Increasingly more numbers of Indians are joining the millionaires club and wealth management in India is gaining popularity. The economic boom and subsequent increase in income levels are acting as the impetus in driving India forward.
The huge chunks of money that these millionaires possess need to be managed well and this is why wealth management in India is becoming one of the most sought after services. Wealth management is an investment advice or assistance to manage a person’s finances. These services are offered to clients with two main goals - growth and safety of their existing investment.
And the specific definition of wealth management according to Investopedia is “A professional service which is the combination of financial/investment advice, accounting/tax services, and legal/estate planning for one fee.”
Types of Service Providers for Wealth Management in India
There are majorly three types of service providers for wealth management currently- Banks, Brokerage firms and Boutique advisory firms.
Banks have larger investment distribution model which means they concentrate on a larger investment portfolio. They cater to mid-level segment clients as well as the HNWI’s.
Brokerage firms focus on investing the customer’s money majorly in shares and IPO, which are equity market products.
Boutique advisory firms provide customized financial solutions to the clients who are majorly the ultra-HNWI’s and HNWI’s.
Wealth Management in India
The 21st century in India saw a spell of entrepreneurial ventures that has created an ever-growing High Net worth Individuals or HNWI’s. India currently has the fourth-highest number of HNWIs in the Asia-Pacific region after Japan, China and Australia.
The HNWI segment is the fastest growing segments leading to the growth of the wealth management industry, which could possibly be the most sought after career choice. The wealth management industry in India is growing rapidly mainly because of two reasons - the changing regulatory environment and increasing competition. Due to the growth rate, many big names have set up their wealth management division in India in the last few years. The existing business houses are also diversifying their services and venturing into wealth management.
In the early period wealth management sufficed the fundamental requirement of insurance and mutual funds products for individuals. During that time the advisory services as a separate division did not exist and institutions did not charge for it. But gradually, with regulatory changes, the sector diversified and found new source of income in wealth management.
Various financial institutions and banks are constantly eyeing ways to entice customers towards their wealth management services. Several wealth managers today are available for customers to seek best services from.
This trend is only going to spurt with India touted to become the third largest global economy by 2030. Today, wealth management in India is still nascent and hence, largely fragmented. The organized players mainly focus on the urban segment leaving a large group of the HNWI untapped across other towns in India. The regulatory environment and tax structure changes will present a lot of opportunities for wealth managers to multiply their product offerings.
Wealth Management in India and the competition
Just like every growing industry, competitive rivalry is increasing in the wealth management sector in India with existing players expanding their offerings, and the emergence of new local and global players. As of now this industry is fragmented with brokers, sub-brokers, financial advisers, insurance and tax consultants. Financial institutions, private banking divisions of popular lenders, and public sector banks provide wealth management services in India. They possess huge brand equity, influence, corporate affiliations, which can prove as a tough competitor for the existing players.
Wealth management in India is still prospering and also presents itself as a promising profession for the new age India. This could be just the beginning of the boom that this industry is yet to see.