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Women and wealth Female entrepreneurs, HNWI and how to approach them
 

Women and wealth Female entrepreneurs, HNWI and how to approach them

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If James Brown was to write one of his famous songs in 2013 would he still start the first line with this is a ...

If James Brown was to write one of his famous songs in 2013 would he still start the first line with this is a
man’s world? Perhaps it would take him a couple more years to be convinced but it is clear that women are
increasingly climbing up the career ladder. As we will show in the report more and more women establish and
manage their own companies. In the future more female entrepreneurs will found their own companies and
generate wealth. The Forbes Billionaires List 2013 for example features yet another record number of women
with 138 women worth at least one billion dollars, compared with 104 in 2012.
As the numbers of women attending university and pursuing professional careers increases, women are
becoming a growing target group for investment managers as well as venture capitalists looking for new
business opportunities. In many parts of the world women are however still subject to discrimination in access
to training and jobs and are often confined to mostly “female” occupations, according to a report by UN agency
ILO. This despite the fact that employment equality has been shown to go hand in hand with economic growth.
In addition to this, there are yet 2.4 million women in the UK who do not work but want to according to the UK
Women’s Business Council.
This report will present the recent trends and profiles of women in business, insight and analysis of new wealth
created by female entrepreneurs and offer advice on how to approach female HNWI. The focus will be on
differences between men and women in business sectors and board memberships, and the specific challenges
female entrepreneurs can face. Building on the findings there will be a final chapter on how to approach female
high net worth individuals.
The report offers analysis based on information gathered from the Wealthmonitor database. It also includes
interviews with Anna Sofat, CEO of financial services boutique Addidi and Afi Ofori, Managing Director of Zars
Media, two key professionals who are very familiar with the topic. An extended part of the interview with them
can also be found in the final section of the report.

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    Women and wealth Female entrepreneurs, HNWI and how to approach them Women and wealth Female entrepreneurs, HNWI and how to approach them Document Transcript

    • Women and wealth Female entrepreneurs, HNWI and how to approach them
    • Women and wealth Female entrepreneurs, HNWI and how to approach them About Wealthmonitor Wealthmonitor is a unique and proprietary intelligence service that identifies new wealth being created as a result of potential and announced liquidity events and provides extensive details on those high net worth individuals (HNWI). Wealthmonitor was launched in Europe in January 2006 and has since proven invaluable for its audience. Since 2010 Wealthmonitor has expanded to also include North America, Latin America, Asia-Pacific and Africa. Key Facts: • Since the launch of Wealthmonitor in January 2006 we have identified and profiled more than 160,000 individuals. • The database represents total estimated wealth of EUR 1.06tr and prospective wealth of EUR 2.6tr. • Our research team add more than 2,700 individual dossiers to the database each month, comprising personal and professional information. • The service also comprises information on a network of more than 39,000 advisory firms servicing HNWIs including financial, legal, accounting and PR firms. • Our global network of 400 journalists collect, translate and summarise all relevant information published in the national and regional press, stock exchange announcements, company press releases etc. on a daily basis using more than 1,500 sources of information. To find out more or to request a free trial visit: www.wealthmonitor.com Or contact: Florian Pixner wealthmonitor Managing Director florian.pixner@wealthmonitor.com +44 (0)20 7059 6245
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Contents Overview Business sectors – Where is the wealth created and where are the women? Board of Directors – A man’s world or a changing climate? Female Entrepreneurs How to approach female HNWI Conclusion and future trends Interviews Contributors: Sabina Andersson Research Analyst sabina.andersson@wealthmonitor.com Christian Meyer Head of Research Wealthmonitor christian.meyer@wealthmonitor.com
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Overview If James Brown was to write one of his famous songs in 2013 would he still start the first line with this is a man’s world? Perhaps it would take him a couple more years to be convinced but it is clear that women are increasingly climbing up the career ladder. As we will show in the report more and more women establish and manage their own companies. In the future more female entrepreneurs will found their own companies and generate wealth. The Forbes Billionaires List 2013 for example features yet another record number of women with 138 women worth at least one billion dollars, compared with 104 in 2012. As the numbers of women attending university and pursuing professional careers increases, women are becoming a growing target group for investment managers as well as venture capitalists looking for new business opportunities. In many parts of the world women are however still subject to discrimination in access to training and jobs and are often confined to mostly “female” occupations, according to a report by UN agency ILO. This despite the fact that employment equality has been shown to go hand in hand with economic growth. In addition to