World must take note of the gender gap

Women control a growing share of global wealth, and financial services providers must work at being useful to this group

Zhang Yin, the founder of Nine Dragon Paper Holdings, is the richest self-made woman in the world, according to the Hurun Rich List 2010.

The political and economic empowerment of women has been a defining characteristic of the past century.

Across the world, the role of women, from economic, social and political perspectives, has changed significantly.

Legislative changes have allowed women to have rights as primary inheritors, and even the right to inherit the same amount as male family members. Even in countries where women typically inherit less than men, the gender wealth gap is beginning to narrow.

Over the past century, not only has female participation in the labour force increased significantly, but more women are emerging as business leaders, with many at the highest corporate levels.

Women today are becoming increasingly financially literate and confident and are playing a vital role in managing their families' wealth and investments. As a result of these trends, female wealth creation is rising rapidly globally.

According to a study published last July by The Boston Consulting Group (BCG), women controlled 27 per cent of global wealth, or about US$20.2 trillion (Dh74.19tn) in 2009.

Between the end of 2009 and 2014, the wealth controlled by women is expected to rise at an average annual growth rate of 8 per cent.

In the coming years, we are likely to witness a significant rise in emerging markets' contribution to the growth of female-controlled wealth, given the growing pool of highly educated women aspiring to professional careers.

According to a recent article in the magazine Harvard Business Review, women represented 60 per cent of college graduates in Brazil, and women from the Bric countries and the UAE considered themselves to be "very ambitious" (85 per cent in India versus only 36 per cent in the US).

Furthermore, according to the Financial Times, 30 per cent of the top 50 businesswomen are from emerging-market countries.

Not only are a growing number of women aspiring to work in top jobs and are postponing having children, but there is also a growing list of self-made female billionaires.

Zhang Yin, who made her fortune in the paper industry in China, is the richest self-made woman in the world, according to the Hurun Rich List 2010.

Female clients from an entrepreneurial background are likely to be as proficient as men in financial matters as they have to deal with them in the day-to-day running of the business.

Women's rising share of global wealth has important implications for the banking sector. New trends are emerging for financial institutions, broad asset allocation and the overall market landscape.

It has been observed that women tend to be more focused on regular income streams, fixed-income investments and property.

In equities, stocks with high dividend yields could be of more interest to women given the income generation characteristic of such equities. As interest rates could start to rise soon, the decade of strong fixed-income returns may also be coming to an end, and positioning in this asset class is crucial for banks, especially given the rising importance of female clients.

Women also tend to have a holistic approach or long-term focus when considering financial investments - such as when planning for children's education expenses. According to a BCG report, women often focus on long-term investment goals or objectives and look for holistic advice.

Risk taking depends more on experience rather than on personality or gender. Increased knowledge and experience of financial markets is absolutely necessary for women to have confidence in their investment choices.

In line with the focus on longer-term investments and less turnover, women seem to be more biased towards social investments and sustainability issues, thus the trend towards more wealthy, female investors will further support sustainable investing.

Women are looking to invest in companies whose values match theirs. Thus, the combination of environmental positions, social values and economic stability will matter even more for companies if they wish to remain attractive to all investors. There could be a growing demand for companies with strong sustainability credentials.

As female-controlled wealth rises rapidly, understanding the gender gap will be crucial for businesses that want to benefit from this potential client segment and also for financial institutions in an increasingly competitive industry.

To present their services and products appropriately to this client segment, banks need to devote more resources to understanding how gender differences influence financial choices.

Juliette Lim Fat is a vice president and head of thematic and derivatives research, Christine Schmid is director of chartered financial analysis and Yalis Torretta is a research analyst at Credit Suisse