project report wms

8/10/2019 Project Report Wms

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Hedge Equities Pvt Ltd

Kirloskar Institute of Advanced Management Studies 0

PROJECT REPORT

Project report submitted in partial fulfillment of the requirements for the post graduate

diploma in management.

ANOJ BABY

Roll noPG 2013-015

Under the Guidance of:

Mr. Vinay Sasidharan

(Assistant Vice President WMS)

Mr. Benil Dani Alexander

Assistant - Vice President

[Hedge School of Applied Economics]

FSG - Prof. Chetan G.K.

KIAMS, Harihar

KIRLOSKAR INSTITUTE OF ADVANCED MANAGEMET STUDIES

PGDM 2013-2015


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Industrial Study on Hedge Equities WMS &

Dynamic Asset Allocation strategies With Respect to

Retail Investors

Submitted by

Anoj Baby

WMS Intern


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ACKNOWLEDGEMENT

It was my privilege to get the SIP in Hedge Equities where I get to learn the key aspects of thecompanys Wealth Management Services. I would like to thank all my mentors, without whommy SIP would not have been a great success.

Mr. Vinay Sasidharan and Mr. Benil Dani Alexander for invaluable assistance, support andguidance. Their passion and commitment towards work constantly inspired us towards fulfillingthe objectives of the project and to get this project in the current position. We are grateful to themfor dedicating their precious time and extending all help possible from time to time to explain thenuances of the Wealth Management Industry.

I would like to thank Mr. Suraj R for his support and assistance. With their help we were able toovercome the challenges and obstacles faced during the course of the project.

I would also like to thank the illustrious management of Hedge Equities for providing us this

exciting opportunity to work on this challenging project.

I would also like to thank my FSG - Prof. Chetan G.K. KIAMS, Harihar for invaluableassistance in 2 months of my internship


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TABLE OF CONTENTS

Page no

1. EXECUTIVE SUMMARY .. 52. OBJECTIVE OF THE PROJECT . 6

3. INTRODUCTION ON WEALTH MANAGEMENT . 7

4. WHY WEALTH MANAGEMENT IS IMPORTANT . 85. PROCESS OF WEALTH MANAGEMENT SERVICE .. 96. UNDERSTANDING PROFILE OF CLIENT ... 117. PORTFOLIO ADVISORY SERVICES... 148. OVERVIEW OF TAXATION ON INVESTMENT PRODUCTS.. 21

9. WORLD WMS INDUSTRY OVERVIEW .. 23

10.NEW RULES AND REGULATORY CHALLENGES 2611.INDIAN WMS INDUSTRY OVERVIEW . 36

12.INIVIDUAL WEALTH: INDIA VERSUS WORLD 43

13.FUTURE OF INDIAs INIVIDUAL WEALTH 44

14.COMPETITOR INFORMATION 45

15.DYNAMIC ASSET ALLOCATION STRATAGIES WITH RESPECT TO

RETAILINVESTOR 54

16. FINDINGS OF THE PROJECT 58

17.CONCLUSION 5918.RECOMMENDATION 60

19.LIMITATION OF THE PROJECT 61

20. ACRONYMS 61

21.BLIBIOGRAPHY 62


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EXECUTIVE SUMMARY

Hedge Equities was established in 2008, under the leadership of Mr. Alex. K. Babu.

He is the Founder, Chairman, and Managing Director of the Hedge Group of Companies. Hedge

Equities is one of the leading financial services company in India. The firm offers wide range of

financial services and wealth management solutions to various individuals, institutions,

corporations. The firm have spanned their presence all over India through meticulous research,

high brand awareness, intellectual management and extensive industry knowledge. The

philosophy of the company was entirely focused on providing long term value addition to clients.

The firm maintains high ethical standards and professionalism in providing sustainable financial

services platform for its customers.

