In a recent article published in the Financial Planning Journal (Oct-Nov 2012) titled “Changing Paradigm - Financial Planning for Women Clients”, FORE’s Prof. Vinay Kumar Dutta highlights the need for financial planners to change their methods to cater to the growing number of Indian women moving toward financial freedom. According to Prof. Dutta, while personal financial planning has traditionally been a male role, this is rapidly changing. He says, “The fundamental drivers of this change are education, employment and the resulting growing earning power of Indian women.”
Prof. Dutta says that literate Indian women are making strides in all sectors of the economy, with the number of women holding executive positions rising rapidly and the number of two-income families growing steadily. “As they become financially independent, more and more Indian women realise that it is important for them to plan and manage their finances smartly and prudently,” he says, but contends that there’s still a gender gap when it comes to personal financial planning.“In fact,” said Prof. Dutta, “very little has been done to educate Indian women on the personal finances front and to design women-specific financial products and services by the financial services industry.”
Research shows that women have particular preferences when learning about investment practices, such as wanting to learn with an expert in concert with others. The challenge facing financial planners is the traditional approaches to teaching financial topics often run counter to these preferences.“Even when it comes to use of money, women think differently,” explains Prof. Dutta. “For men, wealth is a way to reap tangible rewards. Typically, men are goal-oriented. Women, on the other hand, are generally value focused and consider wealth to be a means to less tangible ends.”
A recent study by MasterCard showed that women are closing the gender gap when it comes to financial literacy, and one by Hearts & Wallets found that women want financial advisors who offer low fees and are clear and understandable.As he puts it, “Instead of a sales pitch, they want to be taught about products in language they understand.”
Financial planning can no longer be considered a male domain and financial planning professionals will have to learn what motivates women when it comes to personal financial planning.“This new reality means financial planners will need a new paradigm in their practice,” says Prof. Dutta, “one that reflects an emphasis on values and financial freedom of women. Developing capabilities to serve women clients may open new windows of opportunity for financial planners in the Indian financial planning market.”
