Wealth in India: HNW Investors 2017

Wealth in India: HNW Investors 2017


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Executive Summary

Wealth in India: HNW Investors 2017

Summary

"Wealth in India: HNW Investors 2017", analyzes the Indian investment market, with a focus on the HNW segment. The report is based on our proprietary datasets.

The Indian wealth management market is characterized by family business owners and inheritors. A lack of expertise and access to sophisticated investment products are driving uptake of financial advice. However, execution-only services are the most popular. As many Indian wealthy individuals made their wealth through the IT sector, it is unsurprising that demand for automated services is forecast to rise. Wealth managers should develop digital propositions to attract this tech-savvy client segment and meet their high expectations in terms of financial advice. Equities are the preferred asset class, and as economic growth will be strong, demand for this product will continue to rise. The provision of financial planning services is also mandatory.

Specifically the report-

Sizes the affluent market (both by number of individuals and their demographics) using our proprietary datasets.

Analyzes which asset classes are favored by Indian investors and how their preferences impact the growth of the total savings and investments market.

Examines HNW clients' attitudes towards non-liquid investments such as property and commodities.

Scope

Family business ownership and inheritance are the most important sources of wealth, reflecting the importance family holds in India.

Execution-only mandates are the preferred means for investing among India's HNW individuals, followed by advisory mandates, which are forecast to experience the greatest increase in demand.

Equities, property, and bonds have come to dominate HNW portfolios. Allocations in these asset classes are forecast to grow in the next 12 months.

Pension planning will be the priority for HNW investors, along with financial and tax planning.

Reasons to buy

Benchmark your share of the Indian wealth market against the current market size.

Forecast your future growth prospects using our projections for the market to 2020.

Identify your most promising client segment by analyzing penetration of affluent individuals in India.

Evaluate your HNW proposition by understanding how the Indian tax system will impact HNW clients.



