On International Women’s Day last week, I paused to consider why we celebrate and recognise a day like this. It is symbolic to recognise and celebrate the achievements of women at large. It is a day to remind us of where we have been, how far we have come and what else we need to do. This is an opportunity to reflect on our own lives to remind us of what’s important to us, be it gender diversity, education for girls, women empowerment, and more reasons.
In Hong Kong and Singapore, gender inequality is not as prevalent as in other parts of the world, especially in schools and workplaces. We are fortunate. In Singapore, we are supported by favourable government policies and a meritocratic society.
International Women’s Day is a “call-for-action” reminder for us to focus on self-care and own our worth — as a daughter, a sister, a mother, and a wife. The key is owning our financial confidence and legacy — which takes care of our future selves and loved ones.
Why I say the financial legacy of a woman is important boils down to two reasons — first, women tend to outlive their male counterparts. Second, women tend to value wealth mainly as a security source instead of an opportunity.
Women have very different wealth journeys than men. Mindsets differ, and priorities differ. In the most recent Women and Investing report by UBS, published on March 5, explains a few reasons for this.
“Legacy” to women often means more than passing wealth down to the next generation. It also means being capable of positively impacting the lives of others. Women invest with a purpose: 87% of women we spoke to in the reported survey agree that money is a tool that can be used to help fulfil their purpose.
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Women tend to have greater confidence in investing their money when their values are aligned with their investments and when they see a social benefit. Female investors appear 13% more inclined than men to invest based on their values. The UBS Investor Sentiment survey highlights that more women (71%) consider sustainable considerations when investing than men (58%).
If women invested as much as men, there could be more than US$3.22 trillion ($4.3 trillion) of additional capital to invest globally, with over US$1.87 trillion flowing into more sustainable and impactful investing. A catalyst for this was the pandemic, where we found more women wanting to give to philanthropy — especially millennial women, with one out of two wanting to make giving a bigger priority.
Once women invest, they also tend to perform better than men. Why? Because women are more likely to follow a plan and less likely to try to time the market. They can hold themselves back to think and rethink before taking action. In our UBS Women and Investing 2022 report, the data suggest that during major drawdown events, women are around 25% less likely to withdraw their investments than men.
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Women look for advice and are often happy to pay for an advisor. The UBS Investor Sentiment survey highlighted that women (58%) value the need for expert advice more highly than men (43%). Women identified honesty, knowledge, and transparency as the top values they sought in advisors and financial institutions.
Plan your life with 3Ls: Liquidity, longevity, legacy
Women typically outlive their male counterparts by about five years on average, so their wealth-planning needs must often span a longer time horizon. Given that they typically also inherit wealth from their partner. It is, therefore, even more important for them to carefully plan the succession to their wealth.
However, 56% of women today are undecided about how much wealth they can pass on to the next generation, highlighting the importance of planning. While developing the report, we spoke to women who intend to leave an inheritance, but 55% do not have any plans compared to 41% of men.
Sometimes, women find it harder to discuss money matters with their families openly. More women than men claim that having a professional to facilitate discussions, such as a client advisor or wealth planner, would help ease discussions around inheritance plans.
One of UBS’s purposes is to empower women in their financial confidence. We have met many women, now our clients, who simply started with a conversation on what they wanted but did not know where to begin. We offered them our advice and solutions in a purpose-driven framework called our 3Ls — liquidity, longevity, and legacy. Many of our female clients today have shared how useful this approach is because women tend to define investment strategies that help them clearly understand where their money is and why, which builds their confidence.
The liquidity strategy aims to provide enough capital to give an investor the flexibility for greater risk-return potential in other portfolios. The strategy helps manage cash flow for near-term spending needs and can help women investors ensure that budgeting concerns do not affect investment decisions.
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The longevity strategy is focused on helping investors meet their goals over their lifetime. It aims to ensure they’re invested and have a high probability of meeting those objectives. This helps women connect their investment portfolios to their objectives, particularly addressing their concerns around retirement planning.
The legacy strategy looks at wealth transfer over the generations as well as having a positive impact on society. These goals tend to be particularly important for women. Investments are positioned as solutions to needs and specific problems solved within each investor’s circumstances using this framework. Such an approach should provide the confidence and clarity women seek to help them gain control.
I encourage all women to consider self-care now and in the future. Planning a future is a journey, and remember, every step taken towards securing your financial future is a step towards a fulfilling life. So, take charge and own your worth. Your future self and generations will thank you for it!
Patricia Quek is head, UBS Global Wealth Management Singapore