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Indian Wealth Management: Strategies, Products and Players

By: VRL
Published: 2009

Indian Wealth Management The potential of India as a wealth management market is difficult to over-emphasise. The fundamentals are strong by any metric.

This potential exists not only in the untapped nature of the market, but also in terms of a relaxing of financial regulation and a quickly growing mass affluent and HNW population, in addition to the already established ultra high net worth segment. Opportunity also lies in providing services to the non-resident Indians who have achieved success and generated wealth across the globe. 

Featuring exclusive proprietary data, including interviews with senior industry players taken from Private Banker International’s ‘Indian Wealth Management'  Roundtable, this report provides the most incisive view of one of the most lucrative wealth markets in the world.

Interested in this report but require a different territory or focus? Contact Jeannie today to discuss a customised version. Email on info@vrlfinancialnews.com or call +44 (0)20 7563 5605

 

While the Indian growth story has been an integral part of any assessment of global wealth for sometime, the sense is that 2009-10 could offer a real tipping point in terms of onshore wealth management services. The list of recent entrants takes in all types of wealth manager, from long-established players like Goldman Sachs to burgeoning brands such as Barclays Wealth and domestic brokerages such as Motila Oswal.

From a high-end perspective, it is important to note that India has the second highest number of UHNWIs in Asia after Singapore - over half the billionaires in Asia now come from India. Conversely just 38 percent of the wealth market is owned by those considered to be "high net worth" in the traditional sense. This makes the targeting of differing wealth segments both desirable and practical.

The Indian wealth market is delicately poised, and nowhere is that more apparent than in the competition between domestic and foreign players. The influx of foreign competitors has led to a domestic fightback, as banks, brokerage houses and new entrants develop their offerings.

This report looks at the huge potential for wealth management in India as well as the issues, competition and regulations involved in entering this market.

 

This report features exclusive proprietary data, including interviews with senior industry players taken from Private Banker International’s ‘Indian Wealth Roundtable’ to present the most incisive view of one of the most lucrative wealth markets in the world.

The potential of India as a wealth management market is difficult to over-emphasise. The fundamentals are strong by any metric.

As this report will show, this potential exists not only in the untapped nature of the market, but also in terms of: a relaxing of financial regulation and a quickly growing mass affluent and HNW population in addition to the already established ultra high net worth segment. Opportunity also lies in providing services to the non-resident Indians (NRIs) who have achieved success and generated wealth across the globe.

While the Indian growth story has been an integral part of any assessment of global wealth for some time, the sense is that 2009-10 could offer a real tipping point in terms of onshore wealth management services. The list of recent entrants takes in all types of wealth manager, from long-established players like Goldman Sachs to burgeoning brands such as Barclays Wealth and domestic brokerages such as Motila Oswal.

Assessing Individual Segments

Segmenting this wealth remains a difficult prospect.

The extent of the growth within India has left the country with a wildly divergent population in terms of income and living standards.

From a high-end perspective, it is important to note that India has the second highest number of UHNWIs in Asia after Singapore - over half the billionaires in Asia now come from India. Conversely just 38 percent of the wealth market is owned by those considered to be “high net worth” in the traditional sense. This makes the targeting of differing wealth segments both desirable and practical.

These trends have also resulted in the most fragmented wealth market in Asia. The rapid rate of growth seen in the Indian wealth market in recent years has given rise to numerous independent financial advisors and brokerage houses, though the services offered by these segments are limited, and face stiff competition from insurers and private banks themselves.

The high incidence of mass affluent individuals in India has also led to a continued reduction in the minimum liquid asset thresholds required to use wealth management services.

Reputation and Regulation

The long and varied history of foreign banking presence in India means that there remains a degree of uncertainty regarding the commitment and ultimate intentions of foreign financial institutions.

Despite the surge of wealth and influx of private banking initiatives, the shadow of regulation still hangs heavy over the Indian wealth management market.

Investment controls remain of secondary importance when compared with private banks’ ability to establish a presence in the region. Banking reform is expected to make this process far simpler, diversifying the field still further and mitigating the competitive advantage of the domestic banks which are able to leverage their significant branch networks.

Obtaining a non bank financial corporation (NBFC) licence is an increasingly common way for foreign banks to enter India given the tight restrictions placed upon branch-based expansion by overseas institutions. The RBI currently only allows foreign banks to increase their cumulative network by between 18 and 20 branches per year. The figure is higher than the 12 India is required to permit under the terms of its trade deals with the World Trade Organisation but does not allow significant room for manoeuvre.

Outlook, Competition and Players

The Indian wealth market is delicately poised, and nowhere is that more apparent than in the competition between domestic and foreign players. The influx of foreign competitors has led to a domestic fightback, as banks, brokerage houses and new entrants develop their offerings.

Of all the domestic competitors seeking to target HNWIs in 2009-10, the most notable is perhaps Reliance Money, which launched its wealth management programme in July 2008. Backed by Indian billionaire businessman Anil Ambani, Reliance announced it would be offering India’s first “cradle to grave” wealth management service, utilising its network of over 10,000 outlets across 5,000 towns and cities in India to do so.

The group’s segmentation efforts will involve a focus on both senior citizens and non-resident Indians.

With its extensive local network and considerable knowledge of the local market, Reliance’s entrance into the Indian wealth market poses a number of threats to even the largest foreign banks. As the largest brokerage house in India, the firm has a pre-existing base of investor to target, and the potential for referrals from other Reliance businesses is considerable.

The aggressive nature of Reliance Money’s push into the wealth management sector is evidenced by its AuM targets: reportedly, the firm is looking to reach $11.3 billion in assets under management by the end of 2009, just 18 months after it first launched. But Reliance Money is not the only domestic institution to have announced plans to diversify into wealth management.

A marketplace which already has firms of all shapes and sizes jostling for position is likely to get more crowded still for as long as this trend continues.

 

 

1.     The Wealth Market in India

a.      Demographics 

 b.      Macro-economic

c.      Market Size and Forecast 2009 – 2014

d.      Regulation

e.      Key Market Issues

                   

2.     Competition

a.      Wealth management products and services  (sample products below)                             

b.      Local players

c.      Foreign Players                              

d.      Key competitive issues

                            

3.     Market Outlook and Opportunities

a.      Outlook for the Indian wealth market

b.      Opportunities for wealth management service providers

c.      Opportunities for solution providers

 

4.     Definitions & Glossary

 

View full Summary Report

 

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