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
• Bonds, debentures, fixed maturity plans
• Mutual Funds
• PMS (Portfolio management services)
• Real Estate Services
• Digital Investments
Wealth Management service providers
Broadly speaking, there are three kinds of service providers in the realm of wealth management.
• 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.
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.