8/12/2019 Kushal Todi - Wealth Management(1)
1/51
ACKNOWLEDEGEMENT
The Evolution Of Wealth Management In India touches an emerging
concet in India and comilation of this ro!ect "ould not have#een ossi#le "ithout the active guidance$ mentoring and
motivational suort of Ms Meena Desai%
Ac&no"ledgement is also due to our esteemed Course Coordinator
Ms% 'eena Tha&&ar%
I "ould also li&e to ac&no"ledge our esteemed (rincial Dr Indu)hahani for giving me this oortunit* to e+lore this concet%
Page | 1
8/12/2019 Kushal Todi - Wealth Management(1)
2/51
Money isn't everything...but it ranks right up there
with oxygen.
- Rita Davenport
Page | 2
8/12/2019 Kushal Todi - Wealth Management(1)
3/51
INT,OD-CTION TO WEALT' MANAGEMENT
Wealth management is an investment advisory disipline that
inorporates !inanial planning" investment port!olio management and anumber o! aggregated !inanial servies. #igh $et Worth %ndividuals
$W%s" small business owners and !amilies who desire the assistane
o! a redentialed !inanial advisory speialist all upon wealth managers
to oordinate retail banking" estate planning" legal resoures" tax
pro!essionals and investment management. Wealth managers an be an
independent ()R*%+%)D +%$,$(%, ,$$)R/" M0,s" (+, (harter
holders or any redentialed pro!essional money manager who works to
enhane the inome" growth and tax !avoured treatment o! long-term
investors. 1ne must already have aumulated a signi!iant amount o!
wealth !or wealth management strategies to be e!!etive and is also one
o! the key areas that are growing at a tremendous rate.
Wealth management an be provided by large orporate entities"independent !inanial advisers or multi-liensed port!olio managers
whose servies are designed to !ous on high-net worth ustomers
arge banks and large brokerage houses reate segmentation
marketing-strategies to sell both proprietary and non-proprietary
produts and servies to investors designated as potential high net-
worth ustomers. %ndependent wealth managers use their experiene inestate planning" risk management" and their a!!iliations with tax and
legal speialists" to manage the diverse holdings o! high net worth
lients. 0anks and brokerage !irms use advisory talent pools to
aggregate these same servies.
Wealth management helps people determine their monetary goals and
develop ationable strategies that ould help them reali2e their goals. %t
Page | 3
8/12/2019 Kushal Todi - Wealth Management(1)
4/51
also de!ends their !inanes against risks. Wealth management is a
servie designed spei!ially !or high net worth individuals. *he
threshold !or high net worth varies by ountry and institution" but the
most ommon de!inition is individuals who have more than 3456 million
in assets" not inluding their home. 4ome high net worth individuals
have done well in growing their assets !rom a low base to their urrent
levels" and may !eel that they an ontinue to manage their own
port!olios. #owever" as a person7s wealth grows and8or the markets get
more hallenging" it beomes inreasingly di!!iult to reali2e the
expeted returns.
With greater wealth ome greater investment options as well as more
omplex risks and threats in terms o! legal regulations" taxation issues
and opportunities !or loss. *he level o! !ear or even outright pani that
an be experiened grows with the si2e o! the investment involves.9reater diversi!iation is needed than in earlier stages o! investing. *his
is where independent !inanial advisers or large orporate entities help
their lients through pro!essional wealth management.
Page | 4
8/12/2019 Kushal Todi - Wealth Management(1)
5/51
(,INCI(LE) O. WEALT' MANAGEMENT
Mr 4tuart uas has developed what wealth managers onsider to be a
use!ul set o! priniples !or e!!etive long-term wealth management. *hey
apply e:ually well whether you're managing a nest egg o! 56 million or
56 billion. The Eight (rinciles of )trategic Wealth Management are
at the heart of "hat "ealth managers do ever* da*% The* are/
6. Ta&e Charge and Do It Earl* /0*he 4trategi Wealth Management
+ramework re:uires that you" as Wealth 4trategist" artiulate a set
o! values that will be the !oundation o! !uture wealth managementplanning. 1ne must eduate onesel! about their !amily !inanes"
existing assets" spending patterns" expeted rates o! return" and
urrent estate plans. ,nd one must deide how to struture long-
term !amily and !inanial goals so they beome integrated and an
positively rein!ore one another. ;ou may wind up with good
produts but without an integrated strategy or the resoures toimplement it over time.
