Aditi Kothari Desai, Vice Chairperson, DSP Mutual Fund, advises women to acquire financial knowledge before venturing into investments

Women's Day 2024: The Association of Mutual Funds in India (AMFI) is actively promoting investor education at both the Asset Management Company (AMC) level and through its own committee and board. They are raising awareness about mutual funds, making it mandatory for asset managers to contribute one basis point, which is 0.01%, towards investor education.

"This may seem insignificant, but when applied to the top AMCs managing over one lakh crore each, and with the industry's total assets under management exceeding 50 lakh crore, the collective contribution of one basis point represents a substantial sum dedicated to investor education," says Aditi Kothari Desai, Vice Chairperson, DSP Mutual Fund, in an exclusive e-mail interview with Zee Business' Roshni Agarwal.

Aditi is passionate about the digitization of the financial sector and was instrumental in the launch of all DSP’s digital platforms. Earlier Aditi was a part of  Merrill Lynch's investment banking group in New York where her work entailed primarily working on M&A activities in the Financial Institutions Group. Subsequently, she worked in DSP Merrill Lynch as part of the fixed income sales team and later joined DSP Merrill Lynch Fund Managers in 2002 (now DSPAM) where she worked on various projects, including establishing an offshore fund for foreign investors.

You have been focusing on promoting financial awareness, especially among women. Tell us about your experience and motivation behind this. Also, what is the current trend among people at large, given the era of social media and information overload?

It is evident that women often do not make their own investment decisions and instead rely on their fathers, brothers, or husbands. The hard data reveals that only around 20% of DSP's investors are women. Moreover, when attempting to contact a woman investor over the phone, the common response is to transfer the call to the husband, stating, "Hello, regarding investments, let me pass the call to my husband." This suggests that while the investment account may be in the woman's name, she is not the actual decision-maker. In some cases, the phone number provided belongs to the husband, indicating a lack of autonomy for the woman investor. Although this scenario may change due to recent regulations allowing only one bank account and associated phone number per individual, the observation highlights the need for empowering women to take charge of their financial decisions.

This situation motivated me to actively educate and encourage women to make their own investment choices, as I firmly believe this represents true independence. Earning one's income holds little significance if control over that money is relinquished to others. Fortunately, more women are now taking ownership of their finances. The cultural shift towards equal inheritance distribution, regardless of gender, has enabled women to inherit wealth from their parents. Additionally, the unfortunate reality of a higher life expectancy for women, coupled with the increasing penetration of life insurance, has resulted in more women becoming beneficiaries of insurance proceeds.

I have witnessed friends from various backgrounds, such as artists, art gallery owners, and individuals in the social sector, facing similar situations where they needed to take control of their financial matters. Recognising the need for education and awareness, I felt compelled to guide one person at a time. However, I realised that a more scalable approach was required, involving not only education but also raising awareness about the importance of financial literacy for women.

Social media has played a vital role in this endeavour, making people more conscious of the issue. Research has shown that even well-intentioned parents often communicate differently with male and female children, which should be avoided. Empowering daughters with financial knowledge from an early age will ensure that as they grow older, they naturally seek to learn more and do not automatically relinquish their hard-earned money to their fathers, brothers, or husbands.

You have a financial background; how much did it help in your career?

Yes, I studied finance in both my undergraduate and graduate studies. In fact, during my undergraduate studies, I majored in finance. This background certainly instilled confidence and provided a solid understanding of the fundamentals of finance. However, neither programme specifically delved into personal finance, which differs significantly from broader financial concepts.

Personal finance is highly practical and merits its own dedicated course, particularly given its relevance to everyday life. Even at what I would consider to be among the top educational institutions globally, personal finance was not effectively addressed. I believe it should be a staple in school curricula, as financial literacy is essential for everyone. Learning how to manage money effectively, become a proficient investor, and maintain disciplined financial habits are critical skills. Excelling as an investor requires a distinct set of knowledge and skills beyond the general study of finance.

