Page 43 - Banking Finance November 2019

ARTICLE

a new revenue model with a combination of Mutual Funds, Wealth Management - Contribution and
Insurance and Deposits.
Relevance to an Organization :
Today, a Wealth Manager unlike a banker goes beyond just Wealth management plays a vital role in Corporate Advisory.
investment advice. Wealth Management today, has evolved It's important to have a wide understanding of different
to an end to end Money Management Solutions for every businesses to advice each corporate operating within a
investors ranging from an Individual Investor / family, specific industry. While advisory services include strategic
Corporate Investor, HUF (Hindu Undivided Family) to a Trust. planning of finances, due diligence, mergers and acquisitions
Private Wealth Management involves providing prudent (M&A), short and long term investments through different
investment solutions, Corporate and Treasury Advisory, Off assets, hedge funds, private equity and so on, risk
Shore Advisory & Family Office. management is also offered on advice. Wealth management
is also extended to the employees of corporate through
The Opportunities in the area of Wealth corporate employee benefit programmes.
Management : Depository and Trustee Services are tailor made and

From mere conventional ways of advisory and managing designed for promoters of large corporate houses, to
wealth, Wealth Management today comprises of an provide insightful information on ensuring compliance on
advanced form of financial planning that encompasses fund documentation, regulatory requirements and scheme
Estate Planning, Trust Management, Legal Services particulars. Raising funds for businesses are a never ending
Resources, Taxation advisory, and Portfolio Management process, and promoter funding assistance plays a vital role.
among the many others. India's GDP growth has been Wealth Management - Gained Huge Popularity in India :
tremendous and at $2.3 Trillion as on December 2015. Rise
in savings and lessening debt at 9.5 percent (as a percent Wealth Management in India is gaining more and more
of the GDP) which is one of the best among global popularity as increasing number of Indians are joining the
economies. millionaires club. The boom in the economy and the resultant
increase in the income levels are favoring the increase in
Added to that, positive demographics, long term economic number of millionaires.
drivers, rising per capita income, and fiscal prudence have
shaped Indian economy to emerge as a super power in a Wondering what this has to do with wealth management?
decade. A five year historical average of HNI wealth/GDP Well the huge chunks of money that these millionaires
for each year, combined with IMF's GDP projections, is possess need to be managed well, which many can't do. This
estimated that HNI wealth in India will grow to US$952 is when wealth management comes into picture. For those
Billion by 2017, a steady 12 percent CAGR from 2011. Today who don't know what wealth management is, it is basically
India stands tall with 84 Billionaires with a total aggregate an investment advice or assistance to manage a person's
financial life. These wealth management services are
net worth of $248 Billion that accounts to 11.8 percent of
offered to clients in pack ages to provide benefits with two
the GDP.
main goals, growth and safety of their existing investment.
With rising per capita income, it is important to have a According to Investopedia, Wealth Management is "A
professional approach in managing wealth. It is important professional service which is the combination of financial/
to understand that High Net worth Individuals (HNWI) investment advice, accounting/ tax services, and legal/estate
consists of 8 percent, accounting of 45 percent of the total planning for one fee."
wealth. Interestingly, only 20 percent of the total HNWIs
consult a Wealth Manager. Besides 67 percent of the HNWIs Types of Wealth Management Service
are in the age group of 30-55, thus requiring expert advice.
Again, 39 percent of the total HNWI income arising out of Providers
business income would need prudent tax planning solutions Currently in India there are majorly three types of wealth
to mitigate risk and create wealth. Thus, it provides a great management service providers viz. Banks, Brokerage firms
scope for Wealth Managers. and Boutique advisory firms.

BANKING FINANCE | NOVEMBER | 2019 | 43