For individual investors, owning the stock of a favorite brand or retailer makes sense. It creates a tangible connection to the investment.
And for wealthy women in particular, the idea of “wearing your stock” is a great way to begin an informed discussion about stock investments in general, according to Zaneilia Harris, president of Harris & Harris Wealth Management Group and the author of the newly released, “Finance ’n Stilettos: Money Matters for the Well-Heeled Woman” (Dog Ear Publishing).
Here, Harris discusses this approach and offers other insights into wealth management for women.
WWD: The idea that investors — especially your clients who are women – should “wear your stock” is intriguing. What does that mean exactly, and how did you come up with the investment model?
Zaneilia Harris: I believe that it is a better way to engage women with discussing stock investments. Most womens’ first encounter with investing is through their company’s retirement plan. These plans offer a selection of mutual funds, which are a pool of about 100 stocks. They can include within its stock holdings companies such as Nordstom, Macy’s or Michael Kors.
Many high-end designers don’t have companies that are publicly traded but are held privately. Therefore for accredited investors, women who are worth over $1 million (not including their primary residence), you can have opportunities with equity ownership of these companies through private equity.
I also feel that if women owned the stocks of companies where they spend their dollars it will make them more aware of their investments. It naturally forces you to start paying attention when you hear the company mentioned in the news.
I thought of my personal interest and using my love of fashion and quality products would be great and different way to build a rapport with clients. When you talk about something I’m interested in, I naturally pay attention. It just seems like a logical step to engage my clients.
WWD: Why would this approach work with brands and for retail companies, but might be difficult with other sectors? Is it because retail tends to be a transparent business? And you can see and touch products? And experience service firsthand?
Z.H.: Yes. When you go into a retail store you notice first if there’s a crowd and/or if the very item you want is sold out. Those are signals that the company should be profitable. I say should because this should be your first step in evaluating owning it as part of your portfolio. The other aspects is digging deeper to evaluate articles about the company, looking at its financial statements for profitability and their growth plans to drive revenue.
WWD: Can you give an example of how this approach would work?
Z.H.: Target Corp. is a company that partners with high-end designers to offer items to its “target” customers. In the past, I’ve noticed that a “hot” item is all sold out within the first day and there are lines to get the item. This is a signal that I may want to consider this as part of my portfolio. Your adviser should be able to help you determine if fits within your current portfolio. You don’t want to have too many companies in the same industry. You expose yourself to the risks of having a highly concentrated portfolio or too many eggs in one basket or category.
WWD: From your perspective, what should investors be looking at in retail or with fashion apparel? Where are the opportunities?
Z.H.: Look to retail when the economy is booming. Retail falls into the consumer discretionary segment. Women are feeling confident about their financial security. They are making a great salary and are comfortable with their savings toward major life goals, such as retirement.
Today, they have more expendable income, and it is being spent on luxury items. The economy is improving and more money is being spent at retail, overall. Also look at companies that have prided themselves on providing customers with a unique experience. Then there’s the focus on companies that believe in assisting society in a positive way. For me, I’m a big fan of the shoe company Toms because they make a quality product and believe in providing a portion of its revenue to leaving a positive impact on society.