My Project is Industrial Study on Hedge Equities WMS & Dynamic Asset

Allocation strategies With Respect to Retail Investors

Since the financial crisis began in 2008, stock markets have enjoyed a considerable bull run,

GDP growth is again robust in many markets, and assets under management are on the upswing

around the globe. the prospects for wealth management have improved significantly over the last

12 months, but new global regulations (including the battle against undeclared offshore assets),

changing client behavior, the rapid advance of digitization, and a fluid competitive landscape

have permanently altered the rules of the game and raised the cost of doing business. Wealth

managers must learn the new rules quickly and adapt their playbook accordingly if they are tocapitalize on the continued economic recovery in 2014 and 2015

Asset allocation can be an active process to varying degrees or strictly passive in nature. Whether

an investor chooses a precise asset allocation strategy or a combination of different strategies

depends on that investor's goals, age, market expectations and risk tolerance


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OBJECTIVE OF THE PROJECT

The main objective of This Project is to understand the role of a wealth manager and how

to manage the wealth in dynamic economic environment

To understand the process of wealth management

To Understand Current performance of Hedge WMS

Determine the Growth prospective of this industry

Comparison World and Indian wealth management services

Determination of risk profile of an investor

Determination of asset allocation strategies

Comparison between competitor


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INTRODUCTION ON WEALTH MANAGEMENT

Wealth management as an investment-advisory discipline incorporates financial planning,

investment portfolio management and a number of aggregated financial services. High-net-worthindividuals (HNWIs), small-business owners and families who desire the assistance of a

credentialed financial advisory specialist call upon wealth managers to coordinate retail banking,

estate planning, legal resources, tax professionals and investment management

Many of them had different opinions about the term Wealth Management. Some consider it as

selecting the products while some confuse it with Portfolio Management.

In order to understand the definition of Wealth Management one has to know about the meaning

of wealth. Wealth is nothing but accumulation of resources. As per the definition WealthManagement defined as service to optimise, protect and manage the financial goals of individual,

household or corporate.

Wealth management is selecting and investing in various asset classes and ensuring that client can

gain better returns for the risk taken by him. Wealth manager mainly focuses on requirements of

client rather than money manager who specialises in specific asset class or asset manager who

specialises in maintaining portfolio. Wealth manager always works on helping the clients to

achieve their financial goals through effective management of their wealth.

In wealth management the process of asset allocation is considered as prime importance.

According to various studies returns are mainly varied due to selection of right assets but not due

to timing of market or skills of wealth manager.


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Why is wealth management important?

Wealth creation is a pursuit followed by everyone. However, successful management of wealthis not everybodys forte. It calls for a lot of planning, discretion and commitment. No matter you

earn money the hard way, win a lottery or inherit some wealth, without a well-planned strategyin place, wealth can get depleted before you realize it. A better quality of life and financialsecurity are the major factors driving ones efforts for wealth creation and management.

However, in the endeavor of these, people often overlook that in the absence of propermanagement of assets, all wealth is potentially at stake of getting diminished. In order tofacilitate the growth of wealth, it is best to trust private wealth management companies for theirexpertise. They have a rich experience of the financial market and can advise best on investmentconcerns.

Wealth management experts suggest that investment in Private Equity firms is a good option togrow wealth as it offers attractive Return on Investment (ROI).


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PROCESS OF WEALTH MANAGEMENT SERVICE

Firstly, if any client wants to open an account in WMS itsmandatory to maintain a Demat account.

To open a Demat account one needs to furnish following documents:

PAN Card Proof of Address

Bank Proof

Copy of ITR Acknowledgement

In case of salary incomeSalary slip, copy of Form 16 etc.

Once the Demat account is opened then fund manager can invest on behalf of client basing

on his requirement criteria. Hedge WMS supports only investors who are systematic and logic

oriented in their decisions.

A fund manager will be allocated to each and every client. He helps to choose the schemes

that best suit the requirements of client. Fund manager also can advise client on following options

according to variable market conditions.

