super investors: india’s new wealth …...while property has always been a favourite investment,...

1FEATURED INSIGHTS | SUPER INVESTORS Copyright © 2014 The Nielsen Company

1

F E AT U R E D I N S I G H T S

S U P E R I N V E S TO R S: I N D I A’S N E W W E A LT H G E N E R ATO R S• Thesuperinvestorisamoreactive,prolificandaware

consumerwithalargerfinancialriskappetitethantheaverageconsumer.

• Superinvestorsarenotcontentwiththeservicesthatbankrelationshipmanagersprovide.

• Superinvestorstendtopurchaseinsuranceasaninvestmentaswellasameansofsaving.

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?

DELIVERING CONSUMER CLARITY

2 FEATURED INSIGHTS | SUPER INVESTORS

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.

“SUPER INVESTORS INVEST HEAVILY AND ARE MORE ENGAGED WITH THEIR PORTFOLIOS THAN AVERAGE INVESTORS. THEY ALSO TEND TO INVEST MORE THAN THEY SAVE.”

So what do super investors do differently? Our survey identified some

definitive behaviours that set them apart from average investors.

PROFILE

Higher proportion ofInvestment vs Savings(19% vs 12% at overall level)

87% are salaried

Most of them fromBangalore, Puneand Mumbai

35-45 yrs of age-49%(vs. 37% at overall level)

C/C+/SUV segment car 1/4th own more than 1 houseMale-75%

SUPERINVESTOR

Theyaremainlyfromthemetros;94%vs.62%onanaverage

Jointdecisionmaker;takesdecisionjointlywithfamily(68%vs.33%onanaverage)

Highno.offinancialproducts-6(Doubleofanaveragecustomer)

HighIncomeEarners(Monthlyhouseholdincome1.7xhigherthanavg.)


REASONS FOR INVESTMENTS

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.

48

43

59

49

CHILD’S FUTURE

OVERALL SUPER INVESTOR

RETIREMENT

SUPER INVESTORS DEMONSTRATED GREATER LOYALTY TO PRODUCTS THAT HAD A SPECIFIC OBJECTIVE IN MIND SUCH AS RETIREMENT FUNDS OR CHILDREN-RELATED INVESTMENTS.

Source: Nielsen


AT HOME WITH THE JARGON

Old ways of doing business may not work with super investors. That’s

because they’re less likely to rely on traditional avenues of information

like banks, relationship managers and tax specialists. They are well

informed and source most of their preliminary information from the

Internet, friends, colleagues, and financial publications. Findings

from the recent survey found super investors to be aware of financial

terminologies as well as their implications.

CATEGORY UNDERSTANDING

SUPER INVESTORS HAVE A VERY HIGH UNDERSTANDING OF FINANCIAL TERMINOLOGY. HENCE IT IS IMPORTANT TO SHOW VALUE OF THEIR OVERALL INVESTMENTS. THE SALES PITCH SHOULD BE ABOUT BENEFITS OF INVESTING DIRECTLY.

59

AUM

NAV

NFO

EXIT LOAD

SYSTEMATIC

ASSET LOCATION

AWARENESSOFMUTUALFUNDTERMS

2941

3145

2941

3244

2635

2534

MATURITY VALUE

SURRENDER VALUE

ENDOWMENT INSURANCE

TOP UP

ANNUITY

RIDER

SWITCHING

ASSET ALLOCATION

TERM INSURANCE

AWARENESSOFLIFEINSURANCETERMS

6383

5972

3761

4155

3251

3054

2642

2242

2342

AUM: Assets Under Management; NAV: Net Asset Value; NFO: New Fund Offer

Source: Nielsen

REGULAR INVESTORS SUPER INVESTORS


CRITERIA FOR CHOOSING MUTUAL FUNDS SUPER INVESTOR

RANK

RECOMMENDATION OF SALES AGENT 1

HISTORICAL PERFORMANCE OF SCHEME 2

OVERALL BRAND STRENGTH OF AMC 3

HISTORICAL FUND PERFORMANCE OF AMC 4

INCREASED ONLINE VISIBILITY

The super investor typically belongs to the upper echelon of the work

or business force. This category has easy access to the Internet, and

use it for financial transactions such as bill payments, fund transfers,

etc. In the case of insurance premium payments, for instance, most

super investors expressed their preference for making online payments

or using electronic clearance systems (ECS). Nearly 81 percent of super

investors polled said they were more inclined to purchase policies

online instead of through an agent to speed up the process.

NEW INFORMATION SOURCES

Super investors, as our survey discovered, no longer want to rely on a

single source of information. They want holistic expert advice, spanning

across products and brands, covering their entire portfolio and all their

investment needs.

The Nielsen survey revealed that super investors are no longer content

with the services that bank relationship managers provide. They cited

responsiveness and frequency of contact as critical to satisfaction.

This could be an area of focus for banks although it must be said that

multinational banks seemed more proactive in terms of making contact

with their consumers.

The high rate of churn within bank employees was listed as another

source of discontent. For customers, having a new relationship

manager means having repeat conversations about goals, priorities

and preferences. A stable transition and regular communication with

clients would probably help alleviate this issue.

While super investors prefer not to consult relationship managers for

their banking and insurance needs, they do turn to them for advice on

mutual funds. In fact, when asked to rank the criteria for selecting a

fund, super investors distinctly said they prefer the recommendations

of a sales agent over everyone else.

AMC: Asset Management Company

Source: Nielsen


WINNING OVER THE SUPER INVESTOR

The super investor is always on the lookout for new investment

opportunities. Having a higher risk appetite and a diversified portfolio

means they’re always evaluating investments. And when the time

comes to feed that appetite, they want a one-stop source of information

on products and services across brands to address their specific

investment needs.