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Table of Contents

1. EXECUTIVE SUMMARY 3

1.1. Rising levels of affluence have seen Indian HNW investors diversify 3

1.2. Key findings 3

1.3. Critical success factors 3

2. PROFILING THE INDIAN HNW INVESTOR 9

2.1. Financial services and IT are the primary sources of HNW wealth 9

2.1.1. The bulk of Indian HNW individuals are males above 50 years of age 9

2.1.2. Family business ownership is the leading source of Indian HNW wealth 10

2.1.3. Many HNW investors have built their fortunes through the financial services sector 13

2.1.4. The majority of HNW investors in India hold executive positions 15

2.2. Expats in India account for a lower proportion than the regional average 16

2.2.1. Few HNW individuals in the Indian market are drawn from abroad 16

2.2.2. Investor and entrepreneur visas require relatively low capital 17

2.2.3. Most HNW expats residing in India originate from the US 17

3. INDIAN HNW INVESTMENT STYLE PREFERENCES 19

3.1. A lack of expertise drives demand for professional advice 19

3.1.1. HNW investors favor execution-only mandates 19

3.1.2. HNW Indians expect their wealth managers to be highly experienced 20

3.1.3. India's HNW investors place more than half of their managed wealth with their main wealth manager 22

3.2. The expectation of better returns drives demand for advisory asset management 23

3.2.1. Demand for advisory mandates is strong 23

3.3. The appetite for advice is still on the rise 24

3.3.1. The demand for advisory mandates will strongly increase 24

3.3.2. High expectations are driving demand for advisory mandates 25

3.3.3. A large share of Indian HNW wealth will remain in execution-only platforms 27

4. UNDERSTANDING ASSET ALLOCATION TRENDS AMONG INDIAN HNW INDIVIDUALS 30

4.1. Equity allocations will continue to rise 30

4.1.1. Investors are loyal to equities and bonds 30

4.1.2. Indian HNW clients look for capital growth 31

4.1.3. Capital appreciation opportunities feed HNW appetite for equities 32

4.1.4. Indian HNW individuals enjoy fixed income 33

4.1.5. Bond holdings are driven by the predictability of returns 34

4.1.6. Cash and near-cash allocations are below the regional average 36

4.1.7. Investors' desire to maintain liquidity drives allocations into deposits 37

4.1.8. Indian HNW investors are more interested in property than their regional peers 38

4.1.9. Property prices are an important determinant of HNW demand for property 39

4.1.10. Creating a perception of exclusivity is paramount to drive demand for alternatives 40

4.1.11. Perception of exclusivity is the leading driver for investments into alternatives 41

4.1.12. Commodity allocations in India beat the regional average 42

4.1.13. Commodity investments are forecast to decrease 43

5. HNW PRODUCT AND SERVICE DEMAND 46

5.1. Demand for pension planning services is forecast to increase strongly 46

5.1.1. Demand for financial planning is particularly pronounced 46

5.1.2. Internationally active millionaires require advice on pension matters 47

6. APPENDIX 49

6.1. Abbreviations and acronyms 49

6.2. Definitions 49

6.2.1. Affluent 49

6.2.2. HNW 49

6.2.3. Liquid assets 49

6.2.4. Mass affluent 50

6.3. Methodology 50

6.3.1. GlobalData's 2016 Global Wealth Managers Survey 50

6.3.2. GlobalData's 2015 Global Wealth Managers Survey 50

6.3.3. Global Data's WealthInsight 50

6.3.4. Exchange rates 51

6.4. Bibliography 51

6.5. Further reading 53

List of Figures

Figure 1: Women remain underrepresented within the Indian HNW population 10

Figure 2: Family assets account for a high proportion of HNW wealth 12

Figure 3: Karvy Private Wealth caters for India's unique wealth characteristics 13

Figure 4: Indian wealth is largely derived from financial services, IT, and real estate 14

Figure 5: Most Indian HNW investors hold top executive positions 15

Figure 6: The expat population in India is well below the regional average 16

Figure 7: US nationals account for almost half of the Indian expat population 18

Figure 8: Execution-only is significantly more popular in India than the wider region 20

Figure 9: Lack of expertise is the major driver of demand for wealth management services 21

Figure 10: ICICI satisfies Indian HNW investors' sophisticated investment needs 22

Figure 11: Almost every Indian HNW investor uses more than one advisor 23

Figure 12: HNW demand is highest for advisory services 24

Figure 13: Advisory asset management will experience the highest increase in demand 25

Figure 14: HNW investors opting for advisory mandates expect higher returns 26

Figure 15: UBS Advice Asia empowers clients through cutting-edge technology 27

Figure 16: Non-financial investments put a strain on wealth managers' business 28

Figure 17: FundsIndia caters to individuals who want self-directed services 29

Figure 18: Indian HNW investors' portfolios are led by equities 31

Figure 19: Almost three quarters of equity investments are held in funds 32

Figure 20: Equities growth will be driven by capital appreciation opportunities 33

Figure 21: Bonds account for a fifth of HNW portfolios 34

Figure 22: Bond investments are forecast to increase further 35

Figure 23: Cash and near-cash allocations are much lower in India than in the wider region 36

Figure 24: HNW investors use cash products to ensure liquidity 37

Figure 25: Direct holdings are significantly more popular than property funds 38

Figure 26: Investors will shift away from property investments 40

Figure 27: Investors show strong interest in private equity funds 41

Figure 28: Strong growth for Indian alternatives is expected 42

Figure 29: Indian HNW investors' commodity allocations are mostly held directly 43

Figure 30: Commodity investments will stagnate over the next year 44

Figure 31: Paytm offers a secure way to invest in gold 45

Figure 32: Financial planning is the priority for Indian HNW investors 47

Figure 33: Wealth managers should lead with pension planning services 48

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ICICI private banking, UBS, FundsIndia, Paytm, Karvy Private Wealth, Knight Frank

private banking, wealth management, India, Asia Pacific, investments, allocations, HNW, REITs, tax system, expats, planning services, asset management, Hindu undivided family, non-resident Indian

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