Wealth in India: HNW Investors 2016; Understanding HNW individuals and wealth management strategies on the sub-continent.

Pages: 44 Published: September 01, 2016 Report Code: VF0036CI

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.

Scope

• 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.

Reasons to Buy

Develop and enhance your client targeting strategies using our data on HNW profiles and sources of wealth.

Give your marketing strategies the edge required and capture new clients using insights from our data on HNW investors’ drivers for seeking investment advice vs. self-directing.

Tailor your investment product portfolio to match current and future demand for different asset classes among HNW individuals.

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.

Key Players

Karvy Private wealth
HDFC
Kotak Mahindra Wealth Management
Waterfield Advisors
ICICI

Table of Contents

EXECUTIVE SUMMARY

Rising levels of affluence have seen Indian HNW investors diversify

Key findings

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

APPENDIX

Abbreviations and acronyms

Definitions

Affluent

HNW

Liquid assets

Mass affluent

Methodology

Verdict Financial’s 2015 Global Wealth Managers Survey

Verdict Financial’s 2014 Global Wealth Managers Survey

Bibliography

Further reading

About Verdict Financial

Disclaimer

List of Tables

N/A

List of Figures

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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