Personal finance: what rich Asian women want for their money?

Starting today, StarBizWeek features a column on personal finance called Money & You, which will focus on money matters as they relate to YOU. Our two writers will take turns every fortnight to shed light on personal finance matters.

■ Yap Ming Hui is an independent financial advisor and author of five best-selling books on personal finance. He is the managing director of Whitman Independent Advisors, an independent financial advisory firm licensed by Securities Commission and Bank Negara Malaysia. Since 2000, Yap and his team of licensed independent financial advisors have successfully helped numerous clients achieve financial freedom. Yap believes that all Malaysians can fully optimise their wealth using a holistic wealth management approach.
 
■ Carol Yip, founder of Abacus For Money, believes that if people understand their money mindset, behaviour and money psychology, they can be financially happy and successful. She actively promotes financial literacy and intelligence within families and for women, youths and retirees.

MONEY & YOU By CAROL YIP

WOMEN in Asia are building and inheriting more wealth than ever before. According to Boston Consulting Group (BSG) 2010 report, the percentage of wealth controlled by women in Asia (ex Japan) is rising nearing 30% annually and total wealth controlled by women reached RM2.8 trillion in 2010. Their heightened visibility in financial circles can be traced to more women achieving success in the workforce and a greater number of women actively managing family finances. Kim Sung-Joo recently made her debut on the inaugural Forbes list of Asia's Power Businesswomen in celebration of International Women's Day recently. She is the youngest daughter of an energy conglomerate tycoon in South Korea and created her wealth from luxury fashion.

The increasing number of wealthy women is also partly because they are inheriting wealth due to their longevity. Puan Sri Lee Kim Hua, 81, widow of the late casino magnate Tan Sri Lim Goh Tong, is one of the 40 richest Malaysians on the 2012 Forbes Asia list.

Without a doubt, Asian women are creating significant financial visibility. But are bankers and wealth advisors paying sufficient attention to this alluring segment of the market?

Women of wealth

Based on research conducted in 2011 by the Family Wealth Advisors Council, a network of US-based, independent fee-only wealth management firms, the financial services industry has a long way to go if it wishes to provide the kind of service wealthy women say they want. The title of the study of high net-worth American women says it all: “Women of Wealth: Why Does the Financial Services Industry Still Not Hear Them?”

Involving 551 women across the United States with a net worth of US$1mil or more, the study collected survey questionnaire data across marital status, employment status, age and net worth. The research looked at what worries wealthy women:

About 86% of working women surveyed consider obsolete careers and eroding earning power as risks to their financial success;

Married women believe health challenges present a greater risk to their financial security than the death of a spouse;

About 96% of women want their unique circumstances and their entire life picture understood by their financial advisor;

About 80% of women (either married or divorced) believe that they will be called on at some point to help one or more of their children in a crisis;

About 81% of retirees see a potential decline in the economy as a major risk, versus 45% of full-time working women; and

About 57% of married women feel that divorce poses a significant risk to their financial well-being.

With women's economic clout in the workplace and purchasing power in all consumer and commercial markets increasing, their dissatisfaction with the financial services industry is also growing. The study clearly showed that women do not like to be considered a monolithic group, but want services tailored to their specific circumstances. Evidence suggests that wealthy women in Asia Pacific are also having similar experiences.

Different women different needs 

As more women call the shots on money, they also want their wealth advisors to do a better job of meeting their needs. They want the same attention, advice, terms and deals that men get with advisers who provide investment recommendations. But, at the same time, women want advisors to tailor services to them because they have very different needs and expectations than men.

In the BSG survey, women said advisors tend to assume they have a lower risk tolerance than men, so advisors provide only a narrow range of investment alternatives. Some women claimed that advisors for women are too quick to focus on strategies that don't emphasise on performance, assuming that women are more inclined to make investment decisions based on social issues. With these and other study insights, wealth advisors who service female clients should foremostly recognise that women want to be treated differently. Some suggestions come from the findings:

Women want to be understood as unique individuals. They want an advisor who listens to their needs and is trustworthy. A fiduciary advisor who knows how to create strategic investment allocations based on a women's situation, goals and risk appetite will stand a better chance of securing their business.

Women are looking for advisors who can provide advance planning, relationship management and investment advice a one-stop boutique financial centre.

