Role of women in Family Office

It was Mel Gibson who first attempted to know “What Women Want” in this award winning Hollywood flick. While it required an electric shock to him to get to appreciate their viewpoint, I assure you that I did not have to undergo such a treatment. It just needed a bit of open mind, lowering a sense of superiority or male ego and a bit of empathy. 

I am also relying on my personal experience of dealing with women with their financial affairs. Most importantly the experience I gained in dealing with women in business families, where they are given a bigger role in managing financial affairs of the family.

Before looking at this aspect whether women are adept at handling financial affairs or not. Or whether women with similar financial education background will tip men at this job. Let us approach it from two aspects: Her financial behavioural framework and her general demeanour. 

Her financial behavioural framework:

Let us understand that perhaps this is the first generation of women who have gone out of homes and competing with men. One generation ago, women worked too but not in domains strictly considered of men’s. So let us say historically, men went out to work and women looked after home and raised children. She made jewellery and always tucked away some money from her savings to save for rainy days.

My own mother used to have 3 or 4 metal boxes, where she would throw some currency. One box denoted one goal and she never opened it till the right time. In other words, she never compromised one goal for another whether it was saving for education, marriage or medical exigencies. She only touched the right box and took out money at the right time. She possibly understood the concept of ‘Non-fungibility’ before Nobel laureate Richard Thaler published his work. It was a mere mental note for her. 

From very Indian outlook and some similar conservative societies, this was a prevalent practice and a common wisdom passed on from all mothers to all daughters. Women always focused on preservation. Whether, it was about the health of her family or their general well-being. 

Women of today also carry the same Phylogenetic signature, if you will. This is evolutionary concept. It is a sub-conscious response of the female brain.

Her general demeanour:

A Woman is generally known to be more creative in whatever she does. She is orderly, well behaved and largely in discipline. Yes, we may see many modern day examples of a spoil girl kid in schools and colleges but it is not her true nature. Many a times she is just playing equal to boys and may be venting out her anger towards her family or some frustration for lack of attention. Such girls too stabilise as they grow older.

She has grown up playing with dolls, spending hours decorating her dolls and later on herself in the mirror. She takes care that things are not messy. 

Things may be changing nowadays, but I could not spot more than 10% women in a casino. Aggressive risk taking and a mindless bravado is not in her innate nature. No wonder that in traditional Indian households, the so called Tijori ki chaabi or keys to the safe were handed over to the Female head of the family. She was seen as a figure of responsibility and respect. Her views on matters of land and investment were and still are respected. Overall, she lent a Balance and influenced the manner in which men in the family approached financial matters.

I have highlighted some key words above in my chain of thoughts. Let me enumerate them here once again:

1.      Savings mindset

2.      Goal orientation and Non-fungible financial planning

3.      Wealth Preservation mindset (special mention in concluding note on this)

4.      Creative thinking

5.      Orderly and Disciplinarian

6.      Never leaves a mess

7.      Low risk taking

8.      Responsible and accountable

If I were to write a job description of a chief investment officer of a family office, above qualities would be a Gold standard. Throw in the quality of ‘Trustworthy’ especially if the candidate is from within the family then it is a complete package.

Finally, my personal belief has always been that wealth creation always happens in business or trade that any business family is engaged in. For a Family office, wealth preservation is the top priority. And for the Patriarch of a family, preserving the values and cohesiveness of his family is also paramount. The answer lies in your daughter or daughter in law. Groom them to be the Family office in charge.

Love and Peace,

Nitin Patnia

Disclaimer: The author works as a financial advisor in India. The views expressed here are completely his own and are a collective wisdom of  numerous humans that co-exist or existed before the author. The author claims no right of originality of ideas but would like to assert the right to his style of writing. There is no intent to hurt anyone's sentiments with his opinions. It is just an honest expression by the author to help anyone who may be benefited from his writings. And a medium to express his gratitude to all who contributed to bless the author with wisdom.

