Rajesh Saluja of ASK Wealth Advisers explains some of the main characteristics and expectations of private clients in India, and outlines how to service them effectively.

Date: Mar 2011

Tags: India, Advisory, Portfolio construction

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• Client behaviour in India differs from region to region – in the north and south they are more conservative, while in the west and east they have more exposure to equities and better understand financial markets
• According to ASK Wealth Advisers’ own asset allocation, even its most aggressive clients won’t have more than 15% in alternatives – with perhaps 65% in equities and 20% in fixed income
• The expectation of ultra high net worth clients relate to preserving and transferring their wealth, as well as getting advice how they can improve the yield on their real assets

For example, in north and south India they are more conservative and interested in real estate and gold. While in west and east India, clients have more exposure to equities and better understand the financial markets.

Return expectations mirror these trends, he explained. So in east and west India, clients want to see returns from their investments which are in line with what they have been getting from their own businesses.

By contrast, in north and south India, expectations are linked to trying to beat what they currently get from fixed deposits or gold.

When it comes to fees, in west and east India, where people are exposed to a lot of advisers, Saluja said it is tough to convince them to pay fees. However, in north and south India, it is easier to get fees out of clients.

Typical client portfolios

Individual portfolios in India are dependent on a variety of factors, said Saluja – for example the client’s cashflow requirements, investment horizon, volatility appetite, risk profile and expected returns.

The firm therefore follows a consultation process to understand their key goals based on their occupation, what they want to do with their wealth going forward and when they might need it.

The portfolio is then based on this information and assessment, said Saluja, rather than on a standardised questionnaire that simply puts the client into various pre-defined buckets.

Instead, the firm does its own asset allocation based on various return expectations, he explained, which includes a mix of equity, debt and also alternative assets such as real estate and private equity funds.

As a result, even the most aggressive profiles won’t tend to have more than 15% in alternatives – with perhaps 65% in equities and 20% in fixed income.

On the flipside, the most conservative clients will have 15% in equities and 85% in fixed income, he said.

Ultra high net worth clients

According to Saluja, ultra high net worth (UHNW) clients are those individuals with more than US$100 million equivalent.

Their expectations are clearly more complex, he explained, relating to preserving the wealth they have created outside of their own business, and also, more importantly, protecting their assets for the next generation via trusts and asset planning.

A lot of UHNW clients tend to also be heavily exposed to real estate, added Saluja, so they look for advice on how they can improve the yield on these real assets.

Plus, such clients also want to look for opportunities in other businesses in which they can participate.