Validus Wealth

Women are no longer standing on the sidelines, letting their family members take all the investment decisions. And, they are showing that they are a very different kind of investor.

Women are slowly getting ‘azadi’ from the patriarchal style of investing

YourStory, 10th September, 2021, Zohra Hajiani

Women are no longer standing on the sidelines, letting their family members take all the investment decisions. And, they are showing that they are a very different kind of investor.

Wealth Management is also getting digitised like other businesses. Fintechs are changing the global investment landscape completely as data analytics, AI/ML, and AR/VR tools are getting significantly deployed over the last couple of years.

This can be experienced from the unique gamification seen in investing, insuring, and lending platforms, and the steady rise in fully automated or robo-advisory models. Domestically too we are seeing rapid growth of such technology driven platforms driven by new generation individual investors – both retail and HNIs.

It goes without saying that women are equal contributors in this evolving trend as they constitute almost 50 percent of India’s population.

Women’s participation in the labour force has also been on the rise, driven by rising awareness around education. This has created opportunities for women to earn for themselves and become financially independent.

But women generally face different challenges than their male counterparts that tend to define their investing mindset. Women go through multiple events in their life that impact their professional career and progress — change in living location due to marriage, lack of safe working opportunities, uncertainty around acceptance of a working woman by in-laws, birth of a child, etc.

The unpredictability on the personal / professional life front leads to preference towards goal-based investing which has relatively better-defined outcomes.

Rise in women HNIs

As women’s life expectancy is longer than men, they also tend to invest in guaranteed savings, annuities, and traditional insurance products to address the longevity risk. But many young women are also taking on the entrepreneurship mantle, starting up on their own and raising risk capital.

As this cohort of women are more financially literate, they are also investing in PE/VC funds over time. Few of them are also turning angel investors to provide seed capital to the up-and-coming risk-takers. This has led to a steep rise in women HNIs.

New economic opportunities and growth of sunrise sectors will lead to wealth creation and higher number of HNIs in coming years.

Investing in ESG funds

Women tend to be more mindful about the influence of their investing decisions on the society and environment at large. Hence, Socially Responsible Investing/Environmental Social Growth or impact investing is at the core of their discussions with wealth advisors. This trend has picked up more speed in the last year due to the pandemic-led realisation around climate change and protection of natural habitats.

One of our UHNI Family Office client’s 25-year-old daughter, who’s started working after completing her post-grad, has started to look after her own investments, initially seeded by the father.

Now, also earning a handsome salary, she is keen to invest all her monthly income and says this pandemic has made her conscious of her needs vs wants.

Also, as her wealth manager, she wants us to invest the money only in companies that are environment-friendly and not creating any wastage. This is music to my ears seeing this millennial young lady not only wants to do need-based buying but also wants her funds to be invested responsibly.

Over the decades, the only exception I am used to hearing is to avoid companies who are into alcohol, gambling, non-vegetarian products, exceptions that emerged from their religious ethos.

Changing preferences of investments by women

We are witnessing a steady growth of women keen to have financial literacy that were perceived to be complex. To add to above, we are also seeing the individuals keen to keep their own wealth run as an individual while it folds into a big family portfolio.

They like it being kept as a separate entity and not fungible just to ensure they have their own say in their own funds and also the style with which they would like it to be managed, which is not necessary in line with other family members.

While a bunch of women investors we see are cautious and want their funds to be invested as ‘Safety Capital’, we do see incremental discussion and change in asset allocation from debt to equity as asset class.

There is more discussion on many women entrepreneurs who are in unlisted spaces, running big companies and how to participate in that private market to grow the portfolio.

For example, our women investors know Nykaa and being a user, seeing it run by a dynamic and successful Professional, they want to participate. They feel confident being an end user themselves.

Traditionally, women would urge me to allocate funds to physical gold, seeing their millennial kids lacking interest in jewellery. but now, they are open to buy Gold as an ETF just like any other debt or equity investments.

There is a shift in the thought process, approach, own voice, and understanding, which was almost non-existential two decades back when I started.

I would meet the women of the family only for their signatures and they would just sign the papers without even knowing what they were signing. Having seen three generations of women, I think this transition is eminent.

Here’s one more example of diversity and incremental independence ….After almost a year, I step into the salon, the assistant to my hairstylist is a young girl who must have heard my conversation in the past and is smart enough to understand that my job is to help invest funds.

With a bit of hesitation but with confidence of the subject, she rattles her existing SIP of equity mutual funds and asks my opinion.

This is the new India and I think this is true azadi for Indian women from the patriarchal style of investments.

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