8/12/2019 Kushal Todi - Wealth Management(1)
6/51
put aountability systems and per!ormane metris in plae.
Doing so helps to rein!ore ob?etive business goals and
per!ormane expetations. %t also helps drive implementation o!
wealth-reation strategies and provides a reliable benhmark by
whih to ?udge the per!ormane o! the Wealth 4trategist.
@. Caitali2e on 3our .amil*4s Com#ined ,esources / 0 +amilies
an overome this tendeny toward randomness. %n !amilies o! any
si2e" resoures beome distributed aross the membership with
the passage o! time. *he hallenge is to !igure out how -- and how
muh -- to reassemble these distributed resoures so they !untion
more e!!etively. *he tools !or reversing entropy are apitali2ing on
the !amily's !inanial sale and the ombined strength o! !amily
members' personalities" experiene" skills" a!!iliations" and
networks" all within a meritorati ulture.
A. Delegate$ Emo"er$ and ,esect Indeendence / 0 Members o!a healthy !amily group learn how to grow together and grow
separately. *here are advantages o! working together" but it is also
important to respet the individual ambitions and values o! eah
!amily member and" over generations" eah !amily unit. *he
hallenge !or the Wealth 4trategist and !or other !amily members is
to balane the two and rein!ore the strengths o! eah. 4upporting
!amily members to identi!y and pursue hallenges that they an
all their own" away !rom the !amily's immediate in!luene"
enourages sel!-reliane and risk-taking. *his is an exellent way
to enourage the personal growth o! young adults" who" i!
supported by their !amily in their personal interests or business
pursuits" learn to embrae responsibility !or their li!e hoies and to
develop a sturdy sense o! sel!-on!idene.
Page | 6
8/12/2019 Kushal Todi - Wealth Management(1)
7/51
B. Diversification And .ocus Com#ine The 1est Of 1oth Worlds.
With diversi!iation you ahieve risk mitigation" and with !ous
ome the laser intensity that most people need to sueed in li!e.
Diversi!ying your investments is !undamental to prudent risk
ontrol. Wealth is reated most :uikly and most o!ten through
suess in a single business. #owever" wealth is also most :uikly
lost by onentrating it on only one or a !ew investments. 4o" in
order to protet your wealth" it's best to diversi!y it. *he priniple o!
diversi!iation applies in other ways as well. Most individuals have
both taxable and tax-de!erred &retirement and de!erred
ompensation plans investment port!olios. 4ome have li!e
insurane savings plans that are tax exempt to the bene!iiary. ,
!ew people also ontrol orporations. ,hieving ompetitive
advantage in the deployment o! apital -- a ritial omponent to
growing diversi!ied wealth is very di!!iult to ahieve. Without the
!ous to develop investment skills that are superior to mostpro!essionals" one will not add value to your investment port!olio.
C. Err On The )ide of )imlicit* When (ossi#le /0%nevitably"
advisors will present you with many !any options !or doing great
things with your money. 4ome o! these are terri!i ideas" but it is
reommend to most people that they stik to simple wealth
management strategies and produts. )ven i! you're wealthy" it
might be best !or you to peg most o! your investments to !inanial
indies or to other simple" low-ost" and proven wealth
management produts. 0e!ore hoosing omplex solutions to
wealth management issues" evaluate the simple ones. 4imple
solutions &suh as indexing may o!!er you most o! the bene!its o!
more ompliated plans" a higher degree o! ertainty" easier
Page | 7
8/12/2019 Kushal Todi - Wealth Management(1)
8/51
8/12/2019 Kushal Todi - Wealth Management(1)
9/51
8/12/2019 Kushal Todi - Wealth Management(1)
10/51
6G. International e+osure and diversification>- *hrough this
strength in numbers investor will have aess to international
investment opportunities and ahieve diversi!iation.