Redemptions

Switch of Units

Awareness about new products etc.,

In Hedge WMS, a fund manager will be meeting the client in person at least once in three months.

Every month they update the client about the status of his portfolio either through call or meeting

him in person.

Portfolios are constructed, managed, and rebalanced as needed under the expert supervision of the

Fund Manager backed by a strong research team. Portfolios are regularly monitored and new

information is continuously assimilated into the investment decision making process. This provides

rebalancing the portfolio as and when needed.

Hedge research team provides customized and research oriented investment solutions that aids fund

managers in decision making. Needs identification and portfolios selection based on customer risk-

reward profile ensures that the investments are made considering customer risk appetite and long

term financial needs.

Investors in Hedge WMS can monitor their investments through a dedicated website. Monthly

reports are emailed to customers detailing account performance. Investors can also get reports of

performance and research notes in their respective portfolios


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Some benefits of investing in Private Equity firms:

High ROI- Private Equity investors choose opportunities where they can invest into

something of value at reduced costs, nurture it and wait for it to appreciate so that it canbe sold for a profit. PE investors are prepared to wait for this scenario most of the times.They are usually willing to invest more money into the company if required, in the hopeof maximizing the ROI.

Great scope- Private equity firms offer a great scope as compared to the public markets.Be it a small manufacturing company or the largest division of a multi-national giant, anyorganization can be a private equity investment opportunity. Private Equity firms alsoattract public companies that are looking on to go private.

Transparency and Accountability- Private Equity firm investors can hold the companyaccountable for their performance deliverables and target milestones. They can evenbargain a chair on the board and exert a lot more authority than a public companystakeholder. Moreover, Private Equity firms grant direct access to investors if they wantto get in touch with the top officials of the company; which is in quite contrast to a publicsector company.


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UNDERSTANDING PROFILE OF CLIENT

Knowing the client is an important aspect to provide Wealth Management Service. One

needs to assess following details in constructing the portfolio of an extremely interested

customer.

Details need to know are:

A. Investor attitude:Basing on his attitude they can be classified into 3 fields as

ConservativeInvestors who seek some modest potential increase in the value

of their investments and are willing and able to accept some limited volatility

in the capital investments.

ModerateInvestors whose primary investment objective is to seek moderate

returns over investment time horizon. A moderate investor is equally

concerned about the risk return trade off and is willing to accept limited

volatility for the capital invested.

Aggressive Investors whose primary investment objective is to appreciatetheir returns on the capital they invested. An aggressive investor is ready to

accept relatively higher degree of risk. High level of risk tolerance makes them

to choose more equity stocks than fixed income and cash.

Client

Data

Investor

Attitude

Need of

Investment

Investor

Horizon

InvestorType

Expecting

Rate ofreturn

Investment

Size

Regulatory

Provisions

Choice of

Securities

DisposableIncome

Net Worth

Tax

Constraints


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B. Type of Investor:

Investor can be an institutional or an individual investor.

C. Need for Investment:Fund manager need to know the need of client for investing the money. It can be of

various types like for retirement, for children education, for children marriage etc.

D.Expecting Rate of return:

As a part of choosing the securities for his profile we need to know the level of return

he is expecting.

E. Investment Horizon:

It can be either short or long which differs due to change in the need of investment.

F. Investment Size:

Total amount how much client is interested in investing. If he is a regular investor

then we can suggest him to go with SIP mutual funds also .

G.Regulatory Provisions:

Few investors might be interested in investing in foreign securities also. So, we need

to clearly know the regulatory constraints w.r.t. his geography.

H.Choice of securities:

Securities are of various types like

Equity

Mutual Funds

Debt Instruments

Commodities

Currencies

Options

Futures

Fixed Maturity Plans

NonConvertible Debentures etc.


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So, basing on his interest and risk profile we can choose the securities among the

above.

I. Disposable Income:

From disposable income we would be able to know what is the amount that the client

can invests in various schemes as savings.

J. Net Worth:

Fund manager can maintain the portfolio in appropriate manner only by knowing the

net salary of individual.

