At one time, only wealthy businessmen in the Gulf could attract the attention of international bankers. Now, female wealth managers are flying in from global financial centres to sell their services to the GCC’s growing number of wealthy women.

They are not alone. Local financial institutions are also recognising the existence of an untapped market on their doorstep.

This year, at least two standalone women’s investment firms will launch in the region, targeting high net worth businesswomen and independently wealthy women.

The first has already received initial app-roval from the Central Bank of the UAE. It will be based in Abu Dhabi and will be headed by prominent local businesswoman Fatima al-Jaber, chief operating officer of the Al-Jaber Group. The bank is also supported by Bahrain’s Addax Investment Bank. If it proves successful, the model will be replicated in Riyadh and Jeddah.

Disposable assets

In Bahrain, Dubai-based Bridge Partners has applied to the central bank for an investment banking licence. Once it gains the licence,it plans to follow this up by launching a women’s investment house by the end of the third quarter.

The company will target women with $5-10m in disposable assets, before expanding to cover women with smaller assets. Meanwhile, Dubai World women’s investment company Forsa is one year old this month.

The three firms are part of a growing trend to target a potentially lucrative client base. Increasingly, financial institutions recognise that women represent a distinct segment of the market, and they need to tailor their services and products to win their custom.

The wealth that women in the region hold is substantial. Like their male counterparts, the estimated 48,500 high net worth women in the region have benefited from the economic boom. Industry estimates put the total wealth owned by GCC high net worth individuals at about $1.2 trillion, of which $350bn is owned by women. About $246bn of this is directly under women’s control, and that is set to rise to $385bn by 2011, at a compound average growth rate of 9.8 per cent, well above the global average of 6.8 per cent.

Saudi Arabia has the highest number of rich women, and they have the most assets, with an average of $6m held in cash, businesses, stocks, real estate and jewellery. However, like elsewhere in the Gulf, the bulk of their wealth is in local bank accounts.

“That women’s money is not intelligently invested is a huge issue across the Middle East,” says Graham Bell, managing director
of Bridge Partners. “Lazy money is criminal. Women need to recreate wealth through investment.”

Traditionally, most female wealth in the region has been inherited, and the most trusted source of advice on what to do with it has been a male relative. However, with increasing numbers of women carving out independent careers in the region, and greater numbers of female entrepreneurs, this is changing. More of them are making their own financial decisions and there is a growing market of female investors looking for banking products.

“Women are becoming more independent,” says Wasim Saifi, executive vice-president, Dubai Islamic Bank (DIB).

Women account for one-third of DIB’s customer base, through its Johara Banking brand.

Banking requirements

“They are taking more decisions about their finances and we want to capture that,” says Saifi. “Women are becoming more focused on their specific requirements in terms of their wealth and banking needs, such as auto finance and mortgages.

“Before, decisions on these things were not made by women, but now they are becoming more involved.”

There are other, social aspects to the sector that distinguish it from the wider market. “Because of the way culture works, with wealthy families in particular, women are not expected to spend their personal wealth on the family, so they have a lot of disposable income,” says Youssef al-Essa, chief executive officer of Addax. “We have a conservative
society. These ladies are not always accessible to men. The way you sell to women is not the same as to a man.”

Despite the differences, investment firms ultimately make money from their rich female customers in the same way they always have: by charging wealth management and placement fees on funds, and co-investing with investment vehicles.

Loyal customers

A benefit for banks, though, is that women tend to be a good risk. They are more conser-vative with their money and are loyal customers who repay their loans. However, as their investment preferences are different to men’s, encouraging these latent investors to hand over their cash means the marketing approach has to be different too.

According to Forsa, women tend to invest on behalf of their family and prefer tangible investment products such as real estate. They are more risk averse than men, preferring longer-term investments and products with a guaranteed rate of return. They also tend to avoid complex financial structures, and target sectors that have traditionally mirrored their concerns, such as education, healthcare and retail.

“You start with a simple product that interests them and gives them a hefty rate of return, and then go slowly into advanced products,” says Raana Hasnat Hijazi, head of asset management at Forsa.

Women’s reasons for investing include securing their own and their family’s future, enhancing social status, saving for marriage and, in case of divorce, peace of mind and financial independence. In terms of financial planning, women have different pension requirements and tend to live longer, which affects their entire investment strategy, says Bell.

As the market sector becomes more established, selling financial products to women is becoming more sophisticated. In the past, marketing was done through word of mouth and repackaging existing products. Now there are sophisticated advertising campaigns that emphasise the values of privacy and trust.

“In a lot of markets women are peripheral, but our success criteria is to provide them with products and a vision,” says Shamsa Noor al-Rashid, chief executive officer of Forsa. “A lot of times, institutions put a pink ribbon on and call it a ‘women’s product’, but we do research on profile and risk. It is important for a financial company to understand what women aspire to do, and can do in terms of desire, skill set and motivation.”

Common to all the new ventures that are being set up is the principle that women prefer to be sold products by women. “Women-to-women sales is a successful model in various industries,” says Bell.

In the case of Saudi Arabia, by far the market of keenest interest to new firms, it is a logistical necessity. It is easier for a female independent financial adviser to visit a female client in her home than it is for a male adviser. However, finding sufficient numbers of female financial professionals is difficult.

To attract customers, firms have also appointed prominent businesswomen as chief executive officers, such as Fatima al-Jaber and Al-Rashid at Forsa. Another woman, Sheikha Hanadi Nasser bin Khaled al-Thani, was the face of the Qatar Ladies Investment Company (see Interview, page 26).

Forsa has gone even further. In a reversal of women’s often minority status, men can only invest in its products if they do so in a woman’s name. From a business perspective, it is a controversial approach.

“In general, women’s investment firms fail when people see them as a cause celebre,” says one Dubai-based banker. “It should only be done because it makes money.”

Forsa, as part of the Dubai World group, has the advantage of being heavily backed by the Dubai government. In the past, such political support has been crucial to the success of women’s investment firms.

In contrast, firms wanting to break into the Saudi market are well aware of the political sensitivities involved in encouraging women to take control of their wealth. As a result, they have had to tread lightly when it comes to publicising their services.

Educating clients

Another challenge for firms trying to tap into the women’s market is the low level of knowledge about financial planning and products. Firms have to educate and encourage prospective clients to take an interest in their finances.

“Women still think men are more educated about finances, particularly high-risk investments, and the challenge is to change their minds,” says Hijazi.

The risk of failure for new firms targeting the women’s wealth segment is high. There have been attempts that did not succeed. Qatar Ladies Investment Company was set up in 1998, but in 2003 changed its name to Amwal and became a general investment firm.

There is no successful business model for new firms and they will have to chart their own course.

“The problem with a lot of women’s companies is that they do not get taken seriously because they do not have financial backing,” says Al-Rashid. “We do not want to be another company doing something for women. We want to be seen to be world class and addressing women. This is an unproven business model, but if you have the staying power you will be fine.”

Table: Wealth controlled by women

Source: Merril Lynch; Capgemini; PricewaterhouseCoopers