The changing face of wealth management in India

Wealth management is an extremely personal industry, with the client dictating the face and personality of the management strategies being pursued. An in-depth analysis of the wealth management space indicates that, over the years, there has been a significant evolution in client segmentation. There has been a gradual yet decided shift in the ownership of the person or client that wealth managers deal with, and these are the people who have the decision-making power when it comes to decoding portfolio tactics. While a male member of the family, usually a patriarch in the 60 to 70-year age group, would have been the client and deciding force behind wealth management portfolios a few decades earlier, managers today are meeting with individuals in their 30s and 40s. Further, wealth management is no longer the bastion of men – today, clients are both male and female and they have equal decision-making power, indicating strong equality in the ecosystem.

The evolving equation of age
One of the biggest changes in wealth management revolves around the average age of the decision-makers. Wealth managers are witnessing a major shift in this area, with millennials taking over from their predecessors and injecting a much-needed dose of vitality and innovation into the environment. This generational shift in wealth is also visible from the results of the IIFL Wealth Hurun India Rich List 2022, which indicates that the youngest on the list today is a teenager, as against a 37-year-old a decade ago. The decreasing age of the wealthy also adds an element of risk-taking to the wealth management space because, being in their prime, these individuals are willing to take on greater risk in the pursuit of higher returns, something which wasn’t the case just a decade or so earlier.
Women coming to the forefront

The next major trend that wealth managers have witnessed is the increasing number of female clients coming to the forefront of the ecosystem. With equal deciding power as their male counterparts, women are taking the reins of finance into their own hands and making decisions that attest to their individual personalities and requirements. Gone is the era when a woman’s financial well-being was dependent on her father, brother or husband. Today, women are charting their own path, be it on their education and career fronts or in their financial lives. There is greater awareness and understanding of the nuances of finance and wealth management is slowly transitioning into a sector wherein women now play an active role.

Gen Z makes a mark
As the average age of the decision-maker trends downward, there is one segment of the clientele which is playing a bigger part in making this a reality and that is Gen Z. Wealth managers are now noticing youngsters, who belong to the late millennial and early Gen Z tribe, coming in and playing a leading role in managing at least a part of the portfolio themselves. Retail investments in India have grown steadily, as indicated by the sustained rise in demat accounts, and a number of the younger individuals today are extremely well-versed with money matters and proactively manage their investment portfolios. In this scenario, while they invite advice from wealth managers, these individuals are running the last mile of the race themselves, building up a portfolio, which reflects their unique personas and focus sectors.

The indisputable way forward
In the fast-evolving Indian wealth management ecosystem, the biggest competitive advantage for managers now rests on being India-centric. Having a large number of expert professionals on the ground offers savvy wealth managers a huge lead and puts them in the core position as they enjoy unbridled access to most of the landscape. Further, the presence of a large team helps such firms innovate better, thus enabling them to better serve the Indian institutional, NRI and domestic retail clientele while unlocking untapped opportunities. While creating a product or platform is not a tough task, wealth management firms today must focus on building and owning the trust of their clients and this can only be facilitated by providing a 360-degree view and making the client the unblinking centre of the entire wealth management exercise. Equally important is to understand that the boundaries of support can often be amorphous and wealth managers must holistically participate in their clients’ journey. This means that you must have a ‘Performance Plus’ attitude.