SUPER INVESTORS: INDIA’S NEW WEALTH GENERATORS
- The super investor is a more active, prolific and aware consumer with a larger financial risk appetite than the average consumer.
- Super investors are not content with the services that bank relationship managers provide.
- Super investors tend to purchase insurance as an investment as well as a means of saving.
Now out of the shadow of the Great Recession, global household wealth is rising. In fact, the 2013 Global Wealth Report from Credit Suisse notes that it hit an all-time high of US$241 trillion last year, up 4.9 percent from the 2012. While this is certainly good news, the growth has been even more impressive in India. Between 2012 and 2013, personal wealth shot up by 7.4 percent to US$3.6 trillion.
The influx of wealth in India has also had a significant impact on saving habits. With more disposable income, Indians are spending and investing more. While property has always been a favourite investment, Indians are re-examining their traditional choices and evaluating new ones. Given that financial needs and reasons for investing are changing, financial institutions are beginning to understand that the one-size fits all approach no longer applies.
Recent Nielsen surveys of investor behaviour have revealed some interesting information. But more importantly, they have uncovered a new category of customers that should be of interest to all financial institutions. We call them super investors. Who are super investors and how are they different? Do they simply invest more money or is it that they influence investment trends?
Who Is The Super Investor?
Nielsen defines super investors as consumers who invest heavily and are equally engaged with their portfolios. They are also loyal to the brand, service or product, and their investments outweigh their savings.
Not surprisingly, super investors tend to be salaried or medium-size business owners, metro-dwellers and property owners. They tend to own at least one car. Of the super investors Nielsen polled, 75 percent were male and aged 35 to 45. The profile is slightly different for super investors who opt for mutual funds and other equity-linked investments. The average age of the investor in this case was between 30 to 40 years. Mutual funds seemed to be a popular investment choice for businessmen and self-employed professionals.
So what do super investors do differently? The survey identified some definitive behaviours that set them apart from average investors.
Big On Products
Super investors tend to own more than one life insurance policy, and they often express an interest or intention to own more. The policies typically have a minimum value of at least INR 50,000, and super investors use these policies for investment only. As a result, they rarely miss making a premium payment.
In the case of mutual funds, super investors tended to invest approximately 1.6 times more than the regular customer. They mostly make investments with lump sum amounts rather than systematically over time. Here too, the average minimum investment is at least INR 50,000.
Higher Risk Appetite
Super investors have a more diversified portfolio than typical investors and they balance their portfolios with high risk investments such as equity as well as safer and more traditional investments like gold and fixed deposits. Their priorities go beyond specific objectives such as saving for their children’s education or for their retirement to include not just wealth creation but also ensure that there is no significant change to their lifestyle post retirement. Since most super investors are in their mid-30s, they tend to want investment options that will help them secure the best opportunities for their children
The Super Investor
Connecting With The Super Investor
Digital activation and engaging with super investors at their work place, are recommended ways to effectively connect with this segment. Given the high rate of online activity, ads, banners, pop ups, and emails – both about brands as well as specific products are a good idea. However, the importance of television messaging cannot be underestimated with nearly 54 percent of super investors stating that they had been influenced by advertisements on television.
Super investors can be wooed with improved service levels, greater responsiveness, and proactive contact. Products that cater to their priorities and risk appetites are far more likely to succeed than a generic offering. If approached correctly, super investors are a huge opportunity just waiting to be tapped.
For more details download the full report (top right).