The wealth advisor's gender plays an important part of the financial planning process for wealthy ladies. Female wealth advisors will be able to relate better to their situations and challenges than men.

Women's investment attitude

It's no surprise that women's behaviour as earners, investors and savers is the subject of a large and growing body of behavioural economic research, which has yielded important findings. Women prefer to focus on long-term investment goals and seek holistic advice. When women invest, they tend to look for informed advice and better rate of return than men. Women can be too conservative in their approach, especially given the fact that they tend to live longer than men. Ultimately, from the way they seek financial information and advice, to their understanding of the long term, women's financial behaviour holds crucial lessons for all financial advisors.

Women may also tend to limit their trading far more than men do. They prioritise by protecting principal rather than taking risks to grow their assets. A study by the University of Michigan's Retirement Research Center finds that men frequently and unnecessarily trade their holdings. All other things being equal, the male participants trade 56% more than their female counterparts, and the more they trade, the worse their performance becomes “a result of a too-rosy estimation of their own investment skills,” the researchers write.

The landmark study on gender differences in stock investing also finds that men tend to sell too early, or to swap assets for new ones that underperformed what they havve sold. By contrast, women are more inclined to take the long-term view and understand that performance in many cases are best measured over time.

Huge potential 

Women's financial behaviour and preferences across varied situations show major differences from men's. Women's financial strengths are significant. So are their challenges.

The provision of tailored wealth management services for wealthy women is much needed. There is a unique opportunity for the financial services industry to design investment, insurance, trust and estate planning products and services that better address women's needs, psychological preferences, life values and different life stages.

Wealth is a “means of life planning rather than a goal in itself” for women. The one-size-fits-all concept is no longer appropriate. Customised fitting is always the preferred choice to make wealthy female clients happy. Wealthy female clients will be loyal customers when wealth advisors deliver the results they want. A long-term trusting client-advisor relationship will be the result.

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China three decades from now

CHINA in the Next 30 Years is a new collection of 17 essays published in October 2011 on the future of China, of which eight authors are foreigners. This is one of the few books published simultaneously in Chinese and English.

Reading the book in both the original and translatied versions gave me sometimes a complete different reading of the authors' sentiments, and I had to go back often to the original to find out what the author was really trying to get at.

This is a valuable book precisely because it reflected not only some of the leading thinkers in China but also a number of very original thinkers outside looking in.

The first essay by Michael Hudson of the Institute for Study of Long-term Economic Trends is nothing short of iconoclastic.

He sees the era of debt-driven consumption in the West (1945-2010) coming to an end, and China in the next 30 years must not only avoid the finance, insurance and real estate bubble (FIRE) trap, where China will be blamed by the West, but also go down a path in strengthening its real economy, solving the wealth gap and improving efficiency (subject to ecological constraints).

The future economic prospects are considered by three leading Chinese thinkers.

Prof Wu Jinglian, the most respected Chinese economist of his generation, argues that reforms have gone into deep waters due to the complex battle against vested interests and rent-seeking activities.

There is no alternative except to deepen reforms, particularly re-balancing the playing field between minyin (private) enterprises and the dominant state-owned enterprises.

Tsinghua University Prof Li Daokui regards the three great challenges facing sustainable development as an open mind, more inclusive and harmonious development and formulating China's role in global affairs as a major power.

Returned scholar Wang Huiyao examines the strengths and weakness of the “Chinese models of development”.

He clearly recognises that the pragmatic and adaptive models of the past may not work in the future as sustainable development faces a more complex, interactive and geo-politically fragile world, especially in the ecological, resources and energy issues.

The political challenges are considered by two thoughtful commentators.

In considering Chinese politics within the geo-political order, Peking University Prof Pan Wei argues that any bright prospects in the next 30 years would depend on three key conditions no economic vacillation, no political distraction and no international partiality.

He refutes the argument that there has been no political reform, since the massive economic reforms could not have been possible without significant changes in China's political system.

At the same time, the pillar of China's politics has been its civilisational constancy, based on its humanist democracy, meritocracy at all levels of government and a unified ruling group.

Fellow Peking University Prof Yu Keping identifies the challenges of governance reform as social inequality, corruption, social instability, crime, environmental degradation and ignorance of citizens' human rights.

He recognises the need for a realistic review of China's socialist democratic theories, but also a rethink of popular Western democratic theories.

