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January - 2017 - issue > CXO Insights

India's Wealth Management Services in Modern Times

Amit Bhatia, Head - Sales, Distribution & Product Management, Mahindra & Mahindra Financial Services
Tuesday, January 31, 2017
Amit Bhatia, Head - Sales, Distribution & Product Management, Mahindra & Mahindra Financial Services
The wealth management industry around the world is witnessing a wave of changes due to weak economies in the developed world, strong growth in developing markets like China and India, an uncertain political future in Europe, increasing regulatory supervision, and new competition from rising FinTechs and their innovative services for High Net Worth Individuals (HNWIs).

India has registered an exceptionally high growth in terms of the population of HNWI & their wealth after the financial crisis. A study published by Markets and Markets stated that HNWI in India consists of eight percent of the total wealthy households, but constitutes around 45 percent of the total wealth and around 69 percent of the Indian HNWI population is in the age group of 30-55, which has long term investment plans and thus requires financial planning and advisory asset management.

Also, with strong economic future outlook, stable government, GDP growth rate nearing nine percent and policy reforms taking off, India's growth story is making it 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.

Indian HNWIs have a limited understanding of the risk and returns associated with investment products and thus require personal attention and assurance from wealth managers which has led to a growing importance of face to face relationship management.

Investors now demand greater levels of transparency and far more thorough due diligence than ever before. Disappointment with the past paradigms of the investment management industry, combined with an increasingly sophisticated and more risk-averse investor base, has led firms to adopt far higher standards of transparency, investor communication and fund governance.
Companies have also initiated more investor education and more powerful and robust technology-driven client interface tools. Requests for third-party reports have gained importance as they have become an effective tool to communicate essential information about a manager's internal control structure, risk management and operations.

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