While the Indian wealth management market retains many of its traditional characteristics, such as the importance of family business, it is undergoing big changes. Investors are increasingly open to sophisticated investments and are opting for more planning and professional management. Wealth managers need to adapt to the changes while respecting traditions.
Family business is the most important source of wealth, followed by inheritance.
Discretionary mandates are by far the preferred means for investing among Indian HNW individuals.
Equities and sophisticated alternative investments have come to dominate HNW portfolios.
Indian investors are open to adding leverage to their portfolio, but not to fund property investments.
Verdict Financial's "Wealth in India: HNW Investors 2016" analyzes the Indian wealth management market, with a focus on the HNW segment's demographics, investment preferences, and service demand. The report is based on our proprietary survey of wealth managers. Specifically the report: Profiles the average Indian HNW investor in terms of their demographics and analyzes the expat opportunity in the country.
Analyzes which wealth management mandates are preferred among Indian HNW investors and how demand will develop going forward.
Examines the allocation of Indian HNW investors' portfolios into different asset classes and how the allocation is expected to develop in the future.
Analyzes product and service demand among Indian HNW investors.
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Develop your service proposition to match the product and service demand expressed by Indian HNW investors and react proactively to the forecasted change in demand.
Rising levels of affluence have seen Indian HNW investors diversify
Critical success factors
PROFILING THE INDIAN HNW INVESTOR
Inheritance and family businesses in manufacturing and construction are major sources of wealth in India
Over half of Indian HNW wealth is held in the family, reflecting a strong traditional trend within the market
Indian HNW families have built their fortunes through property and manufacturing
Private banks are likely to see strong competition from family office boutiques
Expats remain a tiny proportion of the resident HNW population
Few HNW individuals in the Indian market are drawn from abroad
The expat market is mostly made up of nationals from the Indian diaspora
INDIAN HNW INVESTMENT STYLE PREFERENCES
Indian HNW investors expect their wealth managers to outperform, making periods of volatility a challenge
Wealth managers need to be able to demonstrate superior returns and provide access to sophisticated investments
The bulk of HNW wealth is kept in discretionary mandates, well above regional norms
Demand is high for discretionary mandates, an enduring market preference
Advisory and discretionary mandates should be the core offering in India
While not currently widespread, execution-only mandates appeal to sophisticated investors as well as the tech savvy
UNDERSTANDING ASSET ALLOCATION TRENDS AMONG INDIAN HNW INVESTORS
Portfolios are mostly allocated in equities and alternatives
Property has reduced significantly as a share of the portfolio in favor of equities
Equities dominate HNW investors' managed wealth, making the portfolio vulnerable to market swings
Indian investors are more comfortable with bond funds than holding securities directly
Cash and near-cash investments are well below the regional average in India
Property is a significant but declining element of Indian HNW portfolios
Commodity investments are currently out of favor with HNW investors
Alternative investments are now a major element of the Indian HNW portfolio
INDIAN HNW PRODUCT AND SERVICE DEMAND
Demand for planning services is strong and growing
Indian HNW individuals expect wealth managers to advise on all aspects of their finances
All planning services will rise in importance among Indian HNW individuals
HNW Indian investors will help expand the earning asset base
Demand for loans remains high among Indian HNW individuals
Indian investors remain open to using leverage to build their wealth in securities and property
Abbreviations and acronyms
Verdict Financial's 2015 Global Wealth Managers Survey
Verdict Financial's 2014 Global Wealth Managers Survey
About Verdict Financial
Figure 1: Family business remains the top source of HNW wealth, followed by inheritance
Figure 2: Manufacturing has been edged out by property as the leading source of wealth
Figure 3: Expats account for a tiny proportion of India's HNW wealth story
Figure 4: The Indian diaspora is responsible for most of the expats in India
Figure 5: Control issues dominate the expatriation of wealth
Figure 6: Indian HNW investors expect their advisors to more than pay for their fees in returns
Figure 7: Discretionary mandates rule the market in India, in stark contrast to the rest of Asia
Figure 8: Discretionary is the most sought after asset management mandate
Figure 9: Demand for advisory and discretionary services will increase significantly
Figure 10: Advances in technology are giving Indian HNW investors the confidence to increase direct control over their investments
Figure 11: Equity is forecast to surge ahead of most other asset classes
Figure 12: Funds are the preferred method for gaining equity exposure in India
Figure 13: Capital growth has been driving the growing demand for equities in India
Figure 14: Funds are the main channel for fixed income investments
Figure 15: Bond holdings will rise modestly compared to the rest of Asia Pacific
Figure 16: Cash holdings in India are primarily rupee deposits
Figure 17: Indian HNW investors are split on the need for more deposits
Figure 18: Despite a strengthening local market, Indian HNW investors are only marginally above average in property exposure
Figure 19: A mixture of capital growth and income will fuel the growth in property holdings
Figure 20: The poor performance of commodities means their share of the HNW portfolio remains low
Figure 21: In contrast to the wider region, commodities demand will not increase in India
Figure 22: Alternatives help investors diversify away from unsatisfactory financial markets
Figure 23: Alternatives will rise in India as investors seek out investments uncorrelated with financial markets
Figure 24: Strong demand exists for most planning services
Figure 25: All planning services will experience an increase in demand over the coming years
Figure 26: Indian HNW investors are keen on leveraging up their investments in securities and property
Figure 27: Demand for credit will not flag over the next two years
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