typically the same for everyone, including excessive spending, poor investment habits, and overborrowing. Inadequate wealth planning and failure to prepare successors for their responsibilities are also factors.
Why financial wellness for dynamic women?
Financial wellness is vital. Those who are financially well are likelier to feel happier and fulfilled in other dimensions, such as their family life, social activities and professional endeavors.
The principles and behaviors that contribute to financial wellness are applicable to all.
Nevertheless, we have focused on women in this paper owing to the rapid rise of female wealth creation and ownership. Also, the financial industry historically focused its attention on men, which has created deficits in levels of confidence.
Overall, we believe a greater focus on financial wellness is needed in societies everywhere for all genders.
What determines financial wellness?
In this paper, we propose four pillars of financial wellness for the ultra-high-net-worth community.
They are developing financial literacy, building a core investment portfolio, strategic borrowing, and comprehensive wealth and legacy planning.
We explore the mindset and behaviors associated with these pillars, as well as some of the ways that our organization can assist.
Importantly, we argue that financial wellness cannot simply be outsourced. Like good physical health, financial wellness is intensely personal, albeit with professionals providing support and guidance.
We conclude this paper with some questions that each of us should ask ourselves regularly.
If you would like to discuss your financial wellness, we would be delighted to hear from you.