K. Tax Constraints:

Investors might be looking to invest the money for the benefit of tax. So, fund

manager as well as investor should be aware of tax benefit schemes and tax constraints

imposed by government.

Apart from the above mentioned list fund manager should also be aware of

Constraint set of investors

Liquidity Risk:

This risk mainly explains about the marketability of an asset (ease of

asset to be converted into cash (vice versa))

Market Risk

Mandatory cash level for certain asset classes


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Portfolio advisory servicesof Hedge Equities

Portfolio Advisory Services is a value-added service offered to our esteemed clients who seek toa high-quality wealth management advisory desk and research team but are comfortable makingtheir own investment decisions.

As a Portfolio Advisory Services client, you have

A dedicated Wealth Advisory Desk standing ready to answer your queries and uniqueneeds

Assessment of your risk profile and help with constructing / rebalancing an investmentportfolio that matches your risk appetite.

Access to high quality research and investment strategies

The guidance can be on-going or as needed at client discretion

Under these services, our Wealth Management Service desk can only suggest investment ideasthat match the assessed risk-reward profile agreed for the investor. The choice as well as theexecution of the investment decisions rest solely with the Investor.

Minimum account balance for availing Portfolio Advisory Services is Rs. Twenty FiveLakhs

Customer needs to sign a Portfolio Advisory Services agreement and get his Risk Profileassessed We do not charge any fees to provide this service


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Portfolio Management Services

Portfolio Management Service (PMS) is a product offering that caters to the investment needsand objectives of a certain investor class.

It is ideally suited for investors who,

Lack sufficient time to adequately monitor and manage a portfolio Lack sufficient interest and knowledge of financial marketplace to obtain the desired

results Desire Customized and Research oriented investment solutions Desire investment decisions that minimize emotion and manage risk Desire returns that are in sync with their risk profile (ability to take risk)

Our portfolios are designed and offered solely based on identifying the risk profile of thecustomer and investment in these portfolios are tailored to the risk-reward profile that isestablished for the same. The portfolios invests in equities, debt instruments, gold ETFs, andother structured products and is managed by competent portfolio managers. The securities areheld in an investors own depository account and as such can be monitored and viewed by the

investor. Regular performance reports and research notes are also provided to the investors in therespective portfolios.

Benefits of PMS

Competent ManagementPortfolios are constructed, managed, and rebalanced as needed under the expertsupervision of the Portfolio Manager backed by a strong research team.

Ongoing MonitoringPortfolios are monitored daily and new information is continuously assimilated into theinvestment decision making process. This facilitates rebalancing the portfolio as andwhen needed.

Best of Breed ResearchOur research team provides customized and research oriented investment solutions thataids portfolio managers in decision making.

Tailored to meet your profile

Needs identification and portfolios selection based on your risk-reward profile ensuresthat the investments are made considering your risk appetite and long term financialneeds.

TransparencyInvestors in PMS can monitor their investments through a dedicated website. Monthlyreports are emailed to customers detailing account performance


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Conservative Portfolio

Investment Philosophy

Hedge Conservative Portfolio is designed for investors who seek some modest potential increasein the value of their investments and are willing and able to accept some limited volatility in thecapital investments. As such this portfolio is designed as a long term defensive portfoliodesigned to provide a real return after inflation and taxes in line with an investors conservativerisk profile, while providing the most protective cover possible. The portfolio implementsdetailed fundamental analysis and long term technical indicators to ensure that investors funds

are invested in reliable and competent manner in securities which have a history of providingstable and secure returns.

In keeping with this philosophy, we have designed this portfolio on some basic principles whichare summarized below,

Stock Selection is made through detailed fundamental analysis of the securities. Investments are made in equities, debt instruments, gold ETFs, and other instruments. Opportunity cost on idle cash is managed through efficient management and exposure on

mutual funds and other debt instruments. Investments are made with a view to buy and hold, but to take advantage of short term

gains a moderate churn ratio will be maintained.