LIMITATION) O. WEALT' MANAGEMENT%
*he limitations o! wealth management are as !ollows
6. *he big limitation o! Wealth management is that they do not show
their atual position to the ustomers. 4o" there may be hanes o!
!raud and !orgery with ustomers.
8/12/2019 Kushal Todi - Wealth Management(1)
11/51
8/12/2019 Kushal Todi - Wealth Management(1)
12/51
Source: Reserve Bank of India
T'E E..ECT O. DEMOG,A('IC) ON IN5E)TMENT IN INDIA
Parameters Number of Investors Percentage
Gender
Male 120 80
Female 30 20
Total 150 100
Age (Years)
Below 35 55 36.7
35-50 80 53.3
51-60 10 6.7
Above 60 5 3.3
Total 150 100
Page | 12
8/12/2019 Kushal Todi - Wealth Management(1)
13/51
8/12/2019 Kushal Todi - Wealth Management(1)
14/51
INTE,(,ETATION/ 0 *he above table shows" that 6
8/12/2019 Kushal Todi - Wealth Management(1)
15/51
)O-,CE) O. IN.O,MATION .O, T'E INDIAN IN5E)TO,
+rom the below table it is noteworthy to !ind that AF &=FH o! the
investors read !our or more soures" @G &
8/12/2019 Kushal Todi - Wealth Management(1)
16/51
O16ECTI5E)7 ,I)K TOLE,ANCE LE5EL O. T'E INDIAN
IN5E)TO,
We an onlude that the investors7 ob?etive o! investment plan is
apital appreiation or balane o! apital appreiation and urrent
inome. %t is investors invest to aumulate wealth rather as an avenue
to supplement their inome.
*he port!olio suggested to investors onsists o! !our types o! asset
lasses i.e." ):uities" +ixed %nome 4eurities" (ash I ):uivalents and
other ,lternative assets suh as art. Depending on their risk tolerane
the orresponding asset lass has been inreased or dereased and
orresponding asset mix has been suggested to eah type o! investor.
Page | 16
8/12/2019 Kushal Todi - Wealth Management(1)
17/51
8/12/2019 Kushal Todi - Wealth Management(1)
18/51
W'3 I) INDIA A GOOD WEALT' MANAGEMENT DE)TINATION;
%ndia represents the greatest opportunities to wealth managers over the
oming years. %n !at" in urrent !inanial environment" the wealthy
population in %ndia is large as well as growing" yet an underdeveloped
Wealth Management industry served the market. 3rbani2ation "growing
middle lass and larger disposable inome with the young. Moreover ,
large proportion o! the younger population is expeted to ome out o!universities over the next 6G J
8/12/2019 Kushal Todi - Wealth Management(1)
19/51
K Wealth Management will need to adapt with lients" to spread
beyond the largest ities and eduate its lients on the hanging
business environment
K *o !oreign banks" non-resident %ndians represent a large asset
K %ndian people are looking inreasingly beyond their own borders !or
their investments. *here!ore" !oreign banks must leverage their global
expertise.
WEALT' MANAGEMENT IN INDIA
Wealth management is lassi!ied as a type o! !inanial planning tool that
provides orporate and their !amilies with private banking" asset
management" legal resoures" real estate planning" investment
management and port!olio management with the goal o! sustaining and
growing long-term wealth. Wealth management servie providers have
segmented the %ndian market into !our ategories>
a *he mass market &investible surplus 34DA"GGG to
8/12/2019 Kushal Todi - Wealth Management(1)
20/51
5=GG"GGG. , true wealth management market is ?ust beginning to
develop in %ndia.
*he inrease in the number o! wealthy %ndians to a ombination o!
