Wealth Management – What is Wealth Management & Services in India
Financial and physical health have a lot in common. Both are continuous journeys and not a one-time activity. For instance, it is not enough to reach one’s desired weight but rather maintain it at the same level. Similarly, when it comes to our financial wealth it is not only about earning money. Rather one needs to focus on continuously growing it.
Both these journeys become easier and more fruitful when a coach is there is to guide you each step of the way. A physical trainer is to your physical health what a wealth management advisor is to your financial health.
What is wealth management?
Wealth management is a kind of specialised and customised investment advisory service. It is also referred to as a combination of financial and investment counseling. These services are offered to individuals with high net worth i.e. HNIs. The financial expert who offers these services is known as a wealth manager.
Wealth management services in India include services related to accounting, taxation, investment, retirement planning, estate as well as legal planning.
Who is considered an HNI in India?
An individual who has an investible bank balance of at least Rs. 200 Lakhs (2 crores) is categorised as High Net Worth Individuals. People with an investible surplus of Rs. 25 lakhs (but below 2 crores) are tagged as Emerging HNIs. This is only an indicative figure and can vary from one service provider to another.
Wealth Management services in India
Wealth Management is one of the fastest-growing industries in our country. Numerous factors have contributed to the rapid growth of wealth management products in India. A positive long-term economic potential of the nation, growing income levels, increased consumer awareness and the current low penetration have collectively fueled this growth. A quick look at these factors
• Expansion in wealth creation
An Asian Bank report mentioned that India with its 119 billionaires stands just behind the USA and China. This figure is likely to triple in less than a decade. Some of the factors that will lead towards this exponential growth are a spurt in entrepreneurship, a robust educational system, a strong outlook for the IT and ITES sector, increased investment in state-of-the-art asset classes, etc.
• Increased awareness
With the advent of technology, information about new age practices and concepts (such as wealth management products in India) is easily available and accessible. People are more open to seeking help from professional experts to manage and grow their corpus. One key factor behind this increased awareness is also the fact that the high net worth individuals are comparatively younger.
• Increase in firms offering wealth management products in India
There is a surge in the number of wealth management service providers in the country. In addition to individual brokers and domestic firms, many global entrants have also forayed into this arena.
Though the percentage of HNIs in our country is small when compared to the figures for developed countries, strong growth forecasts coupled with a growing middle class and young population indicate the potential for high asset accumulation soon. India is pegged to become the third-largest global economy by 2030 (according to a Cognizant report). As a result, personal wealth management in India is going to become the need of the hour.
As per a recent report published by Capgemini, the wealth management industry is likely to witness a double-digit growth (ranging between 10% and 15%) per year in the coming five years.
Key aspects of Wealth Management services in India
• Risk Analysis
The wealth manager analyses the risk-taking capacity of the client by taking into account a host of factors. These include current as well as future financial obligations, investment goals, the stability of income, client personality, etc. Correct risk analysis plays a critical role in formulating a customised investment plan for the client which will meet his/her financial goals.
• Asset Allocation
After the risk analysis, the wealth manager strives to strike the perfect balance between risk and return for the client. The available assets of the client are distributed across the suitable asset categories in sync with their risk quotient and return aspiration. The key asset classes include stocks, debt, real estate, mutual funds, gold, etc.
• Investment Horizon
A good wealth manager helps in achieving the client’s short-term as well as long-term investment objectives. They offer advisory services that enable the clients to maintain enough liquidity and flexibility to meet their investment goals in the short-term. Additionally, they also work towards securing the financial future of the client and maximise the return on their investments.
• Customised Investment Products
Many wealth managers work closely with the country’s leading banks. As a result, they have access to the entire spectrum of investment products. Sometimes they might even be in a position to offer tailor-made and bespoke investment products as per the client’s requirements.
• Continuous market research
Wealth management is not a one-time activity that ends with suggesting the right investment avenues or products. Rather it is just the start. Wealth managers continuously scan the market, assess the performance of various products, review the client’s portfolio and try to predict future trends. They apply a host of quantitative and qualitative techniques for this purpose. Additionally, they keep on interacting with the client periodically to analyse if there are any changes in their risk profile, financial obligations, investment goals, etc.