this, there are yet 2.4 million women in the UK who do not work but want to according to the UK Women’s Business Council. This report will present the recent trends and profiles of women in business, insight and analysis of new wealth created by female entrepreneurs and offer advice on how to approach female HNWI. The focus will be on differences between men and women in business sectors and board memberships, and the specific challenges female entrepreneurs can face. Building on the findings there will be a final chapter on how to approach female high net worth individuals. The report offers analysis based on information gathered from the Wealthmonitor database. It also includes interviews with Anna Sofat, CEO of financial services boutique Addidi and Afi Ofori, Managing Director of Zars Media, two key professionals who are very familiar with the topic. An extended part of the interview with them can also be found in the final section of the report.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Business sectors – Where is the wealth created and where are the women? Although many women are becoming more successful in business and face less discrimination the global wealth is still largely in the hands of men. As reported by Forbes in 2013, women accounted for less than 10% of the world’s billionaires. Even though the situation is changing, there is reason to ask why the earnings of women still tend to lag behind. One reason could be that the sectors traditionally attracting women have not been sectors where people are most likely to accumulate wealth. The United States Bureau of Labor Statistics and the European Union Labour Force Survey both report that women mainly work in service based industries, administration and retail, where the earnings are considerably lower. Sectors associated with higher earnings such as oil and gas, bio-technology, media, financial services and lately computer/IT are on the other hand largely populated by men. In FORTUNE’s annual ranking of America’s leading businesswomen, most of the women on the list were working in the financial services sectors and computer/IT, followed by the retail and food sectors, which suggests that if women are to become powerful and wealthy, choosing a non-traditional career path could be vital for success. The women in the Wealthmonitor database come from a wide variety of sectors. Not suprisingly, the sector with the largest number of women is the rather broad services sector. It represents 21% of the women added to the Wealthmonitor database in the last 12 months. The second and third largest sectors are the computer/IT and the industrial sectors with 11% and 9% respectively. The financial services sector, often mentioned as an sector dominated by men, follows fairly close behind with 6%. This shows that a large part of the HNWwomen provided by Wealthmonitor in the last year have, as perharps expected, been associated with the traditional services sector. Just as the women on the FORTUNE list, a large part of the women in the Wealthmonitor database are also working in the growing computer/IT sector, finance and the industrial sector, showing that they are key sectors for successful women of today. continued... Success stories from the WM database Going against the norm, a female entrepreneur in the database co-founded a construction business in 1982. She is married and has two daughters and practise Feng shui. Her total wealth is estimated to be above EUR 30m.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Business sectors – Where is the wealth created and where are the women? Wealthmonitor Female shareholders (4148 individuals) – July 2012-July 2013: 25% 21% 20% 15% 11% 9% 10% 7% 5% 5% 1% 1% 1% 1% 3% 2% 4% 6% 5% 6% 3% 3% 4% 3% 2% Utilities Transportation Services (other) Real Estate Other Mining Media Manufacturing Leisure Covernment Financial Services Energy Defense Consumer: Retail Consumer: Other Consumer: Foods Construction Medical Chemicals and materials Biotechnology Automotive Agriculture Telecommunications Industrial Computer/IT 0% As this report will show, the profiles of today’s businesswomen, entrepreneurs and female High Net Worth Individuals can be multifaceted and seem to be in a state of change. With more women on board of directors in a wide range of sectors, and female entrepreneurs making their fortunes through building their own businesses and investing wisely, it is in the interest of wealth managers to get updated with how the minds of women of today work.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Board of Directors – A man’s world or a changing climate? As boards have historically been managed by men, several countries have taken up the task to increase diversity and get more women involved. Norway introduced a law in 2006 stipulating that publicly traded companies must appoint at least 40% female members to their boards or risk forced dissolution by delisting from the Oslo Stock Exchange. Even for a country considered by both the World Economic Forum and UNDP to be one of the most gender equal in the world, this was a regulation fairly controversial when introduced. Other countries have chosen different paths, with the UK chosing the slightly softer approach of setting a target (although without sactions if not reached) of a 25% female make up of FTSE 100 companies by 2015. According to the European Board Diversity Analysis 2012, women now account for almost one third (30.8%) of all new European board appointments in what is an accelerating trend. Norway unsurprisingly tops the ranking with 36.4% women on board positions, with Finland (27.1%) and Sweden (24.6%) as second and third, even though they don’t have quotas. Countries with highest/lowest number of women* 2012 Norway 36.4% Finland 27.1% Sweden 24.6% France 20.5% Italy 8.4% Austria 8.0% Luxembourg 6.1% Portugal 4.7% *Proportion of women on Board of Directors in companies of a market capitalization in