BANKING: Being salaried, majority of the super investors tend to have

their primary bank account with private banks. However super investors

also displayed a high level of banking brand awareness. Our survey

indicated that super investors tended to own more banking products

than regular investors.

HIGH ONLINE USAGE

INTERNET USAGE OVERALLSUPER

INVESTOR

USE INTERNET 29 71

ACCESS DAILY 49 82

ACCESS INTERNET ON LAPTOP 3 40

THE SUPER INVESTOR IS CLEARLY A MORE ACTIVE,

PROLIFIC AND AWARE CONSUMER WITH A LARGER RISK

APPETITE THAN THE AVERAGE CONSUMER. FINANCIAL

INSTITUTIONS WILL NEED TO REVISIT TRADITIONAL

STRATEGIES WHEN APPROACHING THIS SEGMENT.

Source: Nielsen

WHEN IT COMES TO FINANCIAL ACTIVITIES CARRIED OUT ONLINE, FUND TRANSFER TOPS THE CHART WITH 91% OF SUPER INVESTORS

OPTING FOR IT.


Respondents during our survey, believed that current levels of service,

especially in private banks, need significant improvement.

Understanding the needs of the super investor is relatively easier than

it sounds, given that banks already know their net worth, their portfolio

and investment appetite. A greater understanding of the client’s needs

and priorities would help identify opportunities to position products or

services missing from the client’s portfolio.

Super investors tend to rely heavily on expert advice. This could be an

area of opportunity for banks who can create investor advisory roles to

fill the current vacuum.

“BANKSALREADYHAVEATHOROUGHUNDERSTANDINGOFACUSTOMER’SPORTFOLIOANDINVESTMENTAPPETITE.THEYCOULDLOOKASPOSITIONINGTHEMSELVESASHOLISTICINVESTMENTADVISORSTOTHESUPERINVESTOR.”

RELATIONSHIP OVERALLSUPER

INVESTOR

AVERAGE PRODUCTS 3 6

DEBIT CARD 85 97

FDs 13 46

CREDIT CARD 7 31

INSURANCE 35 86

AUTO LOANS 4 16

MUTUAL FUNDS 2 8

Source: Nielsen


INSURANCE: Super investors are already aware of how they can invest

in life insurance as savings as well as investment. They own at least 3 or

more life insurance policies and the average life cover is INR 9,79,158

which is nearly three times that of a regular investor.

INSURANCE POLICIES OVERALLSUPER

INVESTOR

Avg. number of policies held 1.6 3.5

Term insurance, however, is a new area of opportunity if pitched

correctly.

Retirement products like pension funds are also of interest to super

investors. They also exhibit a keen interest in products that have an

objective specific to their children, such as marriage and education.

Products that address these needs are likely to be successful. It would

be a good idea to focus messaging of these products online since this

is where super investors do most of their research.

But perhaps the best way to approach this segment would be to

recognize the value they bring and treat them accordingly. A dedicated

service manager would be one way of enhancing this relationship.

Also, considering their high levels of involvement with their purchase,

frequent contact would be the best way to ensure their engagement.

CONTACTED BY COMPANY

AFTER POLICY PURCHASE?OVERALL

SUPER

INVESTOR

YES 49 52

MOST SUPER INVESTORS ALREADY OWN MULTIPLE LIFE

INSURANCE POLICIES FOR INVESTMENT PURPOSES.

Source: Nielsen

Source: Nielsen

“THE NEED TO INVEST ADDITIONAL MONEY -

COMES OUT AS THE MAIN REASON FOR HAVING

MORE THAN ONE INSURANCE POLICY.”


MUTUAL FUNDS: Our data indicates that super investors in this

category buck the trend we’ve seen in this consumer segment.

Unlike the others, these consumers are self-employed and have been

investing heavily in equity for a considerable period of time. Like any

shrewd investor, past performance is a factor in making purchasing

decisions as is reliability. So it isn’t surprising that the majority of

super investors list the AMC (Asset Management Company) brand as

the most important factor when making their choice.

That said, since their investments are usually made in lump sum

amounts rather than in instalments; redemption based on market gains

is also high.

The key to approaching mutual-fund investing super investors is to

remember that they do not view this investment option as a savings

mechanism. They have a much higher risk appetite than the regular

consumer. Equity-linked saving schemes (ELSS) are not likely to be

successful with this investor. Instead, our survey indicates a strong

preference for equity and debt-based mutual funds.

SUPER INVESTORS IN THIS CATEGORY VIEW MUTUAL

FUNDS AS WEALTH GENERATORS RATHER THAN AS

SAVINGS. EQUITY AND DEBT-BASED FUNDS ARE LIKELY

TO BE SUCCESSFUL WITH THIS CATEGORY.

5941

35

65

Choose the scheme first

First choose the AMC and thenscheme

Source: Nielsen

Figs. in %

OVERALL SUPERINVESTOR

10 FEATURED INSIGHTS | SUPER INVESTORS Copyright © 2014 The Nielsen Company

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.

THENIELSENQUALITATIVEVIEWBY: SARBANI SEN AND SIMERAN SETH, NIELSEN INDIA

• Super investors desire to be recognized and acknowledged

for their awareness and expect a ‘distinct’ product and

service offering.

• One size fits all is passé; marketers today need to identify

and segment such customers with precision.

• As companies vie for a larger share from super investors,

there is an increased need to devise separate strategies and

structures that can support and match their needs.


ANAND PARAMESWARAN

DIRECTOR

NIELSEN INDIA

ABOUT THE AUTHORS

ADRIAN TERRON

SENIOR VICE PRESIDENT

NIELSEN INDIA

NIDHI KAUSHIK

ASSOCIATE DIRECTOR

NIELSEN INDIA

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super investors: india’s new wealth …...while property has always been a favourite investment,...

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