!ators. +or one" many are invested in the e:uity markets and have
bene!ited !rom strong orporate results in reent years. 4tok market
earnings multiples are also riding high" and so is sentiment in the market
!or initial publi o!!erings" she says. romoters o! %ndian ompanies have
also been able to unlok signi!iant wealth through mergers anda:uisitions.
E5OL-TION O. WEALT' MANAGEMENT IN INDIA < 9==>09=88?
8/12/2019 Kushal Todi - Wealth Management(1)
21/51
3*% and 4tandard (hartered bank were the only ones providing wealth
management servies.
*he reason !or the growth o! #$%7s in %ndia an be attributed to three
!ators namely>-
ow interest rates
ow exhange rates
4ubstantial in!low o! +oreign Diret %nvestment
%mprovement in %nvestor sentiment
*he number o! #$%7s grew !rom B6million individuals to CGmillion
individuals.
Source: Capemini !errill "ynch Asia #acific $ealth Report %&&'(
8/12/2019 Kushal Todi - Wealth Management(1)
22/51
8/12/2019 Kushal Todi - Wealth Management(1)
23/51
8/12/2019 Kushal Todi - Wealth Management(1)
24/51
T'E INDIAN N,I
%n the ontext o! this report" we re!er to $R%s as those individuals o!
%ndian origin or desent who are working or living outside o! %ndia. $R%s
ontinue to maintain strong eonomi links with %ndia" as demonstrated
by almost 345== billionC6 o! $R% deposits in the banking system and
345
8/12/2019 Kushal Todi - Wealth Management(1)
25/51
ompare priing aross numerous wealth management advisors. +rom
the standpoint o! the !inanial advisor" there!ore" the business owner
ommunity makes !or di!!iult" but rewarding" lients.
,s a lient group" $R% #$W%s and 3ltra-#$W%s are di!!erent !rom other
overseas ommunities. *hey tend to retain a strong allegiane to their
roots and are bound by traditional %ndian language" and religious and
ultural praties" inluding !amily values.
*he pro!essional $R% lient segment o!!ers some distintive
opportunities !or speialist !inanial advisors. 0eause o! urreny
onvertibility restritions" it makes sense !or these %ndians to retain some
wealth o!!shore in !oreign urreny. 9iven their language and ultural
a!!inity" speialist !inanial advisors are ideally plaed to serve them. +or
example" whereas previous generations looked to 4wit2erland" %ndians
today are ontent to bank in ,sia-ai!i markets suh as 4ingapore. %n
ontrast to $R% business owners" emigrating $R% pro!essionals typially
have less investment experiene and tend to initiate their port!olios with
prinipal-guaranteed produts or mutual !unds. *hey are" however" very
interested in learning more.
Page | 25
8/12/2019 Kushal Todi - Wealth Management(1)
26/51
8/12/2019 Kushal Todi - Wealth Management(1)
27/51
Source: Capemini !errill "ynch Asia #acific $ealth Report %&&8
*he assets alloated by #$%7s in %ndia during the year
8/12/2019 Kushal Todi - Wealth Management(1)
28/51
Page | 28
8/12/2019 Kushal Todi - Wealth Management(1)
29/51
8/12/2019 Kushal Todi - Wealth Management(1)
30/51
8/12/2019 Kushal Todi - Wealth Management(1)
31/51
Source: Capemini !errill "ynch Asia #acific $ealth Report %&&+
Page | 31
8/12/2019 Kushal Todi - Wealth Management(1)
32/51
%ndia7s two largest exhanges" the 0ombay 4tok )xhange and the
$ational 4tok )xhange o! %ndia" bene!ited !rom rapidly expanding
initial publi o!!ering &%1 markets and heightened international interest
by the end o!
8/12/2019 Kushal Todi - Wealth Management(1)
33/51
8/12/2019 Kushal Todi - Wealth Management(1)
34/51
,t the end o!