Investment Process

Evaluation and analysis of,

Company Financials Valuation Financial Ratios Cash Flow Generation Net Profit Margins

Debt to Equity Ratio Sector analysis and future prospects using both fundamentals and technical indicators.


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Portfolio Construction

This portfolio assigns a slightly higher weightage to equity instruments but still maintainsa conservative bias.

Investments are spread across Equities, Debt, Gold ETFs, and other Liquid Investments

with the purpose of generating a real return after inflation & taxes.

Who can invest

Resident Indians Non Resident Indians Corporate Institutions

Minimum Investment: Rs Twenty Five Lakhs.

Mode of Corpus: Introduced by way of Cash only

Our PMS Service offers various features such as:

24 x 7 Online Access Performance Reports accessible via our secure website Transaction & Holding Statements Trial Balance & Other Financial Reports

Moderate Portfolio


Hedge Moderate Portfolio is intended for the investors whose primary investment objective is toseek moderate returns over investment time horizon. A moderate investor is equally concernedabout the riskreturn trade off and is willing to accept limited volatility for the capital invested.This Portfolio is called moderate as it is designed to adapt to various situations, perfectlymolding itself into the best shape for the current market situation. As with our other portfolios,

this one too has its set of principles which are used in its design and construction:

Stock selection based on extensive fundamental and technical analysis.

Both sectorial and individual stock performance is taken into consideration.

Portfolio would generally consist of equities and debt instruments with some exposure

to gold ETFs; however derivatives would be used to hedge the portfolio against losses.

Opportunity cost on idle cash would be minimized through efficient management and

exposure to mutual funds and other debt instruments.


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To take advantage of short term gains in the market, a moderate churn ratio would be

maintained.

Investment Process

In-depth evaluation of fundamental factors and detailed technical indicators are used to pickdiversified and versatile stocks.

A detailed historical analysis is undertaken to ensure the pedigree of the company and

to

model future growth prospects for the company.

A comprehensive financial analysis is undertaken which includes analysis of:

Company Financials

Valuation

Financial Ratios

Cash Flow Generation

Net Profit Margins

Debt to Equity Ratio

Sector analysis and future prospects using both fundamentals and technical indicators


This portfolio may hold 40% 60% directly in equities with the rest held in debtinstruments, gold, or other liquid investments.

The portfolios top 10 holdings may carry 50% of the total investment weight-age

The Portfolios will be rebalanced continuously on the basis of market situation

Aggressive Portfolio


The primary objective of this portfolio is to seek considerable accumulation of wealth over theinvestment time horizon. The investors who are willing to accept fair amount of volatility in thecapital and fully understand the emotional and monetary impacts these could have on the valueof the investment are the right prospect for Hedge Aggressive Portfolio.Hedge Aggressive Portfolio endeavors to deliver superior performance of investment over a longperiod through extensive technical research and fundamental backing. The portfolio constitutesequities, which have a historical track record of outperformance compared to other investment


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avenues like bank deposits, bonds, real estate, gold, commodities, etc. We believe that investingin a properly managed business through equity shares can deliver returns of around 20-30% perannum in the long term, compared to returns of between 10% 18% for other modes ofinvestment.

In keeping with this philosophy, we have designed this portfolio, on some basic principles whichare summarized below.

To invest in stocks which have fundamentally sound business and a good technical trackrecord

Investing in companies which have excellent growth prospects and are consequentlycheaper in terms of valuation.

Ensuring maximum returns while at the same time minimizing risk; portfolios generallyconsist of equity protected and hedged using derivatives.

Minimizing opportunity cost incurred by idle cash through efficient cash management.