Role of a wealth manager
Wealth Management is principally a simple concept – protect and grow the wealth of the client. However, its execution is a highly complex task. And hence it is done by financial experts known as Wealth Managers. A wealth manager is an expert who makes use of the entire gamut of financial disciplines such as investment / financial advice, accounting and tax-related services, estate planning as well as retirement planning to grow the client’s corpus.
Wealth Management Products in India
The product offerings vary from one service provider to another. Though the key products include:
• Alternative Asset
• Equities
• Bonds, debentures, fixed maturity plans
• Insurance
• Mutual Funds
• Loans
• PMS (Portfolio management services)
• Real Estate Services
• Digital Investments
• Fundraising
Wealth Management service providers
Broadly speaking, there are three kinds of service providers in the realm of wealth management.
• Banks
• Brokerage Firms
• Boutique Advisory Firms
• Individual brokers or sub-brokers
Selecting the right advisor is critical. One needs to choose a wealth management service provider who is not only trustworthy and credible but also can offer investment or financial advice as per the client's needs. The alignment of interest is extremely important. One of the most trusted names offering wealth management products in India is IndiaNivesh. It specialises in offering customised solutions for their wealth management clients across income levels. Their client-first approach coupled with their rich experience and technological competence enables them to preserve and grow the client’s net worth. Their "Wealth Cafe" offers an exhaustive database of research ideas and reports for the client's information. More importantly, their presence across a wide range of financial solutions such as broking, institutional equities, strategic investments, insurance, and investment banking helps them gain a holistic view of the markets. This translates into profitable and sustainable investment advisory for clients looking for personal wealth management services in India.
Final Words:
We hope that this article has addressed a lot of questions. Such as what is wealth management, why you need it along with an overview of the offerings. And now that you know who can help you with managing and growing your corpus, make sure you make the best use of their expertise.
Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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An Overview of Bull Markets and Bear Markets
The terms bull and bear market are quintessential in investment circles. Even though these terms are relatively simple and easy to understand, their causes are sophisticated and complex that depict market conditions. Since the direction of the market plays a significant impact on the portfolio of every investor, it is crucial to understand the meanings of ‘bull’ and ‘bear’ in the larger context. That is knowing its meaning and implications can determine how the bull market and the bear market can affect you. Understanding bull and bear markets In the stock market, bull and bear are terminologies that are used to convey the progress of the market and its direction. Typically, a bear market is indicative of falling prices in the stock market, while on the other hand a bull market is a sign that the market is appreciating in value. The bull and bear market meaning have a tremendous impact on investors. These terms also reveal how the market is shaped by investors' attitudes, ensuing trends and overall market sentiments. A bull market means the stock market is on the rise. A sustained increase in market share prices is typically seen in a bull market. Under such a scenario, investors are upbeat and optimistic that the rising trend will continue over a long period. A sustained bull market scenario also shows the strength of a country's economy and high employment levels. On the other hand, a bear market refers to a declining market. In this scenario, company share prices continue to dip, leading to a downward trend. In such a bear market environment, investors believe that the downward trend will perpetuate into a downward spiral. Typically, a prolonged bear market situation also points to a slowdown in the economy and rising unemployment as companies begin to lay off their workforce. It is important to note here that a bear market can be dangerous to invest in, as securities continue to lose their sheen and value. Bull and bear market characteristics It is crucial to be aware of the ensuing attributes of a bull and bear market. Here is a list of factors of the various bull and bear market conditions. Supply and demand Generally, there is a robust demand and weak supply for securities in a bull market. In such a scenario, most investors look to buy securities, but very few are willing to sell it in an uptrend. Hence, share prices continue to grow, while investors are competing to buy equities that are available in the market. On the other hand, an increasing number of people are looking to sell their equities and securities rather than make purchases. There is a significant low demand for fixed-income securities, while prices of equities rise. Investor understanding Investor psychology and sentiment majorly impacts the market price in any scenario. This is because the behaviour of the market is affected and determined by investor behaviour and psychology. In the stock market, performance of share prices and investor psychology are mutually dependent. In a bull market, investors