Rajat Sharma, the CEO of Sana Securities, explains why he wants to grow his practice with more women clients.
Since a much larger number of Indian women are working today, a natural corollary of more women joining workforce should have been more women investing.
This has not happened. Consider this, if I draw up a pie chart of my clients, 88% of them are men. This is also the experience of many of my peers.
This is not a good thing. I sometimes wonder where all the money being generated by women workforce ends up.
Yet, I can safely say that, in my experience, the balance 12% are the most passive of my clients, which is why their money compounds a lot faster. Besides, they display traits that I would love to see in an investor.
Based on my experiences, here are 5 aspects of women investors that give them an edge.
- Long Term Implementation of Strategy.
Once you have set the expectations, it is easier to manage women clients. Women work with slightly more dogmatic expectations when it comes to projected returns. As an adviser, I know that I will be held accountable for exactly what I project. This helps with devising a plan on day one. I generally give various scenarios based on what we end up buying. In my experience, it always works well so long as the deviation from this plan is not substantial and is well explained.
- Less Interfering.
Periodic interactions with women investors are less frequent. Once they find a plan that works for them, they stick to it. More than constantly looking for newer avenues of growth, they are more likely to stick to the plan they had committed to. In a way, they rely a lot more on the judgement of their financial adviser after they have devised an investment plan. This is one of the most important traits of a successful investor. When it comes to financial planning, execution of plan is far more important than creation.
I have always believed, two of the best financial advisers will ruin an investment plan the moment they start second guessing each other. One reason why women do better is because they do not change or even tweak a plan. They stick by it.
- Less Ego.
Women are not shy to ask for help and are upfront about it. They are also more open to hearing you out no matter how unconventional your strategy. This gives the adviser a free hand to work on the portfolio. To give you an example, I have bought a lot more thematic funds and stocks in portfolios of women clients. In 100% percent cases they have delivered expected and above average returns.
- Comprehensive Advisory.
Once they trust you, women will call upon you for advisory across products and services. From opening a bank account to buying a basic insurance policy, they will rely upon you to give them an opinion on how to plan their financial journey. This helps an adviser create a better overall portfolio and manage risks much better.
- Better Risk Managers.
This is something I have noticed over and over again. Women tend to be far more accepting of risk once they understand it. Of course, it is critical to explain the risk and set the right expectations. However, once that is done, women investors are far more comfortable dealing with volatility and negative returns so long as they were made aware of such a possibility. Here again, I have had very good results with women investors in terms of committing more to a loss-making position which often times is just what is needed.
I hope and believe that more women will start taking control of their financial lives in coming years. There is tremendous opportunity to venture beyond a savings account and fixed deposits. The scope for expansion in this area will benefit not only the client but also financial services industry as a whole. As advisers, we should all work to get more women investing in financial products. If you do the job well then women investors are far more liberal in passing a lead on to you. There is merit in trying to grow your practice in this area.
Rajat tweets at @sanasecurities.
