HER MONEY
Growing number of female investors are reworking the legacy mindsets, products and the rules of personal finance. EPISODE #65
Dear Reader,
A very Happy Monday to you.
The findings of a survey conducted for Lxme, a financial platform for women on the emergence of female investors in personal finance, released on 8 March were buried by the noise and excitement of the results of the latest mini-election.
Coincidentally, the survey was carried out by Axis My India. Yes the very same market research firm which has carved itself an enviable reputation of foretelling poll truths; the latest being its spot on call of the landslide wins of the Aam Aadmi Party in Punjab and the Bharatiya Janata Party in Uttar Pradesh. So every reason to believe their capture of a key slice of the business of personal finance.
The survey confirms what several commentators have been arguing for some time now: personal finance has to shed its alpha-male thing and embrace a more inclusive approach that acknowledges the key demographic of women.
At the moment they are the most underserved cohort: over one in two women in India are either not investing or are unaware about their investments.
So this week I explore this phenomenon. Just like the female voter upset the conventional poll math based on the legacy of caste and religion, this demographic is poised to do the same in personal finance. Do read and share your feedback.
This week’s picture is something I clicked one early morning in Delhi while driving to my destination. Busy members of India’s giant informal economy.
Last week’s post too struck a chord with readers. A big shoutout to Vandana, Rajiv, Gautam, Krishna, Rajit, Premasundaran, and Vivek for your informed responses, kind appreciation and amplification for last week’s column. Gratitude also to all those who responded on Twitter and Linkedin. Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊.
THE X-FACTOR IN PF
The findings of the LXME Women & Money Power Report 2022 studying money habits of women was released just a couple of days ahead of counting of votes in the recent election cycle. Unfortunately the noise around the election outcome buried the compelling results of the survey carried out by Axis My India.
Not only did it empirically establish the worst kept secret—Indian women are the most underserved cohort in personal finance despite accounting for half of the country’s population—but it also confirmed that the money habits of women differ fundamentally from that of men.
The obvious corollary is that there is a business opportunity waiting to be tapped, provided that personal finance offerings are tweaked to be aligned with the lifestyle choices of women. In short it is the end of the road for the lazy business strategy of one-size-fits-all.
Underserved
The report establishes some startling facts.
Firstly, one out of two women are either not investing their money or have outsourced their investment decisions to a male—a father or husband.
Secondly, the investment priorities of women are skewed towards family security and the education of children. While two out of three women were guided by these objectives, little over one in 10 women invested to secure their individual financial freedom.
The Survey further uncovered:
59% women had no insurance (life or health) in their name;
92% women have no access to any financial investment related websites/applications.
As a regular reader you may recall that I had visited this topic in a previous newsletter and also written a detailed feature on it for Khaleej Times, the Dubai-based daily. Instead of doing a recap I will share the post below. You may click it if you wish to re-read it.
Reporting the piece for Khaleej Times I had spoken to Priti Rathi Gupta, founder of LXME and the Managing Director and promoter at AnandRathi Group. She had pithily summed up the need for women to own their investment decisions.
“We women need to invest our money even more. There is so much said about it: our careers close down at every stage of our life; our career peaks are much earlier; and we live longer than men. So the need to manage money is far more for women.”
The Mindset
Implicit in Gupta’s argument is that there is a mindset issue plaguing the business of personal finance. The one-size-fits-all approach handed down for generations ignores the new reality of women in the workforce, their lifestyle choices and unique financial needs.
Shinjini Kumar, co-founder of SALT (mysaltapp), a platform for women buying financial products, argued that all the underlying assumptions—monthly salaries, tenured jobs, cars to commute to work and owning a house—are up for a makeover. So, why shouldn’t the personal finance rules be reset.
“Now we are living in times where people may prefer to take an Uber, live in an AirBnb and may not work long-term jobs. So it is not gender prejudice. Instead, it is a matter of legacy that has defined our credit models and other financial products. All these assumptions are up for disruption because those lifestyles have changed or have disappeared.”
The Options
Clearly, status quo is no longer acceptable.
Legacy players should be watchful as the rise of fintech has already disrupted the existing business lines of personal finance. The previous barriers to entry are no longer relevant. More importantly it is no longer about size; FinTech has made it possible to monetise niche business. Hence, it won’t take much for some upstart to run away with the opportunity.
As the Lxme survey reveals, women across the country—not just in metros—are hungry for information. Women in eight out of 10 metros and three out of four small towns are desperately seeking a platform to enable easier investments. The one big barrier the survey found was the lack of funds—now this is something that will be resolved gradually as the country materially trades-up; in other words there is enough demand in the pipeline.
Significantly, the survey busts the myth that women are risk averse. If anything they are risk aware and would prudently like to line up all their ducks before taking a call on the investment. The shift in the country’s population towards the youth—65% of India was less than 35 years of age in the last Census—also tilts the balance against status quo.
Especially if you factor in what the survey captured:
Millennial women are likely to invest in stocks;
Around 79% of women are looking for a platform that would make investing easier;
Women who are 26 years and older are more inclined to long term investment and family security.
To sum up the Lxme survey has unambiguously identified both the challenge and opportunity in the business of personal finance for women. It is an idea whose time has come.
Recommended Viewing
Over the last two years, thanks to the covid-19 pandemic, the world in general has experienced a spike in deaths. I too experienced the loss of a few friends and family members and have come to accept the inherent frailty of life.
At the same time the end-of-life experience of some of those who passed left me both stirred and shaken. Inevitably they talked about seeing visions of a very near and dear who had passed; about conversations with the previously deceased that made them feel at ease in their distressing circumstance. While I listened with rapt attention my assumption was that these were hallucinations triggered by the trauma of rapidly failing physical health.
That is till last week when I stumbled upon a podcast. The conversation with Dr. Christopher W. Kerr, end of life researcher and the Chief Medical Officer at The Center for Hospice and Palliative Care was illuminating.
It exposed me to a very different perspective about the end of life experience. One which suggests that this is actually a signal of closure with dignity for the dying person.
The podcast is rather long but really worth listening to. However, if you prefer a shorter version please check out the Ted-talk below.
I am sharing a quote from the talk:
“I have heard from the dying words that are compelling and relevant. I hope they leave open the possibility that there is light within the darkness of dying.
Look back on your own life think of your greatest loss, the greatest comfort and your greatest wonder. The loss of someone you loved: the familiar warm hug of a grandparent, the birth of the child. What if at the end of your life at some appointed hour the loss returns, distant feelings become familiar and the meaning is restored.
If any of that is true, then dying is illuminating.”
Till we meet again next week. Stay safe.
Dear Anil,
Very comprehensive and insightful article.Enjoyed reading it , as you rightly say the winds of change are blowing in urban as well as rural India.we have to empower the 50% of our population and financial independence of Women is the need of the hour !!
Socioeconomic changes in the last 50 years, has progressively led to the identity of the women in India, from a housewife to an individual with a free choice. Although, the emancipation of the female gender in our traditional society, has still a long way to travel, but the educated, assertive and financially independent woman, is the new reality and this is set to grow. Today the educated young lady is more keen to establish herself in a career and only then is she comfortable to settle into a marriage, with the assurance of independent financial security. What will and has followed, is her desire to further establish her economic independence by investing her money in generating funds for retirement, as her commitment to children and family is much more than her male companion. A very important article Anil, I am sure other people will appreciate your article as well. Thoughtful !