How High-Net-Worth Investors are Approaching Capital Allocation

0:00They told us to expect change. They warned us about the transition. But honestly, they forgot the best part. This is the chapter where we finally focus on us. LifeMD delivers expert menopause and midlife care right from your home. From hormone health to holistic wellness, LifeMD helps you feel your best for the best years of your life. LifeMD, it's just getting good. Visit LifeMD.com slash goodlife. So there's a lot of noise about AI, but time's too tight for more promises. So let's talk about results. At IBM, we work with our employees to integrate technology right into the systems they need.

0:40Now, a global workforce of 300 ,000 can use AI to fill their HR questions, resolving 94 % of common questions. Not noise. Proof of how we can help companies get smarter by putting AI where it actually pays off, deep in the work that moves the business. Let's create smarter business. IBM. For many men, mental health challenges aren't recognized until they've already taken a toll. Work pressure, financial stress, changing relationships, and traditional expectations around masculinity can quietly wear men down, often without clear warning signs. In season three of The Visibility Gap, Dr. Guy Winch and his guests explore how these pressures show up, how to spot them earlier, and how men can access meaningful support.

1:23Listen to the new season of The Visibility Gap, a podcast presented by Cigna Healthcare.

1:32Bloomberg Audio Studios, podcasts, radio, news.

1:38Kathleen Paylor:You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. So the financial and retirement services company in power, they have put this out. They know that by 2030, women in the United States are expected to control$34 trillion in financial assets. That's up from$7.3 trillion just one decade ago. This represents a major component of the great wealth transfer, a$84 trillion shift projected to occur between generations by 2045. It's pretty tremendous. And so in this week's Women, Money, and Power, we're exploring how this shift is creating huge implications for how vast sums are invested, philanthropy, and the way that wealth is passed on to the next generation.

2:23Joining us to talk about it is Kathleen Paylor. She's Vice President of Impact Investing and Philanthropy at RSF, Regenerative Social Finance, and she joins us from San Francisco. Kathleen, so good to have you here. We want to drill down into this great wealth transfer, if you will, to women specifically. But when we think about wealth transfer just broadly and what to do with your money, what someone should do with their inheritance or otherwise, how does the macro for you factor in, whether it's the current geopolitical environment, whether it's we're talking AI, whether we're talking about private credit concerns and more.

2:59Let's just start there on the macro level. Yeah, Carol, Tim, great to be here. I think we've seen in this course of a few days, us go from geopolitical shock to global energy supply shock. And as we all know, public markets react when headlines, even when those headlines are on sub stack and utter fantasy, as we saw a couple of weeks ago with Citrini. And one of the things that we're really hearing in the impact investing space, particularly in the deep impact investing space, like at RSF, is that investors increasingly want more assets that are less correlated with public markets so that they don't have the kind of vulnerabilities and volatility that we're seeing right now.

3:46And really to be invested in real assets with long-term value like food systems, regenerative agriculture, social enterprises that aren't reacting to minute-by-minute geopolitical headlines.

3:59Kathleen Paylor:How do those assets manifest in, not in asset, I guess in asset classes, like are those in the private markets? Are they in the form of venture capital or venture debt investing? How do you invest in those assets that you speak of? Yes and yes. I mean, impact investing in the past 10, 15 years has grown enormously. So really, investors can invest across the spectrum from capital preservation to deep impact fixed income, which is where RSF plays, to venture, to venture debt, to venture capital, private credit. But it's not the private credit that we're seeing, you know, the volatility in right now.

4:40We're investing in the private credit side. You can be private credit and fixed income. You can be private credit and much more venture. But it's really investing in real assets that are providing long-term regenerative solutions to really intractable problems that we're facing right now and aren't just about what is the money I can make from this. I mean, that is, you know, we can look at the transfer that's happening, which is really more like$124 trillion if you look over the next 20 or something years. And a lot of that going not just to women, but to women in NextGen. And they are really asking more questions.

