When a group of men and women enjoy a meal together and the conversation turns to the topic of where current investment opportunities lie, Saadya Riaz finds what generally happens next “quite strange”.
“At that point, the women just stop talking,” says the head of wealth management at Standard Chartered in Menap and Europe. “They tend to shy away from these topics. Yet globally, women manage finances for their households. They’re saving for a vacation, their first mortgage, they are pushing their partners to buy a new car, so they have a position of power there. When it comes to investment, why is it that they tend to not get involved?”
Ms Riaz, from Pakistan, was speaking last month at a panel discussion of leading Dubai-based female financiers, on the theme of how women can better manage their wealth. The event was hosted at the Capital Club by the Dubai chapter of the global professional women’s network Ellevate.
Ms Riaz’s experience of women’s reluctance to invest is backed up by global data. Last year, a Fidelity Investments study found that 72 per cent of women don’t feel confident about selecting financial investments on their own. In the same study, 63 per cent of women said they didn’t feel knowledgeable enough to plan for their retirement.
“Women ask more questions and generally need a lot more information”, says Ms Riaz. “Women will decide to wait for the right time, whereas the men will just come speak to me and then they will invest immediately, before they even think of who they have invested in. I think women have to speed up the whole decision-making process.”
Although females are slow to invest, when they do, global research indicates that they tend to make better investment decisions than the men.
A study by the American finance professors Terrance Odean and Brad Barber found that women outperform men by about 1 percentage point a year on the stock market, and that men traded the stocks in their accounts 45 per cent more than women did.
"Put simply, men think they know more than they do," writes LauAnn Lofton in her 2012 book Warren Buffett Invests Like a Girl, which investigates how the investment strategy of one of the world's richest men mirrors that of most females. "Women are more willing to own up to the fact that they don't know everything. Because of their overconfidence, men trade more than women do. And what does more frequent trading do to your investment results? It drags them down, running up transaction costs and acting like the proverbial albatross on what might otherwise be smart investment decisions."
So given their more successful track record in this field, what is holding so many women back from investing their wealth?
Simona Sutaviciute, from Lithuania, has until now been deterred by the tactics of the financial advisers who keep pestering her.
“I get these phone calls from wealth managers that make me think they’re only after their own commission, rather than helping me out”, says the 25-year-old, who works in Dubai for Thomson Reuters as a digital solutions manager. “It makes me feel like ‘I’m not going to trust you with anything’.”
According to a Fidelity Investments study, just under half of women say they are confident talking about money and investments with a financial professional.
Nevertheless, Ms Sutaviciute is still keen to investigate investment opportunities to help her money grow. “As a typical woman, I want to study everything about it first, so that I feel in control.”
Ms Sutaviciute is considering starting up her investment portfolio with Beehive, a Dubai-based crowdfunding debt platform which is the first peer-to-peer lender in the UAE. Crucially for Ms Sutaviciute, who wants to start small, you can join Beehive by setting up an account with as little as Dh1,000. The minimum bid on an individual business is then only Dh100.
“Women often feel insecure when it comes to investments, but on this kind of platform you can feel very much in control of your own destiny,” says Beehive’s chief marketing officer Francesca Moore. “You can decide which business to put your money into and how much, so that can alleviate women’s concern.”
According to a recent study from LPL, a US firm of financial advisers, one of the biggest problems women have is a lack of understanding of financial jargon. One in six women surveyed felt that financial terminology was confusing and made it more difficult to make decisions.
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Investing tips
■ Read five tips for first-time female investors at www.thenational.ae/blogs/your-money
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Last year, Beehive started running group investor sessions, which Ms Moore claims give women the opportunity to ask intimidating questions about investing that they might not otherwise feel comfortable asking. “Once you give women the knowledge about the benefits they can receive from platforms like crowdfunding, you see women investing more on the platform, and their style of investing is very different from the men’s. They invest more into different businesses, and they really reap the awards from that diversity.”
And yet only 20 per cent of Beehive’s investors are currently women. Another local crowdfunding platform, Eureeca.com, has the same percentage of women listed as investors on its private equity site. Eureeca’s investment director Heather Henyon says she finds their low percentage of female investors “shocking”, given that 60 per cent of the businesses that successfully raise money on Eureeca are women-led. “Why are we women handing it over to men to make money off of women-led ventures?”, Ms Henyon asks.
Two years ago, she founded Wain (Women’s Angel Investor Network) in Dubai, the first of its kind in the Middle East, to invest in women-led start-ups.
“Getting women at the table is really important – teaching women about investing, so that they can teach their children,” she says. “You don’t learn about investment in school. Women are not active as investors because their fathers didn’t teach them when they were children.”
Ms Henyon, from the US, admits it was “lonely” being the only woman in her finance classes at business school. But her financial education has served her well. Ms Henyon began putting $15,000 a year into a retirement account when she started working at 21. “Now it is probably 10 times what my husband’s retirement savings are”, she says. “The compounding power really works.”
Ms Henyon manages all her family’s finances as she says she is better than her husband, an engineer, at managing investments for the lower risk, long- term return. “We hold quarterly investment committees, so we run our house like it’s a business. We’re total dorks. But that way you become very rational about your approach. Money often becomes way too emotional and if you can take the emotion out of it, it gives you information that is power.”
Ms Henyon’s biggest nugget of advice to would-be female investors is to find a way to make investment interesting on a personal level.
“I really like working with entrepreneurs, and I like investing in businesses things that I care about,” she says. “I see a lot of women who are really good ‘social’ investors – we like to support our communities. And you can also make money while doing it.”
But it doesn’t always work that way.
Five years ago, the Lebanese-Palestinian Rana Nawas, who leads the Dubai chapter of Ellevate, grabbed the chance to invest in one opportunity she found exciting on a personal level. But she later came to regret it.
“I put a lot of money – a quarter of my savings – into a movie called 2 Guns, with Denzel Washington and Mark Wahlberg, which didn’t perform,” she says. “The lesson I learnt was that movies are risky, and like with any risky investment, go small. I think I wouldn’t have regretted it if I had put in one-fifth of what I had put in. Several years on, I still have not got any of that money back.”
Despite the financial setback, the experience hasn’t deterred Ms Nawas from investing in the film industry again. “Its fun, and I would invest in another movie in the future. But next time it would be a smaller amount.”
Ms Henyon also advises new investors to look for lower cost and lower entry point platforms. Apps such as Betterment and Wealth Front, from America, and also the new Dubai-based Finerd, are starting to replace traditional asset managers, says Ms Henyon. “The world is changing so much. These companies are using big data to do things much more efficiently.”
Ms Riaz urges women to bear in mind that when choosing their investment platform, Sharia law dictates what will happen to those investments should the investor pass away. “Families won’t have access to the money held in the UAE until the courts settle the inheritance process”, she says. “A lot of people therefore choose to invest offshore. A lot of banks based in the UAE are global, so as an expat, when you leave this country, you will still be able to continue funding these products.”
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