8/12/2019 Kushal Todi - Wealth Management(1)
35/51
A. 6=H in ash deposits a !all o! @H sine the previous year.
Page | 35
8/12/2019 Kushal Todi - Wealth Management(1)
36/51
8/12/2019 Kushal Todi - Wealth Management(1)
37/51
%ndia7s growth is expeted to keep aelerating" with 9D !oreast to
expand E.6H in
8/12/2019 Kushal Todi - Wealth Management(1)
38/51
9=8=
The economic recover* in Asia0(acific has #een driven #* #othdomestic demand$ rimaril* in China and India$ and rising e+orts
@from Tai"an$ )ingaore$ Indonesia$ Ne" ealand$ 6aan$ andAustralia%
(rivate #an&s and local "ealth management firms "ill have moreaffluent clients to serve in the coming *ears% India4s oulation of'NIs surged 98B to 8$:$=== in 9=8=$
This is the second straight *ear in "hich India4s 'NI oulationgro"th has #een among the to gainers$ the reort said% Indiaied )ain to gain entr* into the 4to 89 league4 of countries"hich have highest num#er of rich eole% Indian 'NIs continue to
Page | 38
8/12/2019 Kushal Todi - Wealth Management(1)
39/51
#enefit from a ro#ust econom* and asset classes li&e euities andreal estate
Page | 39
8/12/2019 Kushal Todi - Wealth Management(1)
40/51
This economic strength attracted caital from develoed
economies in 9=8=$ "hich led to rising commodit* and asset
rices$ and caused u"ard ressure on regional currencies%
Central #an&s in the region have resonded to these inflationar*
ressures "ith monetar* and fiscal tightening% The resultant
rise in interest rates ma* lead to a temering of the economic
e+ansion in 9=88% At the same time$ the rising rice of oil$ the
Middle East crisis$ and the ongoing effects of the earthua&e in
6aan are all adding to concerns a#out the sustaina#ilit* of the
regions gro"th rate% More #roadl*$ the macroeconomic divide
#et"een Asia0(acifics fast0develoing emerging economies and
the "orlds mature mar&ets has onl* increased since the financial
crisis% Each faces its o"n economic and structural challenges
going for"ard$ #ut #oth "ill need to "ean their economies from
crisis0related stimuli$ and manage inflationar* ressures% It is clear
Asia0(acific "ill continue to #e the engine of glo#al gro"th through
9=89 at least$ #ut the actions Asia(acific governments ta&e to
restrain inflation$ control foreign0caital inflo"s$ and deflate
otential asset #u##les "ill certainl* affect the ace of that
e+ansion%
Page | 40
8/12/2019 Kushal Todi - Wealth Management(1)
41/51
-)
)%-
98
*
INVESTMENTS MADE BY HNI's
IN THE YEAR 2010 !" #!$$!%" &
E./IT0
A"TER1ATI2E
I12EST!E1T
REA" ESTATE
3I4E5 I1C6!E
SEC/RITIES
CAS7 5E#6SITS
Page | 41
8/12/2019 Kushal Todi - Wealth Management(1)
42/51
GEOG,A('ICAL A))ET ALLOCATION 13 'NI) IN INDIA
< 9==F09==?
+rom this hart we an onlude that %ndian #$%7s pre!er investing in
,sia .,mong this most %ndians invested their wealth in %ndia itsel!. %n
%ndia they have invested ma?orly into the real estate setor and they
pre!erred domesti investment over !oreign investment. %n $orth
,meria %ndians ma?orly invested in *he 3nited 4tates stok exhanges
like $asda: and $;4). #owever due to the !inanial meltdown they
have onsiderably redued their exposure !rom 6
8/12/2019 Kushal Todi - Wealth Management(1)
43/51
Page | 43
8/12/2019 Kushal Todi - Wealth Management(1)
44/51
ME AND M3 C.O
8/12/2019 Kushal Todi - Wealth Management(1)
45/51
et us now analy2e the di!!erent !orms o! wealth management servies
Page | 45
M4 riority 0anking Multi +amily 1!!ie
, standalone produt +ouses on
investment advisoryand !inanial planning
+ouses not only on
investment advisorybut wealth protetion
and !inanial planning.
Pust one investment
option that !orms the
port!olio
(lients usually have
more than one
advisor.