What should, according to you, be the first crucial step in a woman's path to financial independence?

The first crucial step in a woman's path to financial independence is really earning her own money. And besides that, owning your own money. This is their money; no one else should have any power over it, nor should anyone question it in any way. Once they own it, they should take care of it. That is extremely important. She needs to educate herself on how to manage money. DSP has a great set of videos on our learning site, dspim.com/learn. 

What, as per you, can drive women to own their money, as you say? I heard you say in an interview that if you invest, only then can you own your money.

It is advisable to invest with your own money to maintain financial independence. One should be aware of the consequences of relinquishing financial autonomy, which is why we emphasise the importance of women acquiring financial knowledge before venturing into investments. I encourage all women, colleagues, competitors, and individuals within the industry to prioritise this educational aspect.

It is crucial to educate oneself and subsequently engage the services of a competent financial advisor, which is an essential step towards attaining financial independence. Once you have secured the services of a financial advisor, you will be able to engage in meaningful conversations, pose questions, and ultimately make informed decisions while benefiting from the advisor's expertise.

How do you see the future of the mutual fund industry 20 years down the line? Will it still be that exciting and enable wealth creation?

I believe the mutual fund industry in India has significant room for growth. As per the latest statistics, only 7% of households have invested in mutual funds, in contrast to 50% or higher in America and other countries. Undoubtedly, India has a considerable distance to traverse.

However, as the nation's wealth continues to increase, coupled with a stable government in power, it instills a sense of comfort and confidence among investors, both domestic and foreign. Furthermore, India boasts an exceptional regulatory body that consistently safeguards the interests of investors, providing further reassurance for individuals to invest through mutual funds. With these solid foundations in place, the mutual fund industry is poised for substantial growth.

Additionally, the Association of Mutual Funds in India (AMFI) is actively promoting investor education at both the Asset Management Company (AMC) level and through its committee and board. They are raising awareness about mutual funds, making it mandatory for asset managers to contribute one basis point, which is 0.01%, towards investor education.

This may seem insignificant, but when applied to the top AMCs managing over one lakh crore each, and with the industry's total assets under management exceeding 50 lakh crore, the collective contribution of one basis point represents a substantial sum dedicated to investor education. Furthermore, AMFI matches this contribution, effectively doubling the funds allocated for educational initiatives.

As the market expands, awareness increases, and these educational efforts bear fruit, the growth of the mutual fund industry is expected to accelerate. 

What would you suggest to someone if he or she is also looking for a career in fund management?

For individuals aspiring to pursue a career in fund management, it is highly recommended to obtain professional qualifications such as Chartered Accountancy (CA) and Chartered Financial Analyst (CFA). Developing a comprehensive understanding of accounting principles is crucial, complemented by a sound knowledge of finance. However, it is equally important to engage in a profound introspection and assessment of one's temperament. The ability to maintain composure during market volatility, avoid panic during downturns and resist euphoria during upswings, is an essential trait.

Maintaining a clear and rational mindset, focusing on value analysis and stock valuation, and possessing the fortitude to withstand scrutiny and criticism are imperative qualities. There may be instances when adhering to prudent investment strategies might appear misguided in the short term, especially when the market sentiment is contrary. Nevertheless, such steadfastness will ultimately lead to long-term success. However, cultivating this resilient character and temperament is a prerequisite for thriving in this profession.

Developing this level of self-awareness and training one's temperament is a crucial aspect of personal growth in this field. Concurrently, mastering the requisite skills and gaining extensive experience is essential, as it takes a considerable amount of time to become a proficient fund manager. The journey typically begins as an analyst, during which one develops a deep understanding of stocks, market cycles, and investor psychology.

Dedication, focus, and a deliberate choice to pursue this profession are indispensable. It should be a well-considered career path, not merely a job opportunity. With perseverance and commitment, securing a rewarding position in fund management becomes an attainable goal.