On the new global order, Nobel laureate Robert Fogel's essay warns that China's future geo-political position may be stronger than estimated.

Taking a long historical and demographic view, he sees Chinese income per capita being double that of Europe by 2040 and accounting for nearly 40% of world GDP, significantly larger than the United States and Europe.

His higher estimates are due to currently favourable demographics, good education and resilience in the political system, overtaking aging population in the West with a different work and lifestyle.

Singapore diplomat Tommy Koh echoes the recognition that China will become more powerful in terms of soft and hard power, and wishes that China will continue to practice good neighbourliness, play a constructive role in global governance and embrace sustainable development.

Five out of the 17 essays are devoted to green growth, with the best article by Tsinghua Professor Hu Angang, who sees a Green Vision as China's third generation of modernisation.

He powerfully argues that the idea of greenness is essentially the ancient Chinese philosophy of harmony of man with nature and that innovation and realisation of green modernisation is a civilizational objective that has global benefits.

The message of cutting carbon emissions, clean energy, green technological innovation, and central importance of Chinese agriculture and rural development are reinforced by essays by Copenhagen Professor Bjorn Lomborg, Swiss agriculturalist Hans Herren, Worldwatch President Christopher Flavin and Shanghai Professor Li Wuwei.

The last and longest essay is an intriguing and wide-spanning exploration on China's “Civilization-State Model” by Malaysian-born, India-based scholar Tan Chung.

He argues that China is the longest surviving civilization-state that is actually a commonwealth of different tribes, languages and cultural communities that has lived within its borders for more than 2,000 years.



China has absorbed different cultures, particularly Buddhism from India, more recently Marxism from the West and has evolved its own concept of “grand universal harmony.

He actually laments the fact that many modern Chinese scholars have learnt “whole-hog Westernization of China” without drawing upon the inner cultural confidence of ancient China.

His suggestion that Chinese leadership is differentiating between the “kingly way versus the hegemonic way”, echoes an important book by Tsinghua political scientist Yan Xuetong, which I shall review shortly.

Professor Yan argues that modern statecraft depends on kingship, founded by humane authority and strong moral standing.

Hence, for China to be a superpower modeled on humane authority, she has to forge a harmonious society from which other states are willing to learn.

The fundamental contribution of this book is that it has pointed the way on how China intends to move towards a harmonious green economy through the recent 12th Five Year Plan (2011-2015).

This is a bold and arduous journey unprecedented in history in terms of scale and difficulties.

All hopeful global citizens must wish its success, because its failure could have geopolitical consequences beyond contemplation.

Andrew Sheng is president of Fung Global Institute.

THINK ASIAN By ANDREW SHENG

Spy on citizens?

To spy or not to spy on citizens? That’s the question

KUALA LUMPUR: Should governments use “trojan horse” programs or other computer hacking tools to spy on its citizens?

Mikko Hypponen, chief research officer for network security solutions company F-Secure Corp, believes the end does not justify the means. But he admits that there is no clear answer.

 “It's a problematic subject. As long as technology is used to catch drug smugglers or terrorists, that's great.

“But when a government places a trojan on the computer of an innocent person, it is a horrible wrongdoing,” he said recently.

He was in Kuala Lumpur for a meeting at F-Secure's network security monitoring centre in Bangsar South, which covers the Asian region.

The problem has been compounded in recent times because terrorists and so-called “hacktivists” have no qualms about launching cyber attacks against governments and others.

So why shouldn't governments resort “to fighting fire with fire”?

Hypponen said it was a question for each government to mull over because there was no one-size-fits-all solution.

He cited Germany as an example where a government-backed trojan program was set loose on public networks.
Controversy arose in Germany in October last year after a hacker group highlighted what it claimed was a government trojan program to spy on people, Hypponen said.

The program, apparently deployed to help law enforcement agencies, could record Skype calls, monitor online messages, log keystrokes on a computer and even take pictures of the screen.

Hypponen said he was glad to note that such trojan programs had not been deployed in Malaysia.

Last year, Hypponen tweeted about the Anonymous hacker group's threat to attack government websites in Malaysia, which later happened.

> Watch out for the full interview in StarBytz, the information technology pullout of The Star.

By GABEY GOH The Star/Asia News Network

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