Shyamal Banerjee/Mint
Shyamal Banerjee/Mint

Why women should make financial decisions

Women are taking small but steady steps forward in making financial decisions

Trupti and Mandar Natekar have been married for 10 years now. Early in their marriage, Trupti took over the reins of managing investments and has proved her mettle through results and returns.

Over the years, she has meticulously built a portfolio spread across debt and equity mutual funds fixed deposits, gold and some shares. A homemaker now, Trupti worked for many years in the marketing function with large banks and financial service providers. “The exposure helped me," she said.

While participation of Indian women in making financial decisions is still low, there are small but steady steps they are taking. According to a survey conducted by Nielson on behalf of DSP BlackRock Mutual Funds on Indian women aged between 21-60 years across tier I and II cities, 23% of working women in India are sole decision-makers as far as investments are concerned. The proportion falls to 10% among non-working women; 85% of the survey respondents are married women.

Look deeper into the 23% and you will see stories of inspiration just like Trupti’s.

Seeds of change

Single women: Let’s consider the financially independent and relatively more aware single woman today. Though the number is still minuscule, women have started coming ahead, said most of the financial planners we spoke to.

Piya Virmani, a corporate finance professional working in New Delhi, is an example. She started investing at the age of 26 after completing her degree in management.

Now 32, apart from investing in stocks and having a substantial fixed-income portfolio spread across fixed deposits and non-convertible debentures, Virmani has also invested in an upcoming residential asset. She is the rare breed of women investors who relies mostly on her judgment to build and manage an investment portfolio.

While cases like that of Virmani are rare, if pushed to a corner, which might be the case for a widow or a divorcee, single women do tend to take this seriously. According to Aditi Kothari, executive vice-president and head (marketing), DSP BlackRock Investment Managers Pvt. Ltd, “Women who are separated from their husbands find themselves in a bind and lost on financial aspects. But there is a lot of potential to make good investment decisions since surplus funds are available and there is a need to financially secure the family’s future."

According to the Nielson and DSP BlackRock survey, among working women 73% of divorced women and 68% of widowed women are sole investment decision takers as compared with 18% single women and 13% married women.

Married women: Virmani has realized the importance of starting early despite being solo. But many women give up control post marriage, finds a report—Trends and Insights into Financial Goals of Indian Consumers (Second Edition)—by Ameriprise India Pvt. Ltd. The report shows that 70% single women are financially prepared to manage future requirements through investments.

The issue really arises in the second part; the report also finds that after marriage, 77% of women are influenced by their spouse’s investment decisions.

The verdict of a majority of the financial planners we spoke to was that when it comes to wives participating in investment decisions, it is mostly restricted to listing out major expenses or getting the documents ready.

But increased awareness is bringing about a change. According to Nitin Vyakaranam, CEO, Artha Yantra, a company that provides personal financial services, “We are seeing a change in how married women approach financial planning discussions. Earlier they were not so interested, but now they have started to dig deeper into our advice and they are the ones who ask the really tough questions."

He added, however, that at the start of a client relationship, this happens rarely and it’s only over time, as dealings become more frequent, that women open up.

Deepali Sen, a certified financial planner from Mumbai, said, “Men don’t really involve their wives in decision making." Wherever possible, Sen insists on the wife’s presence at the time of important discussions.

Mahalakshmi Ravisankar has recently been introduced to a structured and disciplined manner of approaching her personal finances. At 47, with big changes happening in her life, Ravisankar finally decided there is good reason to follow a financial plan. After 25 years of regular work, she has moved on to freelancing now. Structuring her investments and inflow is paramount for her as apart from getting a regular stream of income to service equated monthly instalments and other expenses, she has to think about funding her retirement and her 21-year-old son’s education, who is studying abroad. As a working woman, Ravisankar has always been independent about her money and her husband supports her.

The challenges

Education and awareness: Talk to people outside the metros and you will find that the the kind of role a woman plays in making financial decisions can depend on which part of the country she hails from.

According to Shiny Sebastian, managing director, Affluenz Financial Services Pvt Ltd, a Kochi-based financial planning firm, “When we work with families, we try to include the wives. Women are open about family finances and even get the children to talk."

Among her clients, older male members refer their daughters as clients and women who never took such investment decisions now try to get their daughters involved. But this is in Kochi, in the state of Kerala, the state with the highest literacy level in India.

Vinita Baraya, a Jaipur-based financial planner insists that awareness and education of women has a big role to play. In Jaipur, she hardly has women clients and there isn’t any interest among women as they claim not to understand financial matters. Baraya has been operating in this space for around 18 years and prides herself as being the only active woman adviser in Rajasthan.

Changing the mindset: Baraya says it was not easy to get men to trust her advice when she started out. Over time they did commit funds to her as she demonstrated the benefit of her advice and the returns she helped generate.

Ultimately, this is all about changing a mindset and creating more awareness. Even as more women have started to work, few have become financially independent.

Kothari said, “Women earn money independently but often give all of it up to their husbands. It’s important for them to also create a basket of savings and investments in their own name to cater for contingencies if the husband is not around in the future."

Mint Money take

Financial planners concur that women investors bring to the table a stable and long- term approach towards investing. They point out that women are more practical in approaching goals and easily give up short-term goals for long-term plans.

They tend to take a holistic approach and put things like children’s education ahead of their own goals. Lastly, once they understand the nuances of long-term investing, they are less bothered by short-term events.

If you are a single, working woman and understand the benefits of investing, start now. If you are married, working or not, take some interest in family investments; you may be surprised at the stable dimension you can lend to your family’s financial plan.

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