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Wealth in India: HNW Investors 2017

Wealth in India: HNW Investors 2017

Summary

Serving the Indian HNW investor market means understanding the pressures of family wealth. Whether this wealth is derived from family business or inheritance, given the high proportion of HNW investors who derive their wealth through one of the two there will be a family context to the assets and their control. A lack of expertise and access to sophisticated investment products are driving uptake of financial advice.

Wealth managers need to understand that decisions regarding investments might not be signed off by the client alone but may require input from other family members. This can be an encumbrance if a quick decision is required, but it is also an opportunity as it should provide a ready pool of potential clients to expand into.

As many Indian wealthy individuals have 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 with execution-only services as the most popular; as economic growth will be strong, demand for equity products will continue to rise.

Critical success factors

  • Focus on advisory mandates: The bulk of HNW wealth is held in execution-only mandates, but demand is particularly pronounced for advisory mandates. While demand for all types of asset management services is on the rise, advisory asset management has enduring appeal, and demand for it will outpace other approaches.
  • Offer a wide range of investment products: Investors expect their wealth managers to give them access to more complex and sophisticated products. In order to accommodate this need, wealth managers need to develop their area of specialization and prove to their clients that management fees can be offset by higher returns.
  • Provide automated services: Indian investors’ demand for automated services will rise strongly in the next 12 months. Wealth firms must be able to integrate fintech solutions into their proposition in order to stay competitive.
The report Wealth in India: HNW Investors 2017, analyzes the Indian investment market, with a focus on the HNW segment.

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.
Companies mentioned in this report: ICICI private banking, UBS, FundsIndia, Paytm, Karvy Private Wealth , Knight Frank.

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.


  • Executive Summary
    • Rising levels of affluence have seen Indian HNW investors diversify
    • Key findings
    • Critical success factors
  • Profiling the Indian HNW Investor
    • Financial services and IT are the primary sources of HNW wealth
      • The bulk of Indian HNW individuals are males above 50 years of age
        • Table Figure 1: Women remain underrepresented within the Indian HNW population
      • Family business ownership is the leading source of Indian HNW wealth
        • Table Figure 2: Family assets account for a high proportion of HNW wealth
        • Table Figure 3: Karvy Private Wealth caters for India's unique wealth characteristics
      • Many HNW investors have built their fortunes through the financial services sector
        • Table Figure 4: Indian wealth is largely derived from financial services, IT, and real estate
      • The majority of HNW investors in India hold executive positions
        • Table Figure 5: Most Indian HNW investors hold top executive positions
    • Expats in India account for a lower proportion than the regional average
      • Few HNW individuals in the Indian market are drawn from abroad
        • Table Figure 6: The expat population in India is well below the regional average
      • Investor and entrepreneur visas require relatively low capital
      • Most HNW expats residing in India originate from the US
        • Table Figure 7: US nationals account for almost half of the Indian expat population
  • Indian HNW Investment Style Preferences
    • A lack of expertise drives demand for professional advice
      • HNW investors favor execution-only mandates
        • Table Figure 8: Execution-only is significantly more popular in India than the wider region
      • HNW Indians expect their wealth managers to be highly experienced
        • Table Figure 9: Lack of expertise is the major driver of demand for wealth management
        • Table Figure 10: ICICI satisfies Indian HNW investors' sophisticated investment needs
      • India's HNW investors place more than half of their managed wealth with their main wealth manager
        • Table Figure 11: Almost every Indian HNW investor uses more than one advisor
    • The expectation of better returns drives demand for advisory asset management
      • Demand for advisory mandates is strong
        • Table Figure 12: HNW demand is highest for advisory services
    • The appetite for advice is still on the rise
      • The demand for advisory mandates will strongly increase
        • Table Figure 13: Advisory asset management will experience the highest increase in demand
      • High expectations are driving demand for advisory mandates
        • Table Figure 14: HNW investors opting for advisory mandates expect higher returns
        • Table Figure 15: UBS Advice Asia empowers clients through cutting-edge technology
      • A large share of Indian HNW wealth will remain in execution-only platforms
        • Table Figure 16: Non-financial investments put a strain on wealth managers' business
        • Table Figure 17: FundsIndia caters to individuals who want self-directed services
  • Understanding Asset Allocation Trends among Indian HNW Individuals
    • Equity allocations will continue to rise
      • Investors are loyal to equities and bonds
        • Table Figure 18: Indian HNW investors' portfolios are led by equities
      • Indian HNW clients look for capital growth
        • Table Figure 19: Almost three quarters of equity investments are held in funds
      • Capital appreciation opportunities feed HNW appetite for equities
        • Table Figure 20: Equities growth will be driven by capital appreciation opportunities
      • Indian HNW individuals enjoy fixed income
        • Table Figure 21: Bonds account for a fifth of HNW portfolios
      • Bond holdings are driven by the predictability of returns
        • Table Figure 22: Bond investments are forecast to increase further
      • Cash and near-cash allocations are below the regional average HNW allocations to cash are a third of regional average
        • Table Figure 23: Cash and near-cash allocations are much lower in India than in the wider
      • Investors' desire to maintain liquidity drives allocations into deposits Demand for cash investments is forecast to decrease
        • Table Figure 24: HNW investors use cash products to ensure liquidity
      • Indian HNW investors are more interested in property than their regional peers Wealth managers should keep an eye on the developing property fund market
        • Table Figure 25: Direct holdings are significantly more popular than property funds
      • Property prices are an important determinant of HNW demand for propert Listed REITs are set to be introduced in the Indian property market
        • Table Figure 26: Investors will shift away from property investments
      • Creating a perception of exclusivity is paramount to drive demand for alternatives Indian investors are less keen on alternatives than their regional peers
        • Table Figure 27: Investors show strong interest in private equity funds
      • Perception of exclusivity is the leading driver for investments into alternatives Alternative investments are forecast to soar over the next year
        • Table Figure 28: Strong growth for Indian alternatives is expected
      • Commodity allocations in India beat the regional average Indian investors are loyal to physical gold
        • Table Figure 29: Indian HNW investors' commodity allocations are mostly held directly
      • Commodity investments are forecast to decrease The perception of safety is the leading driver for commodity investments
        • Table Figure 30: Commodity investments will stagnate over the next year
        • Table Figure 31: Paytm offers a secure way to invest in gold
  • HNW Product and Service Demand
    • Demand for pension planning services is forecast to increase strongly
      • Demand for financial planning is particularly pronounced
        • Table Figure 32: Financial planning is the priority for Indian HNW investors
      • Internationally active millionaires require advice on pension matters
        • Table Figure 33: Wealth managers should lead with pension planning services
  • Appendix
    • Abbreviations and acronyms
    • Definitions
      • Affluent
      • HNW
      • Liquid assets
      • Mass affluent
    • Methodology
      • GlobalData's 2016 Global Wealth Managers Survey
      • GlobalData's 2015 Global Wealth Managers Survey
      • Exchange rates
    • Bibliography
    • Further reading

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