Investment Strategy

The portfolio weightage will constitute 60-70% in equities which are diverse in nature. Thestocks are invested in different weightages and allotted on the basis of market movement andpotential future movements. For example, equities which have high beta will be included whenretracement of the index is imminent and vice versa. We realize that some short term gains maybe lost if the portfolio is held with a long term objective only and thus a moderate churn ratio ofinvestment is implemented to capture short term gains. In order to maintain such a churn ratio apercentage amount of cash is kept. This cash and derivatives also serve the purpose of tactically

hedging the portfolio against any losses.

Investment Process

Our investment process follows our investment philosophy closely; we first evaluate thefundamental factors of the particular stock, then identify the technical trend exhibited and finallywe make sure that the company has a diversified product mix which make it a stable and longterm growth prospect. We also initiate an in-depth analysis which include,

Company Financials Valuation Financial Ratios

Cash Flow Generation Net Profit Margins Debt to Equity Ratio Sector analysis and future prospects using both fundamentals and technical indicators


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We believe that a portfolio of 10-15 stock with 60%-70% weight age in equity willadequately create a perfect diversification.

The portfolios top 10 holdings carries 50% of the total investment weight-age, Any shifts in investment and weights are done based on market movements and any

opportunity cost on non-deployed cash will be nullified through mutual fund and debtfund exposure.

Mutual Fund Advisory Services

Hedge Wealth Management Services can help you choose the mutual fund schemes that best suityour requirements. We can also advise you on redemptions, switch of units, etc according to

variable market conditions, etc.

Purchase and redemption of mutual funds are now made easier through our online mutual fundpurchase terminals and the mutual fund units can be held in your demat account. This allows fora faster purchase & settlement process and facilitates online viewing of your mutual fundholdings.

Investors can choose to invest either a lump-sum investment or through a Systematic InvestmentPlan (SIP) in Mutual Funds. Our exclusive research team will help you to make the right choice.


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OVERVIEW OF TAXATION ON INVESTMENT PRODUCTS

Key tax planning strategies used by Hedge Equities are:

Capital Gains reduction/ deferment strategies

Tax efficient investment strategies

o Selections of right funds in case of mutual funds

o

Products which offer indexation benefits Strategies to reduce liability across heads of income

Strategies to set off/ carry forward losses

The income gained through these asset classes are called as capital gains and are taxed

differently. Investor needs to be aware of tax implications on these assets to ensure better returns

from their investment. The key tax rates as per the latest financial year were mentioned below.
http://hedgewms.com/wp-content/uploads/2010/11/Ourmutualfundselectionprocess.jpg


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These capital gains are mainly classified as

I. Long-Term Capital Gains:

Capital gain is considered to be long term when an investor holds certain

asset class for definite period. Minimum years of investment vary from 1 year to 3

years across different asset classes. Applicable tax rate for various asset classes is

as shown below.

Type of Investment Min. years of investment Taxation

Equity 1 year NIL

Debt Instruments 1 year (Whichever is beneficial among

these)

10% without Indexation

20% with indexation benefit

Gold 3 years (physical gold, e-

gold)

1 year (Gold ETF, Gold

MF)


(Whichever is beneficial among

these)

10% without Indexation


Real Estate 3 years 20% with indexation benefit

Bonds/NCDs 1 year 10% without indexation

II. Short-Term Capital Gains:

Capital gain is considered as short term when an investor holds asset class

for very short period. These taxed as short term capital gains. Only the asset class

equity charges 15% tax rate whereas others are included in investor income and

taxed according to tax slab rate. Following table shows various asset classes in

detail.

Type of Investment Min. years of investment Taxation

Equity Less than 1 year 15%


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Debt Instruments Less than 1 year Added to Income

Gold Below 3 years (physical

gold, e-gold)

Below 1 year (Gold ETF,

Gold MF)

Added to Income

Added to Income

Real Estate Below 3 years Added to Income

Bonds/NCDs Less than 1 year Added to Income

Indexation Benefit:

In order to reduce the effect of inflation indexation benefit is provided on long term

capital gain. Returns on investment are adjusted to the inflation using cost of inflation.