4olutions are
ustomised using an
entire range o!
produts.Managed on a
disretionary basis.
+re:uent hange in
advisors lead to
relationship ontinuity
(lients have a single
point o! ontat whih
ensures superior
oordination and
exeution
*he lient has no sayover the port!olio
%nentive may lead tohard selling o!
produts.
1perates on an openoperation model. $o
sense o! produt
pushing
Deision lies in the
hands o! the !und
manager
imited or negligible
level o!
personalisation
,ts like a one stop
shop !or !inane. %t is
akin to being the !amily(+1 and onsultant.
8/12/2019 Kushal Todi - Wealth Management(1)
46/51
*he multi !amily o!!ie is !ast gaining pae among super rih %ndians. ,s
opposed to wealth management servie a multi !amily o!!ie provides a
one stop shop to meet the !amilies7 diverse needs.
,part !rom providing traditional wealth management servies multi!amily
o!!ies also render !untions like
%. )state planning and systemati wealth trans!er
%%. +inanial and *ax lanning.
%%%. hilanthropy (ounselling.
%O. )xpertise in ,lternatives.
O. Risk Management
O%. (onsolidated Reporting
O%%. ,dministrative servies like doumentation and payment o! bills.
O%%%. (o ordinate with external advisors.
Page | 46
8/12/2019 Kushal Todi - Wealth Management(1)
47/51
Source: Business Today !aaine(
*he multi !amily o!!ie aggregates your port!olio7s and ensures that allthe port!olios meet the asset alloation plan. *oday this onept not only
restrited to #$%7s but even the middle lass are now being servied by
a large number o! !inanial planners.
A))ET ALLOCATION 13 WEALT' MANAGE,)%
8/12/2019 Kushal Todi - Wealth Management(1)
48/51
*he two !undamental :uestions investors must address" are the likely
li!e expetany o! the investor &or ouple and the perentage o! assets
the person &or ouple expets to spend every year in retirement. %n
terms o! the latter" %! it's AH" and bonds are earning AH" the investor is
in trouble" beause o! in!lation.
6. Wealth managers would invest the total amount o! the !unds by
determining asset alloation" along with the health and the
expeted li!espan o! the individuals.
8/12/2019 Kushal Todi - Wealth Management(1)
49/51
@. *he alloation is hanged based on eonomi onditions" but is
broadly aligned with the risk tolerane and return ob?etives o! the
lient. +or example" i! the stok market is soaring" one needn't
trespass an asset alloation skewed in !avour o! bond investments
in the ase o! a risk-averse investor. ort!olio rebalaning is also a
good way to maintain risk-return parity among various asset
lasses.
A. Wealth Managers use alternative investments only i! the total
amount was very substantial and the individuals had some
expertise in that !ield. ,lternative investments" while o!!ering good
diversi!iation and risk-ontrol bene!its" tend to be restritive in
their investment struture" with high minimums" in!re:uent prie
valuations and tightly ontrolled li:uidity !or withdrawals.
B. Wealth Managers rebalane their port!olio7 asset struture yearly
so as to boost the overall return. #owever Wealth Managers mayrebalane the asset mix :uarterly i! the port!olio is overexposed to
a ertain setor.
Page | 49
8/12/2019 Kushal Todi - Wealth Management(1)
50/51
1I1LIOG,A('3
1OOK) /0 HWealth Management The .inancial Advisors Guide
To Manage Clients Assets
NEW)(A(E,)/0
8% T'E ECONOMIC TIME)
9% T'E 1-)INE)) )TANDA,D
:% T'E 'IND-
>% T'E .INANCIAL TIME)
% T'E .INANCIAL C',ONICLE
MAGAINE) /0
8% 1-)INE)) TODA3
9% 1-)INE)) INDIA
:% 1-)INE)) WEEK
>% .INANCIAL CONNECT
6O-,NAL)/0 T'E W'A,TON 6O-,NAL O. .INANCE
Page | 50
8/12/2019 Kushal Todi - Wealth Management(1)
51/51