Finding real 'Value' in Value Investing

Truth is bold by nature and lie, arrogant. - Om Swami

I wonder if anyone has ever thought of Value investing in a philosophical sense. My weekend contemplation is on the importance of Values in companies that fetch premium valuations. We are too focused on what we are getting for the price we are paying to buy a stock or a stake in a company. In other words, there is enough literature available on Value investing in its economic sense

Taking a view on a stock, from Value investing point of view, perhaps, will be incomplete if we ignore what was the core reason for ‘life’ or ‘essence’ in a business.

Many growth investors have already thrown the Cigar Butt or Asset value concepts out of reckoning and married pure growth concepts in their valuation matrices. Much debate is around durability, longevity, consistency, predictability of a business growth. These concepts are very subjective in nature and are a matter of conjecture. This is the reason why buyers and sellers of a same stock exist at any given point of time, assuming both buyers and sellers had long term horizon, same risk profile and there was no liquidity crunch.

This subjectivity alone is the reason for ‘Alpha’ generated by some successful investors in equity markets world over. I am not denying the role of luck or market timing. But the joy one receives by a careful and diligent preparation is more satisfying than success by sheer luck. The former experience gives rise to a  ‘Bold’ personality and the latter an ‘arrogant’ investor.

Coming back on the main topic, I used two terms above ‘life’ and ‘essence’ of a business or an organisation. Let us look at what fosters and nurtures growth in a company. Is it technology, a great product, speed to market, popular managers, employees, preferential access to government or is it Research and development?

Perhaps all of the above are excellent ingredients of a great stock to own optically. In a short run, you will do well if you just identify some ideas that score high on some of the above attributes in comparison to its competitors. However, to get a sustained growth environment within an organisation, a great value system is vital. Very often it is the vision of a man who leads the value chain. It is the single biggest challenge in succession planning that this legacy of values is protected and passed on generation after generation. It is a role that everyone inside the organisation has to perform to protect the values. One can not rely just on HR bosses or some cultural captains that present a value shield. 

If you notice, I have not used terms like ‘creating growth’ in my post so far. It is a short sighted and narrow way of looking at things. Even nature on our planet and in universe is only providing a ‘nurturing environment’, nobody is creating. We are not growing plants or trees, they are just growing. We are only helping, nurturing it. When we think that it is we who are creating it, it only boosts our ego. We will be carrying a burden on us.

Creation is an ‘in to out’ process and not vice versa. We can only provide an environment of free thinking, moral ownership, a sense of belonging inside the organisation. It alone instils a huge and vital mental energy for all stakeholders to think like one. In the words of my Spiritual Master,”… Group intelligence is more transformational than individual heroism in the longer run”.

A value based organisation is judged not just by how they wish to treat their employees but its attitude towards its business associates, partners, suppliers, shareholders, government and community. A company that is respectful of all its stakeholders, will invariably get preferential treatment from them. I am not for a moment suggesting that ‘Money’ and ‘Profit’ are to be ignored but an organisation that has its eyes only on Profit and fame, will have no eyes on its path.

You will notice that such companies will be very consistent in its communication with investors, transparent in its proceedings, values its stakeholders, treats employees fairly, gives back to community and gives credit to others for their success. In a nutshell, will have good reputation and high corporate governance standards.

Is it then a surprise that those stocks will trade at a huge premium to its peers? Such companies will always be preferred in tough times by investors. Such companies will find good talent attracted to them like a bee to a real flower. During times of consolidation, many opportunities for merger or takeover will be presented to them. For, a virtuous stream of Ganges will continue to remain pure. Despite taking many small streams of water, full of impurities, along with it.

How many of us are looking at real ‘Value’ in a ‘Value investing’?

Love and Peace,

Nitin Patnia

Disclaimer: The author works as a financial advisor in India. The views expressed here are completely his own and are a collective wisdom of  numurous humans that co-exist or existed before the author. The author claims no right of originality of ideas but would like to assert the right to his style of writing. There is no intent to hurt anyone's sentiments with his opinions. It is just an honest expression by the author to help anyone who may be benefited from his writings. And a medium to express gratitude to all who contributed to benefit the author with wisdom.