The Indian wealth management ecosystem has evolved significantly and is at an inflection point. Strong triggers suggest a robust upward trajectory, both from demand and delivery angles.
India has been hailed as a bright spot in an otherwise gloomy global scenario. Measures like the GST, demonetisation and aggressive public spending of around $1 trillion in infrastructure over the next decade have the potential to reinvigorate the economy. Green shoots are visible and a repeat of the 2003 boom is on the horizon.
The latest Global Wealth Report by Credit Suisse shows that 2.4 million Indians have a net worth of more than $100,000, and of them 2,48,000 form the top one per cent of global wealth holders. As many as 2,260 citizens are worth $50 million and more, and 1,040 have more than $100 million. The number of high net worth individuals (HNIs) in India grew from 1,52,000 in 2007 to 2,36,000 in 2015. Their combined wealth rose 67 per cent, from $0.9 trillion in 2007 to $1.5 trillion in 2015. India is the seventh richest country in the world, in terms of total individual wealth held, after the US, China, Japan, Germany, the UK and France.
Interestingly, the demographic landscape of billionaires is changing rapidly in India. Besides the traditionally big corporate firms, MSMEs are also joining this elite group, along with senior corporate honchos and independent professionals like lawyers, doctors. But the most fascinating feature is the addition of Gen-next and the millennials, thanks to the startup revolution. By roping in huge investments in ventures like Flipkart, Ola, etc. they are shining as the new kids on the block. The figures show that over 70 per cent of Indian HNIs are under the age of 50, with a majority in the 31-50 years bracket.
On the delivery side as well, the industry has evolved significantly. In terms of product innovations, customer centricity, etc. India stands at par with its peers in developed economies and has triggered healthy competition, catering to all income groups. Banks, NBFCs and IFAs are competing for a piece of the pie, unlike earlier when only family offices provided such services. Another major trend is the changing profile of relationship managers, who act as financial consultants rather than mere salespersons. The scope of advice, unlike in the traditional sense of asset management, has expanded to include liabilities, tax, estate planning, insurance, budgeting, etc. The health of a client’s wealth is in the hands of a relationship manager. So wealth managers are forced to adopt strategies as per the needs of clients. Increased regulatory framework and greater awareness amongst investors have aided the transformation of the industry. The fact that there is a sound growth potential does not mean it is easy pickings for the industry. The future course of the industry will depend on how well it can continue to provide standardised, yet personalised services. Another key challenge is how smartly advisors can reinvent themselves to meet changing customer expectations and adapt to emerging technologies like robo-advisory, which I personally believe, will prove complementary, and not contradictory to the industry growth. With more wealth in hand and increased competition, we are undoubtedly on the cusp of a boom that can make our wealth management industry a significant contributor to the economy.
Guest Author
The author is executive chairman, Centrum Capital Group and former Standard Chartered Bank Asia chief
