Who are the Canadian women set to control $4 trillion by 2028?

We tend to frame Canadian women’s rapidly growing wealth as a singular experience within the intergenerational wealth transfer. Sarah Bull notes that a one-note view of this massive demographic trend may not be so helpful for advisors or their female clients. The Managing Partner & Portfolio Manager at KJ Harrison Investors highlights the 2019 CIBC study that predicts around $4 trillion will be controlled by Canadian women by 2028. She notes that this wealth accumulation will come in myriad forms. Understanding that nuance, in her view, is key to advisors’ success in this moment.

Bull offered a survey of how women are accumulating wealth now, where that wealth is coming from, and who will now control it. She offered examples from her own work of how advisors can help women in different situations, be they self-made or the recipients of a major inheritance from a spouse, parent, or grandparent.

“Women is a broad term. So if you think about it as 18 plus, and you think about the various cohorts that there will be in a transfer of wealth, you need to consider how that transfer of wealth is happening,” Bull says. “It could be the death of a spouse, divorce, the sale of businesses, inheritance. It’s a matter of understanding how it happens.”

Perhaps the primary driver of women’s place in the wealth transfer is simple longevity. Women live longer than men and are therefore more likely to inherit the wealth held by their husbands. That is a more established trend through past generations, though, and Bull notes that now we are also seeing a large cohort of women entrepreneurs and high income earners impact the Canadian wealth space. More women earn, more women manage their own money, and more women are preparing to leave their earned wealth to the next generations of their families. Advisors, Bull notes, need to be aware of all these dynamics.

Gaining and retaining that awareness, Bull notes, comes from a combination of macro forces and micro stories. She believes advisors need to stay aware of these core demographic trends while listening closely to the unique circumstances their client finds themselves in. They need to prepare themselves and their clients for the inheritance of assets that aren’t always as simple as cash.

In the case of divorces or spousal death, there might be private shares, company shares, or RRSP assets that end up going to women who might not have expected these assets. Liquidating them might come with significant tax consequences, especially if they were long-held and carry very low adjusted cost bases. Life insurance assets, conversely, can be extremely tax efficient. In the case of a spouse’s death, real estate assets can roll over without incurring a tax bill either. In cases where she is preparing a family for spousal inheritance, Bull will often recommend holding certain assets jointly to better manage tax consequences.

Talking through a few hypotheticals, Bull first outlined how she might approach a female client who had worked in the home, not managed family money, and who has just lost her husband. Bull explains that her work in preparing that woman would have begun before her husband passed. No matter that woman’s initial level of financial literacy, comfort, or interest, Bull says that as her advisor she should encourage this client to get involved to the extent that she can. In doing so, she can help close that confidence gap and root her understanding of finance in her understanding of the family’s overall security and wellbeing.

In creating the space to encourage women like this hypothetical client to develop greater financial literacy, Bull notes one dynamic in the industry that she believes can discourage people with less financial literacy or overall interest. While not exclusively a male dynamic, she notes that many male advisors and clients can end up bonding over conversations about central bank decisions or semiconductor stocks or other pieces of “CFA gobbledygook.” For clients who are baseline less interested in macro stories and more concerned about family wellbeing, those topics can prove alienating. Bull doesn’t advocate for expunging those macro topics from the conversation, but she notes that some cognizance of who these conversations can exclude may be helpful in broadening the reach of financial advice.

In the case of a client who has made her own money and kept finances separate from her husband, only to inherit his wealth and his advisor, Bull notes that visibility and preparedness are key for an advisor in her position. If those assets are well managed, she notes that it’s often in the client’s best interests to keep them where they are with that advisor, as moving those assets could come with some significant tax implications. There are moments of temptation in this wealth transfer when an advisor might see the chance to bring on new assets quickly, but Bull cautions against that and notes that a slower approach focused on the client’s best interest can be more effective.

While these are just a few of the myriad forms that women’s wealth will take over the coming years, Bull sees value in discussing them and other topics with other advisors, clients, and women in general. She leads her own seminars and salons for women to discuss finance at different levels encouraging more young women to become advisors, more wealthy women to work with advisors they trust, and more advisors and advisory firms to take a view of the client relationship that extends to the whole family.

“I think the difference comes from ensuring that the advisors are working with the family,” Bull says. “When they meet with the family is the relationship very transactional in nature, or is it truly advice driven? And if it's advice driven, then do they have a sense of what the mission and vision of the family is and what keeps them up at night? If you approach it that way then, inevitably, you're helping with this giant wealth transfer, because you're including people in conversations that are interesting to them.”