Keeping India on track for a bright wealth management future

The country’s wealth management sector has seen impressive growth in AUM over the past couple of years. But investor education, adviser compensation, competency and various other aspects of the industry need scrutiny and improvement to capitalise on the industry’s potential.

This was according to the 45-plus speakers and over 300 senior industry practitioners in attendance at Hubbis’ 7th annual event for India’s private wealth management community.

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The bright outlook is based on a savings rate of more than 30%, coupled with the fact that the Indian economy is in an ‘investment’ phase. With absolute numbers of wealthy also rising, such a confluence of factors represents a great situation for intermediaries on both sides of the trade.

The expectation is that clients will want to see more options across the investment spectrum, with advice on the right selections based on individual risk profiles – and also more guidance during times of market stress.

At the same time, clients’ needs are growing and getting more complex in relation to wealth structuring and solutions to manage family and business assets, and across generations.

To help the industry to move faster, however, government programmes are necessary to facilitate the shift into financial savings. Plus, advisers must be able to convince clients of the need for advice that they actually pay for.

Further, wealth managers must embrace digital tools in a way that helps them to provide more relevant and customised advice.

Meanwhile, talent continues to be a major challenge for the industry. Fresh faces offer increasingly less value due to a lack of cross-cycle experience, yet senior practitioners are expensive. 

Although fragmentation is more common than consolidation as an industry theme, some consolidation would help in releasing talent. A more serious and consistent approach to training and development is therefore a pressing requirement.

In the coming decade, entrepreneurship is broadly expected to continue to generate the bulk of the wealth in India. But professional wealth will grow too, due to equity participation offered by employers. Keeping a watch on – and growing with – small and medium-sized promoters will also create a competitive advantage.

Key event take-aways

•    Nearly 60% of respondents to a delegate poll believe that, in the face of a market downturn, India’s wealth management industry is now robust enough to continue to grow in a sustainable way.

•    Private banks will see the fastest growth in AUM over the next 5 years in India, according to 27% of poll respondents. This is followed by retail banks (21%), multi-family offices (18%), IFAs (15%) and then NBFCs and RIAs (each at 9%).

•    Indian wealth management firms don’t take training and development seriously enough, according to 62% of poll respondents.

•    Only 42% of poll respondents believe there is a proper understanding of the meaning of ‘advice’ in Indian wealth management today.

•    Nearly 90% of delegates don’t think there is adequate fee transparency in Indian wealth and asset management.

•    At the same time, 94% of poll respondents said the country’s existing suitability framework needs to be improved.

•    Three-quarters of delegates said they expect technology to disrupt their business in the next 5 years – with a similar percentage predicting that robo-advisory will be successful in India over this timeframe.

•    Yet for the time being, efforts in automation, such as reducing paperwork and non-critical processes in the system, are not happening quickly enough, according to 59% of poll respondents.

•    Wealth solutions and structuring is – and will continue to become – more important in conversations with clients in India, according to 96% of poll respondents.

•    Within this area, succession planning is the main wealth solutions priority for promoters in India today, believe 43% of poll respondents. This trumps minimising tax and family governance, both at 20%, and also transferring assets to the next generation (17%).

•    94% of poll respondents said the concept of using professional advisers is becoming more accepted among business promoters.

•    When it comes to investment portfolios, the implications of banks not lending as much as they did – and interest rates falling – include increasing diversification and investment in funds, according to 83% of poll respondents.

Delegate, speaker and sponsor summary

•    More than 45 speakers

•    Over 310 CEOs and senior management, product gatekeepers and business heads – from local and universal Private Banks and Retail Banks, along with NBFCs, MFOs, national distributors, IFAs, Registered Investment Advisers and Insurance companies.

•    Sponsors: Edelweiss Global Wealth Management, IIFL Investment Managers, Infosys Finacle, L&T Mutual Fund, Miles Software, KG Financial Software, Motilal Oswal AMC, Numerix, AlfAccurate Advisors, Amicorp Group, Bordier & Cie, HSBC Global Asset Management, IDFC Asset Management Company, Investors Trust, Iyer Practice Advisers, Mercer, SNG & Partners, Sundaram Mutual, and Warmond Trustees & Executors. 

Mark your diary

•    2018 event in Mumbai - Thursday 30th August