Practical Insights on Wealth Management Strategies

IAIP hosted Sanjay Bhuwania, ED, Merrill Lynch Wealth Management one of the renowned and successful wealth managers in India at its Speaker event at Conclave, Kolkata on May 11th, 2013, wherein he communicated the core concepts, provided deeper understanding of the subject together with practical problems being faced by the wealth manager in the current Indian market place. He reiterated the importance of trust as an important determinant to succeed in this competitive and lucrative wealth management field.   The event concluded with Q&A session.

This slideshow requires JavaScript.

Sanjay began his presentation by stressing on fundamentals of wealth management. He explained in lucid terms definition of wealth, different categories of wealth and the business opportunity in the field.  Thereafter, he provided details about different business models practiced by the market players along with their product offerings.

Wealth is an accumulation of assets over time. It can be accumulated by different sources namely inheritance, sale of business, and from surplus from the existing business or profession. However, for the wealth management purpose, the manager is interested in the personal wealth of the client and not the business wealth because business wealth is paper wealth and cannot be unlocked easily and is not a free cash flow.

The target segment could be group into four categories namely builders/promoters, professionals, salaried employees and NRIs. Out of these, professionals and NRIs are the large segments.

There is a huge opportunity for wealth management as the total savings is estimated at $640 mn/year i.e. 32% of Indian GDP. According to him the major chunk of money get invested in Fixed Deposits with Banks. By 2020, if we estimate the Indian GDP to grow to the levels of $5 tn, then the overall market size will increase to whopping $ 1.5 bn./year.

In order to tap the potential market the key success factor is building a strong brand equity in the minds of customers. Based on the age segmentation, the clients falling under the age bracket of 30-50 are the major contributor in the overall revenue basket.

There are different arrays of product/service offerings from the existing players based on the expertise level of clients. There are variety of business models adopted by the market players namely Service Model, Advisory Model and Long Term Revenue Model.

According to Bhuwania, asset allocation is inevitable for any wealth manager. The selection of asset classes should be done after thorough study of client requirements namely liquidity, risk appetite, investment objective, age profile etc. According to him for any wealth manager to be successful, following factors are of paramount importance.

  • Strong Brand image and brand equity in the minds of clients
  • Modern technology for effective execution, monitoring and reporting
  • Holistic view of the assets i.e. Portfolio Approach
  • Transparency and compliance with all the regulatory guidelines
  • Embrace mobility
  • Asset Allocation to diversify the risk

Contributed by:  Babita Agarwal

Photographs by: IAIP Volunteers

About IAIP

India Association of Investment Professionals (IAIP), which is established April 2005 and located in Mumbai, is an association of local investment professionals. As one of the 136 CFA Institute member societies, IAIP connects members to a global network of investment professionals. Consisting of portfolio managers, security analysts, investment advisors, and other financial professionals, IAIP promotes ethical and professional standards within the investment industry, facilitates the exchange of information and opinions among people within the local investment community and beyond, and works to further the public’s understanding of the CFA designation and investment industry.
This entry was posted in Speaker Events and tagged , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s