5:20They are not just asking how much money can I make off of this deal, but they're asking what is this money doing? Where are my resources going? And what are the implications of that for people and planet, not just for my portfolio? And I am curious, Kathleen, in terms of how women and next generation folks are thinking about wealth management differently, you know, as they inherit, as the wealth moves from a different generation and to women specifically, especially when you think about some of the very wealthy women out there who have made some major movements in a very different way when it comes to philanthropy.

6:00And I think about Mackenzie.

6:03Kathleen Paylor:Bezos. Mackenzie Scott, excuse me. Yeah, I was going to say, I was trying to remember, forgive me. But I also think Melinda Gates continuing in terms of her work and how she's approaching. And many say it's often very different from what we've seen in the past. Very different, very different. And you don't see it, you know anywhere more clearly than with Mackenzie Scott and folks like Melinda Gates as well Melinda French Gates I mean they are increasingly looking for and not just looking for but expect investments to be purpose-driven intentional uh responsive to both social and environmental needs and again not just saying like what am I going to get out of this but what is my my money doing in the world I was talking a couple of weeks ago with an ultra high net worth woman and she referenced this book by parker palmer that is was called let my life let your life speak and she said what if my money could speak what would it say about what kind of person i am and she said i can tell you right now i wouldn't like it and that's why i'm here because i want my money to do something different in the world and they're looking at much longer term um much more intentional you know some Some women, a lot of this is happening at divorce or death, where they haven't had agency before.

7:20Yeah. It's been, you know, sort of set it and forget it, or my partner, my spouse is taking care of this. And now when it's in my domain, what do I want to do with it? What do I want it to say? What do I want it to do? What do I want my inheritance that I provide to the rest of the world to be? What do I want my legacy to be? And often we think about legacy just with philanthropy. But really now people are starting to think about what is the legacy period of what holistically from philanthropy all the way to investing? What is my legacy? Hey, one last question. Women in particular are asking that.

7:55Kathleen, one last question, because I do feel like we've become a more informed society, yet we still talk about financial literacy at all ages. Women coming in that you are seeing and working just quickly. Do they have to kind of do a little bit of homework and do a little bit of work to understand the investment environment? Or are they coming in saying, I kind of got it, or I kind of have an idea of what I need to do? You know, and it's not just women. I think a lot of folks said it and forget it. But specifically around women, they're coming in with a lot of clarity about what's important.

8:26I want my money to do good things. I want my money to have a positive impact. And I don't know how to do it. So help me do that. And that's where advisors are coming in and advisors who can talk with their clients, particularly women, about impact can help them navigate the impact investing landscape are in a fantastic position right now. And that's what we do a lot with folks who come to us. What what is the next step? What is the first step? What is what is it? What does a capital stack look like on the impact side? Do I have to take a haircut? No is the answer. You do not. Absolutely do not.

9:02But there's a fair amount of handholding and it's not even handholding. That's not really the right way to put it, but it's walking side by side on a journey with folks. Anyone who is entering this space now knows what they want their money to do in terms of the impact that they want it to have, that they want it to be positive, but they don't know how to get there. And that's the journey that we're taking. Kathleen, let's continue this journey and hopefully we can get you back real soon. Kathleen Paylor, really appreciate it. Vice President of Impact Investing and Philanthropy at Regenerative Social Finance, joining us from San Francisco.

9:56on your days off. And I'm Lisa Mateo. Watch and listen to Bloomberg this weekend for thoughtful, enlightening conversations about business, lifestyle, people, and culture. On Saturday mornings, we put the past week's events into context, examining what happened in the markets and the world. Then on Sundays, we speak with journalists, columnists, and key political figures to prepare you for the week ahead. Join us as soon as you wake up and bring us with you wherever your weekend plans take you. Watch us on Bloomberg Television, listen on Bloomberg Radio, stream the show live on the Bloomberg Business app, or listen to the podcast.

10:29That's Bloomberg This Weekend, Saturdays and Sundays, starting at 7 a.m. Eastern. Make us part of your weekend routine on Bloomberg Television, radio, and wherever you get your podcasts.