excess of EUR 4 billion. The results suggest that quotas do get the numbers up. In Sweden it has also been suggested that the threat of introducing quotas could have a positive effect in itself. The fact that Italy is showing low numbers could be related to women also taking less part in the active workforce as a whole, with only 47% of women in paid work compared to 67% of all men, according to the OECD. This however does not explain the poor results of Portugal where the division of labour is far more equal with 60% of the women in paid work compared with 68% of men. Wealthmonitor data suggests that although a higher percentage of the Italian women included in the database are Board Members, with an impressive 1 in 4 of every shareholder, the progress has been close to none in the last four years compared to Sweden with an impressive increase of women in our database who are Board Members. continued...
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Board of Directors – A man’s world or a changing climate? 2008 Italy Sweden 2012 Italy Sweden Board Member 151 25 136 32 Grand Total 595 78 532 67 Board Members (%)* 25.4% 32.1% 25.6% 47.8% *Proportion of women in the Wealthmonitor database who are serving as either Chairperson or as a regular Member of the Board of Directors in at least one company The large increase in women on Swedish Boards is not matched in the EBD data, which reports a meagre 2 % increase between 2008 and 2012. The European Board Diversity Analysis restricts their data sample to companies with a market capitalization in excess of EUR 4 billion, where Wealthmonitor on the other hand provides an insight in how the structure of board membership has changed throughout a range of companies from start-ups to large multinational companies. This shows that, in a more broad perspective, an increase of women on boards have still occurred in Sweden. It also indicates that a significant increase in the number of women on boards of bigger companies could be imminent, even without quotas. Italy decided in 2012 to introduce a law which requires listed and state-owned companies to ensure that one-third of their board members are women by 2015. Judging by the reported stagnation of development in the boards of both smaller and large companies it remains to be seen whether the law will have the wished for effects in Italy in the coming years. Afi Ofori who is Managing Director of Zars Media hopes that improvement will come through entrepreneurship, as the number of business women continues to grow. She also bring up the topic of culture and the fact that quotas in the case of Norway may only have been part of the explanation as it is a country with highly ranked gender equality overall. Sectors such as retail and service tend to have most diverse boards, where science- and engineering related fields on the other hand have few women on their boards. As our data suggests, as well as the list of the top 50 female entrepreneurs in the world indicates, the wealth is still largely created in the sectors with less female representation. Success stories from the WM database Despite Italian women’s struggle to get onto boards and to executive roles, the Wealthmonitor database features numerous examples of successful Italian women, including one Chairwoman of a retail company, who is also a Board Member of a financial company. She has a degree in Economic History, has five children and is engaged in a number of non-profit organizations, and has an estimated potential wealth of EUR 45m.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Female Entrepreneurs Despite the recent trends, the gap between male and female entrepreneurship is nonetheless high. We find only a few exceptions, such as in Singapore and Thailand where more women found their own business than men, according to a 2012 Forbes report. Switzerland, Guatemala and Brazil present a business environment where the gender gap is minimal. Still, according to a study conducted by Dell, the countries that are leading in fostering female entrepreneurship are USA, Australia, Germany and France followed by Mexico. They listed factors such as cultural norms being supportive of female entrepreneurship, education and access to financial capital as crucial to the success of women in business. Wealthmonitor provides the latest intelligence not only on successful M&A deals but also on early investments made into start ups. Those investments may not immediately boost the personal account of entrepreneurs but will help individuals to grow and develop their own business. Wealthmonitor’s database contains over 158,000 individuals of which 27,000 are female. Since women often take the main responsibility for children, balancing work and family and financing a startup at the same can prove challenging. Afi Ofori believe employers and nurseries need to become more innovative in supporting parents of young children so that having a child would not need to have a negative effect on a woman’s career. By increasing the number of female role models other women might also pursue more bold careers and be encouraged to explore their own business ideas. One step towards a successful career is higher education, and in 2012 female university graduates outnumbered male graduates in the EU by a ratio of approximately three to two according to Eurostat. Looking at university applicants, the UK admission service for instance received 80,000 more applications by women for the September in 2013 semester than by men. The figures for approaching a MBA are however still fairly low. In 2011 the Telegraph reported that only 31% of women took part in AMBA-accredited programmes worldwide. continued... Success stories from the WM database One of our Top 10 female entrepreneurs is the daughter of a wellknown media business man. She founded a media production firm and has an estimated total wealth of EUR 60m.