are continually hoping to reap profits; whereas in a bear market there is immense investor negativity and this sentiment shows as money moves out of equities and into fixed-income securities. Investors are cautious in a bear market and look for positive movements, while at the same time refraining from investing in equities. In short, the stock market decline negatively impacts the confidence of investors preventing them from investing in companies, thus causing an overall price decline as the outflow grows. Correlation between the economy and the stock market Since companies whose stocks are trading in the stock market are significant players in the country's economy, their performance can influence the economy. Typically, it is seen that a weak economy is associated with a bear market. This is because most companies are unable to show profitability as consumers are spending less. In turn, a downturn in company profitability directly affects stocks and their market values. In a bull market, the opposite takes place, as consumers have adequate money to spend and their expenditure propel and strengthens the country's economy. Observing market changes The principal causal factor of whether the market is bullish or bearish is not seen in the short term, but rather its performance in the long run. This means that a bull or bear market is not determined by the stock market’s spontaneous reaction to any specific event. Tiny movements could represent a short-term trend or correction in the market. It is in the extended time frame that determines whether the stock market will turn bull or bear. Sometimes, the stock market may experience an inactive period as it is looking for a direction. Here, a chain of downward and upward movements could, in reality, wipe out gains and losses leading to a flat-market trend. What you can do in any market The ideal thing to do in a bull run is to exploit rising prices and purchase stocks early on in the trend if you can. You can then look at selling them when these stocks reach their peak. Any losses that you experience in the bull market would be minor and temporary. You could briskly and comfortably invest in more equities with a higher likelihood of making a profit. In a bear market, the chance of assuming losses are higher as share prices are continually losing value without an end in sight. Hence, if you are looking to invest in a bear market with the hope that the upturn will be around the corner, you may have to be prepared to take on losses before the positive turnaround takes place. Hence, if you are well-versed in the stock market, you could try short selling, or if you are trying your hand in the stock market for the first time, you may want to stick to safe investments such as fixed-income securities. Some investors opt for defensive stocks, whose achievements are not affected by the trends in the market. Such stocks can be looked at as stable investments at a time when the economy is in a slump; these stocks are even beneficial in a bull market. Examples of these defensive stocks include utilities that are often government-owned and essentials that consumers buy irrespective of how the country's economy is functioning. Conclusion Bull and bear markets play a prominent role on investors’ emotions and investments. Hence, it can be an excellent idea to devote some time in determining how the market is performing before deciding on an investment decision. It is important to note that despite current market sentiments and trends, over the long term, the stock market has always been beneficial for its investors. Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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Share Market - How to invest in share market
Have you been thinking about buying shares but do not know how to invest money in the share market? Then you have come to the right place. In this article, we will tell you all that you need to know regarding the DOs and DONTs and how to invest in the share market. Why is an investment in the share market a smart decision?Many market experts feel that investing in the share market is the only towards building real long-term wealth. Read on to know the top reasons why you should venture into the share market and the benefits associated with it:• Ownership (at least a certain percentage) With shares, you gets the twin benefits of dividend and ownership. • No need for negotiation In the case of shares, you see clearly what you need to pay. There are no hidden charges or scope for negotiation. This makes the buying process quicker and more transparent. Brokerage or such associated costs are also minimal. Hence, you can be assured that a big chunk of the investment does not go towards associated costs or operational expenses. • Potential for a higher return Share markets have the potential to generate a much higher return than conventional investment avenues such as Bank deposits, Fixed Deposits, etc. You just needs to choose the right stock to invest in and be willing to absorb some degree of risk. Investments in the share market bear extremely sweet fruits for you in the long-run. How to invest in the share market?Before we answer your question on how to invest money in the share market, you need to know the pre-requisites and procedures involved.