On International Women’s Day, we may see discussions over issues related to women such as safety, literacy, health care, employment, pay gap and so on.
However, have we thought that as money managers, what we can do for our women clients?
In my view, we can sensitise ourselves to the issues facing women in their wealth creation journey. To start with, we can make small changes in our approach to deal with client families through our conversations.
Let us first look at the key issues faced by women on their wealth creation:
1.) Earnings: Women tend to earn less than men having similar qualifications and experience. Women usually need to take career breaks to raise their children or ailing family members. This let to less earning and hence less investments/assets.
2.) Invest less: Women invest less. Primarily, due to social conditioning, which makes them think that investing is a man’s domain.
3.) Less inheritance: Most women give up their rights on parental properties and assets due to social obligation. This translates to less inheritance wealth subsequently expanding ‘wealth gap’ between genders.
4.) Divorce: In most cases, the court gives custody of children to women with a fixed alimony. Such an alimony does not factor in inflation and rising living costs.
5.) Longevity: Women tend to live longer and thus have to plan for a longer retirement.
6.) Lack of women MFDs: Currently, women investors are underserved by the financial services industry. There are fewer women MFDs. The jargon, terms, presentations used in financial industry are more relatable to men.
Now let us look at what we can do for our women clients:
1.) We can sensitise our women clients to the importance of financial planning. Planning enables financial well-being, which in turn enables many life choices.
2.) For working couples, we should sensitise them that the lady of the house may need to take a career break. Thus, accumulation needs to be higher at initial stages and could be reduced later during maternity. Their investments could go up again once the women joins the work force. This will enable more effective financial planning. As employees, we can support women by offering flexible work timing, when they are passing through a phase of having children or supporting family.
3.) Over generations, women have seen ‘Papa takes care of money and mama is responsible for the household chores.’ The social conditioning is so strong that all of us have seen women clients deferring investment decisions to their husbands or to other males members of the family. And this is so even when the women are highly educated and holding senior corporate positions. We can make a difference here
By encouraging our clients to meet us as a couple.
By simplifying our explanations and rationale for investment decisions
By linking investments to ‘goals.’ Women can relate to goal-based investing better
By ‘listening’ to financial concerns of the woman of the house to build ‘trust’
By ensuring that we do not talk ‘down’ to her but talk ‘to’ her in a meeting
4.) In most Indian marriages, the wife is younger to the husband. Considering that biologically women tend to outlive men, the chances are high that the wife will survive the husband and would need to manage the financial assets. We can support our elderly women clients by starting conversations within the family around this issue.
5.) We can do our bit to reduce the wealth gap by advising our clients to hold assets as ‘either or survivor’. So in case of an unforeseen incident, the assets transfer to the wife. If we are advising them about pension / annuity then it should be structured such that the annuity goes to the wife in case she survives the husband.
We can initiate discussions about the benefits of having a ‘Will’ so that assets move seamlessly to the wife in case she survives the husband.
6.) We can support & guide our women clients undergoing divorce by educating them financially so that they can take informed decisions.
7.) Effective communication is the foundation for building relationships. There are gender differences in interaction (on average). Generally, women communicate more and prioritise communication more than men. So, they usually need to be talked to more. They need more information and value clear communication and transparency.
Over the years, I have found it effective to share stories. I share stories to explain different concepts of financial planning like effect of inflation, impact of debt or power of compounding. At times, I have emphasised the importance of ‘Investing’ to my women clients by linking it to a basic skill like ‘cooking’.
This has encouraged me to compile my oft-used stories and examples in a book: ‘Investing Is the New Cooking.’ The book will be listed on Amazon and Flipkart on March 15. Feel free to download a copy of the book. You can look at presenting this book to your women clients.
We all have the power to make a difference. So, let’s go out there and start-off a small change.
Happy Women’s Day!
Sapna Narang is Managing Partner, Capital League. The views expressed in this article are solely of the author and do not necessarily reflect the views of Cafemutual.
