Industry Assets Under Management (AUM) May Double In Next 5 Years: Ajay Mishra, JM Financial Services
How has the domestic wealth management landscape evolved over the past five years? Is our high net worth individuals demanding more tech-intensive proposition or would you say it’s still very much a human touch business?
Well, the evolution of the domestic wealth management landscape can be measured not only in terms of growth and scale but also in terms of the development of its various key factors.
The growth of India’s private wealth is in a way of being driven by entrepreneurs. The country’s blossoming wealth management industry is working to ensure that top-flight concepts and solutions can be discussed and attained with these high net worth individuals as well as other wealthy families.
We believe the industry Assets Under Management (AUM) will at least double in the next five years, the way it has grown in the past five years. The target will be achieved by thanks to the new money coming in and performance from the investible funds.
To answer your second question, Technology evolution is inevitable. Because of the digital advances, the wealth management industry can now access a far broader range of the population in India. Approximately only 2 per cent of the population currently have investments in financial assets. It will be vital to navigate smartly and to be on the right side of these benefits, be it scale, cost efficiency, process efficiency or be it the ability to add value.
Having said that, the current model for UHNI is hybrid in nature wherein they need technology interface along with advisors to discuss the proposition and customize it as per their requirement.
The demand for CAT 3 AIF has soared within the HNI community. How do you see this playing out? Is it, after all, a very risky proposition?
Category III Alternative Investment Funds offer HNI’s access to more unique Investment opportunities, flexibility for the fund managers to invest in instruments, where the regular MF and PMS cannot invest.
In the last five years, the growth of the AIF CAT 3 category has been remarkable at approximately 110 per cent CAGR.
Due diligence and education are extremely important, Every investor, either on their own or through the services of a trusted advisor, should not approach any investment option without understanding the alignment of their expectations which are relative to the underlying risks that they are taking on.
Are you witnessing a shift from vanilla products like a mutual fund, within the high net worth space? Or do mutual funds still form the core of the average high net worth portfolio?
Mutual Funds continue to be a dominant and preferred Investment vehicle. The efforts through ad campaigns like “Mutual Funds Sahi Hai” has gone a long way in creating investor awareness, especially in Tier 2nd and 3rdtowns.
In recent times, on the back of lower interest rates, we have been witnessing UHNIs allocating part of their portfolio towards unique bespoke investment options such as AIF’s, NCD’s, LRS Offshore Investments etc. which provide superior risk-adjusted return compared to that of plain vanilla products.
What about structured debt? Do you see interest from wealthy investors in this space?
In India wealthy people, most of whom have made their own wealth, these HNWIs are generally accustomed to calculated risk-taking, the family office clients and larger HNW and ultra-HNW clients are becoming more interested in direct, private deals rather than only relying only on the mainstream financial markets.
How do you see the whole RIA play panning out?
We received our RIA license at the beginning of this year and we have found a very good response. It enables us to provide advisory based services to a large set of clients as it not only is it more cost-effective but also brings in transparency and alignment with clients interest. Family offices have been migrating to the RIA model as there is greater emphasis on value addition backed by research and technology.
To conclude do tell us a bit about your business goals for 2020
At JM Financial Services, we offer an extensive bouquet of products adopting a “One- Firm approach” through our group companies to serve our clients in a holistic manner. We have a robust team in place that ensures our clients across different locations receive integrated services.
Going forward, our goal is to continue offering differentiated unique products to our clients as well as leverage innovative technology to offer enhanced client servicing.