• Identity Proof (PAN Card or Aadhar Card) To be eligible for investment in the share market, you need to have a PAN Card or an Aadhar Card. These are mandatory documents for the Know Your Customer (KYC) process of SEBI. Also as per the new rules for opening a Demat account, one needs to furnish a canceled cheque along with your bank statement (for the last six months).It is also important to make sure that the information mentioned in these documents is correct and up-to-date. So, You must check the details such as name spellings, contact details, etc. to ensure there are no issues later. • Contact a broker Trading on the share market is not open to all individuals. Only some people are authorised (by the central regulator –SEBI) to perform trading (buying and selling) of securities. These intermediaries are referred to as brokers. They can be individuals, firms or agencies registered with SEBI. Hence, any interested investor needs to reach out to a broker to invest money in the share markets. They also assist the investors in completing the formalities involved in making investments in the share market.Brokers levy a service charge or brokerage for rendering their services to the investors. • Demat and Trading AccountA Demat account is an account that will hold the shares in a non-physical electronic format. The Demat account number needs to be quoted for all stock market transactions to allow electronic settlements. It is mandatory to have a Demat account to trade on the share market. Shares can no longer be held in physical format. Similar to a bank passbook, any transactions (buying or selling) will be debited or credited in the Demat account. A trading account is used to place the trade (invest or sell) orders in the share market. Its purpose is different than a Demat account. A Demat account acts as the bank in which shares purchased are deposited and shares sold are taken out. It is a storage house. Trading Account, on the other hand, facilitates the trading process and acts as the link between the Demat account and the bank account. • Unique Identification Number (UIN) A UIN is required if the value of a single transaction reaches or exceeds Rs. One Lakh. For transactions below that limit, UIN is not needed. • Depository Participants (DPs) There are two depositories in India – CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). They act as a link between the listed companies and their shareholders. Depositories issue the shares through authorised agents known as Depository Participants (DPs). DPs can be banks, individual brokers or financial institutions. They are accountable for the final transfer of the securities. Once you have all the above things in order, you are ready to know how to invest in the share market online. All you need to do is:1. Scan the market and identify the shares or securities that you would like to invest in. One must ensure that the investment decisions are in line with the goal, investment strategy, risk profile, and investment horizon. 2. Inform the stockbroker about the details of the investment to be made. These include the name of the organisation to invest in, the number of securities to be purchased and the entry price. For instance, you want to purchase 1000 shares of a company that is currently trading at Rs. 750. However, you want to get in at an entry price not more than Rs. 600. You can instruct your broker to invest as soon as the price comes down to that level. 3. In case if any of the buy or sell orders reach their expiry date, the broker informs the investor regarding the same. 4. Once the transaction is complete, it reflects in the Demat account. 5. Dividends on shares held are directly credited to the linked bank account. Share Market Investment TipsHere are some share market investment tips to make your experience smooth and fruitful:• Do not get swayed with promises of guaranteed return. In the share market, there are no minimum or definite returns.• Check the credentials and track record of the intermediaries that you partner with. One should only deal with intermediaries who have the necessary authorizations and are registered with statutory bodies such as SEBI or stock exchange.• In the case of securities, "one size fits all" does not hold true. Hence, ensure that the investment decisions are in sync with your risk profile.• Not everything that shines is gold. Be cautious of securities that exhibit a sudden increase in trading activity or price. Also, before investing in low-priced stocks one must conduct a due-diligence of the concerned company. It is important to make sure that the price fall is justified by internal or external factors.• Maintain copies of all investment-related documentation (application forms, contract notes, communication to companies, brokers, etc.)• Do not invest in the share market based on market rumors. Similarly, do not panic sell in case the market goes down. Impulsive decisions are not fruitful for most investors. • Always check the instructions given to the broker and their understanding of the same. Now you know everything about how to invest money in the share market. However, make sure you invest adequate time and effort in choosing your broking partner. The right firm or individual can help you make the right decisions in the share market. One name that you can depend on, for these services in IndiaNivesh. Their rich experience and technical expertise enable investors to maximize the potential of their investments. They also conduct extensive research on markets and various players.So, what are you waiting for? The share market has something for everyone.Disclaimer: Investment in securities market / Mutual Funds are subject to market risks, read all the related documents carefully before investing.
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