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India’s wealth management industry is changing rapidly. The prosperous middle class is growing while the country’s high net individual population is estimated to grow by 75% from 3.5 lakhs in 2020 to 6.11 lakhs in 2025, according to a report. Ultra-high net worth individuals are expected to excel by 63% in the given period. India witnessed a record 14.2 million new demat accounts being activated in FY 21, the report signifies.
Trends you should know about Private Wealth Management
Exciting new opportunities are creating some positive transformation for wealth management solutions. If your business seeks to leverage these opportunities, then you need to know these trends:
- The makeup of investors is changing: The new generation of Millennial and Gen Z investors are always connected and prioritise using technology. They want to be able to communicate with financial advisors in real time via all available channels, including text messages and video chat. Additionally, they need constant access to investment options and portfolio information. This requires re-constructing the traditional investment ecosystems which are tailor-made to their demands.
- A hybrid future of wealth management services: The foundation of the wealth management solutions lies on personal relationships and human connections – and this will continue to be so. Customers still expect to be treated with compassion, honesty and understanding. However, they also look for experiences that are quicker, more practical, and smoother. The key enablers include digital technologies like robo-advisors and self-service investment portals. To increase productivity and respond to client demands more quickly, advisors will also adopt digital tools and process automation.
- Emergence of alternative asset classes: Millennials are very concerned about social and environment issues due to which ESG investing is becoming more popular. Young investors are shifting to non-traditional investments like passive investing, unlisted companies, private equity investing, etc. They actively seek out investment options that align with their environmental values.
- Increasingly, advisory firms are subject to regulatory scrutiny. For example, the Securities and Exchange Board (SEBI) of India is paying more attention to advisory firms’ fee structures, data security and privacy procedures, adoption of AI/ML, use of crypto assets, and ESG (environmental, social, and governance) funds. Tax increases are also anticipated, which is a huge worry for investors. Advisory businesses will need to have a solid compliance program and system of controls in place in order to be proactive prepared.
- The “financialization of savings” is accelerating: Historically, physical assets like gold and real estate accounted for 95% of household wealth in India. However, investors are now favouring financial savings over tangible ones. They are more conscious that, in the face of rising inflation, an excessive concentration of wealth in non-financial assets might produce unfavourable returns. They can experience better returns and greater efficiency in terms of liquidity and contingency planning with a more balanced approach to portfolio creation.
- Financial planning is becoming more holistic: The newest investors are fusing monetary objectives with moral and non-material objectives. They are searching for more all-encompassing investment solutions that cover social welfare, impact investing, estate preparation, and retirement planning.
- Hyper-personalization is essential right now: A one-size-fits-all strategy is no longer effective with investors. They demand carefully chosen, specially tailored, and contextually relevant offerings. Whether it’s investment products, marketing emails, or call centre service, every customer touchpoint needs to be personalised to gain customer loyalty and trust.
Conclusion
India’s private wealth management industry is poised for significant growth, driven by shifting investor demographics, emerging alternative asset classes, and rising regulatory scrutiny. With the increasing affluence of the middle class and the growth of the high-net-worth individual population, wealth management firms must adapt to meet the evolving needs and expectations of investors. By embracing digital solutions, incorporating non-traditional investment opportunities, and providing more holistic and personalised services, private wealth management firms can capitalise on these exciting new opportunities and position themselves for success in the years to come.