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Female Entrepreneurs Caterina Fake, co-founder of Flickr and a university drop out has a more straightforward advice and says: “Want to be an entrepreneur? Drop out of college”. A quote that indicates a certain level of risk that few women might be tempted to take on. However, Afi Ofori at Zars Media says being more risk averse is not necessarily wrong nor a sign of weakness. “We just take our time to do a lot of research to understand what we are doing before we make the decision.” On the one hand the majority of research conducted in the last decades describes females as more risk averse than men, as men are thought to have a more aggressive style of management and make their decision faster. Taking a closer look at the topic however reveals more nuances. Finanznachrichten.de reported in 2013 that female entrepreneurs with investable wealth above GBP 1m are more likely to take risk in their areas of expertise than typical female HNWIs. Also, in an article from 2012 Forbes found that women tend to have a higher fear of failure at a young age whereas men get a higher fear of failure as they get older. Success stories from the WM database Another example in our Top 10 table is a successful self-made business woman, who co-founded a gambling company with a relative in 2000. Her estimated total wealth is above EUR 30m. She acquired a degree in econometrics, drives an Aston Martin and enjoys spending time with her family in her hometown
    • Women and wealth Female entrepreneurs, HNWI and how to approach them How to approach female HNWI Unlike previous research has reported, the interviews conducted by Wealthmonitor shows that women do not necessarily see risk differently or want to be approached in a very different manner than their male counterparts. Whether a person is more or less prone to take risks in their career and with their investments is often down to other factors than gender, such as age, professional and cultural background and previous experience. It is however important to keep in mind that some women can be put off by financial jargon, especially in cases when the person is not used to having someone taking care of their finances for them. To view women as a coherent group when it comes to financial advice could prove to be a mistake and shy a potential client away to seek advice elsewhere. There are a number of factors to take into account, and we have discussed this issue with Anna Sofat and Afi Ofori to get a deeper understanding of where we stand today. Build relations and understand the client As obvious as it might sound, meeting a client on their own terms is important yet not always happening. Afi Ofori believes that the investment process needs to be simplified and explained in a manner that the client understands. She has herself bad experiences of banks discussing topics that she felt she could not relate to or understand, and therefore turned the offers away. Investment managers also need to take the time to understand the women and how they look at investments. Ofori also believes that business women who built their fortunes and women who inherited their fortunes work in different ways when it comes to risk, confidence and types of investments. To build trusting relations and taking wealth management to the next level is exactly what Anna Sofat does at financial services boutique Addidi, aimed primarily but not exclusively towards women. To put the emphasis on lifestyle wealth and not just crunching numbers has been proven a popular take on wealth management, she says, with investments her clients can relate to and social investments that still bring good returns for the clients. Risk-Intelligent v.s. Risk-Averse This topic has been discussed throughout the report since it often is brought up when talking about women, careers and wealth. Numerous articles have throughout the years cemented an image of women being more risk averse and careful than men, both when it comes to investments as well as in their approach to careers and business life. There is however reason to start to question this standpoint as more and more women become entrepreneurs, business owners and building and maintaining their wealth by breaking new ground. For advisors to assume that women have less tolerance towards risk can mean they miss out on clients who decide to go elsewhere for advice that they feel is more suitable for a woman of today. Both of our interviewees agree that the assumption that women in general are risk averse is old-fashioned and changing. To be more understanding about risk, or being a “considered investor” as Anna Sofat from Addidi puts it, does not mean an advisor should assume a client is afraid of taking risks. To take into account the age and situation in life as well as the type of HNWI could prove far more appropriate and open new doors to understanding how the particular client wants their wealth to be managed.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Conclusion and future trends Although recent data from the European Board Diversity Analysis shows little improvement of gender diversity on Swedish Board of Directors, Wealthmonitor data on trends in small and medium sized companies paints a different picture. A significant increase in the number of women on such boards indicates a change in large corporations could be imminent, even without quotas, once these women have gained more experience. As the number of women graduating from university continues to rise more qualified women will be competing with men and pursuing a career in the future, increasing the chances of equality in top management and leadership of businesses. The topic of women and risk is not as straight-forward as many reports previously have claimed. To assume that women have a certain approach to risk merely because they are women is a simplified view that should be challenged in order to fully understand a potential entrepreneur and client.
