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BW Businessworld

Managing Wealth For Super Rich

The dominance of multi-millionaires or the ultra-wealthy continues to put pressure on the wealth management managers, to rethink their products and services in order to match the demands and specifications of the super-rich

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The robust economic growth in India has kicked off its participation in the race of HNWI (High Net worth Individuals). Globally 1 per cent of HNWI holds more than 45 per cent of investable wealth, with the globally accepted definition of HNWI being one holding investable assets of RS 65 million ($1 million). The study around HNWI in India has gained more prominence with the coining of the terminology UHNWI (Ultra High Net worth Individual – Net Worth > RS 250 million). The key source of UHNWI wealth remains the success in primary business followed by real estate, gold and investment in equity. At least 86 per cent of Indians household assets are in real estate and gold. The tangible nature of real estate makes it an attractive investment and over 90 per cent of UHNWI have exposure to real estate investments in addition to their primary residences. During the past few years, UNHWI have shifted toward equity markets as the real estate market has stagnated a bit.

The dominance of multi-millionaires or the ultra-wealthy continues to put pressure on the wealth management managers, to rethink their products and services in order to match the demands and specifications of the super-rich. The wealth management space is evolving rapidly amid tightening regulations, fast-paced customer demands and market shifts. These factors have resulted in a paradigm shift for wealth managers.

India has the potential to become a high-growth wealth management market supported by its young affluent investor base and strengthening regulatory environment.

An increase in the wealth of global Indians, the Indian government’s push to curb illicit leaks and more tightly regulate markets. India’s growth story is making it an increasingly attractive market for wealth management firms. This trend is expected to continue, with India estimated to become the third largest global economy by 2030.

Rising cost along with evolving lifestyle, healthcare, various financial goals are bringing lot of awareness among individuals on the need to optimise liquidity and plan for financial goals.

Presently, various surveys reveal gaps in the financial readiness among individuals to fund their financial goals, for example the HSBC Global Survey 2016 focused on ‘Value of Education’ had 71 per cent of the Indian parents willing to go into debt to fund their children’s education. Digitisation will remain a game changer for wealth management firms leading to a significant transformation of how advisors and clients interact, reducing the costs of the traditional multichannel models. The concept of “roboadvice”, which refers to automated and digital techniques to build and manage portfolios of exchange-traded funds and other instruments for investors, has gained significant attention within the wealth management industry. Robo-advisors are platforms that use algorithms to manage users’ investment platforms and which are cost competitive. To continue to successfully tap into the opportunities presented by the growing class of super-rich, wealth firms must undertake a customised approach. This will need to be supported by a robust and dynamic business model focused on improved transparency and compliance, synergistic partnerships and efficient technology solutions.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.


S. Ramakrishnan

The author is head, Retail Banking & Wealth Management, HSBC India

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