    • Women and wealth Female entrepreneurs, HNWI and how to approach them Interviews Anna Sofat – Addidi Afi Ofori – Zars Media CEO and Founder of financial services boutiqe Addidi. 20 years experience of advising private clients, previously serving as Managing Director at Fiona Price & Partners, the first firm to provide financial advice for women by women. Managing Director and founder of Zars Media. A Corporate event organiser and promoter of working women with 13 years experience in financial sales. She is also the founder of the Women In Sales Awards. Women who come to you for advice, have they built their own businesses or have their largely inherited their wealth? Is your experience that women tend to work in certain business sectors? We are quite a broad shirt, so I would say the majority is selfgenerated. Yes, but that is changing quite a lot. The financial service and media industries are still male-dominated. However, over the years, more women are going into those sectors. Do you feel there is a difference between these two types of women and the way they choose to invest their money? Possibly one of the differences is if you’ve inherited money, or divorced or widowed. Then you are a bit more used to having somebody take care of it for you. Age also matters, the older generation, particularly age 60 and onwards tends to delegate a lot more. Do you believe women are more risk averse? I suppose on the whole you probably become more risk averse as you get older unless you’ve got quite a bit of wealth. I would say, generally speaking, entrepreneurs are used to taking risks and are quite comfortable with that. Younger women too, before you have families and such responsibilities there can be a feeling of having less to lose therefore you are more prone to taking risk. Do you think that women are neglected or misunderstood by the financial institution when it comes to launching their own business? I don’t think they are neglected, perhaps sometimes misunderstood. Work-life balance continues to be an area of concern. Although a challenge, it presents unique opportunities for companies to continue to attract women and provide familybased benefits. So how do you think banks can help women who want to start their own business? I have no doubt that the banks are aware that a growing part of the UK’s wealth is controlled by women. As a growing number of women in the UK enter the workforce, the banks have an opportunity to design products that are attractive to women. A lot of research suggests that women as more risk averse than men, do think that is accurate? It is sometimes claimed that women take less risks than men, do you agree? I think it is changing, I would have said yes probably ten years ago. There is sometimes an element of money that they would perhaps ring fence and not want to take risk with, and that tends to be around their children and their home. But outside of that I don’t think they are, there are plenty of women who are comfortable with taking risks. I completely disagree and I will tell you why: women take risks all the time and are often responsible for their families and their children’s education. Women appear to be risk averse because we tend to take time to make decisions and consider all viable options first before making a choice. And if that is seen as a taking less risk then I think they are wrong. Some say women are more prone to have “done their homework” before they go to an advisor, that they look into things more thoroughly, or seek advice from a more wide variety of sources. Do you think that is true about women more than men? Any final comments on women and investing? I think they are considered investors, yes. They would think about things and not necessarily run into things because they happen to be the latest good buy. Often they will shy away from anything pressure orientated because they want to think about things and look into things a bit more. The main thing for financial institutions to remember is that for most women it’s all about building relationships. First learn what is important to women and then design products that fit into their priorities; but most importantly make it simple to understand and jargon free.
    • www.wealthmonitor.com