World WMS Industry Overview

Since the financial crisis began in 2008, stock markets have enjoyed a considerable bull run, GDP

growth is again robust in many markets, and assets under management are on the upswing around theglobe. But these gains have not translated into the amount of top- and bottom line growth that wealthmanagers would expect based on past recoveries the prospects for wealth management have improvedsignificantly over the last 12 months, but new global regulations (including the battle againstundeclared offshore assets), changing client behavior, the rapid advance of digitization, and a fluidcompetitive landscape have permanently altered the rules of the game and raised the cost of doingbusiness. Wealth managers must learn the new rules quickly and adapt their playbook accordingly ifthey are to capitalize on the continued economic recovery in 2014 and 2015Wealth management is


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back and firms are winning clients and assets at an accelerating rate. Wealth management is arguablynow one of the fastest growing segments of the financial services industry with global wealth expectedto grow 61% to USD 313 trillion by 2015.1 A recent study conducted by the Deloitte Center forFinancial Services found that the total wealth of millionaire households may grow from $92 trillion in2010 to $202 trillion in 2020 (based on a review of 25 economies).

An industry still in transition

After surviving a tumultuous period of plummeting asset prices, spiraling revenue, and the nearcollapse of some of the worlds leading wealth management firms during the 2008 financial

crisis, the global wealth management industry is winning back some lost ground. But it is stillstruggling on several fronts. According to a global wealth management study conducted byStrategy&, consisting of quantitative market analysis and complemented by in depth interviewswith more than 150 wealth management executives, senior financial advisors, and regulators,assets under management (AUM) are growing worldwide. In North America, after four years ofsteady growth, these assets have recently passed their pre-crisis levels. In China, Latin America,and other emerging markets, they have grown far beyond their mid-2000s levels. Only Europe islagging and, even there, assets under management have increased significantly since the nadir of


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2008 .Nonetheless, market participants report that earnings are still under pressure and they dont

expect the industry to return to a pre-crisis way of doing business. The rules for wealthmanagement have changed structurally driven by increasing global regulations, the movefrom undeclared to declared offshore assets, changing client behavior, the advance ofdigitization, and a fluid competitive landscape

Wealth management: What it is, how its changing, what is required

AUM make steady gains

Many of the worlds wealth managers enjoyed solid AuM growth in 2012 for a number of reasons:

strong GDP performance in emergingeconomies, rebounding equity markets worldwide, net investorinflows, and the fact that the number of high-net-worth individuals those with more than US$1

million of investable assetscontinued to growtwo to three times faster than GDP in most markets.

However, performance by region varied significantly. In 2012, the Middle East was once again the

standout region forwealth creation, posting its third consecutive year of impressive gains19 percent

in 2012 after growth of 15 percent in both 2010 and 2011.The large Middle East wealth management

centers (such as Dubai)experienced particularly robust AuM growth, fueled by inflows from Syria and


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politically unstable countries in North Africa, as well as theincreasing number of HNWI households

in more stable countries in theMiddle East and North Africa (MENA) region. The year 2012 also saw

AuM growth accelerate in other regions. Asiasgrowth rate jumped to 20 percent, up from 2 percent in

2011, thanks to strong economic growth and increasing wealth concentration. This made Asia the

hottest region for wealth managers. Meanwhile, North America and Latin America both posted

healthy 12 percent AuM gains,up from 1 percent and 5 percent, respectively. In North America, AuM

have now passed their precrisis level. Latin America was the only region to notch positive AuM

growth every year from 2007 to 2012. The regions largest market, Brazil, enjoyed political and

macroeconomic stability as well as relatively high interest rates,encouraging investors to keep more

assets onshore. At the same time, a flurry of initial public offerings by family-ownedbusinesses,higherprivate-equity activity, and the economic rise of various industries (such as agribusiness)

contributed to wealth creation. The one exception to full AuM recovery is Europe, which despite 7

percent growth in 2012 has not returned to its precrisis levels. A number of factors weighed on

Europes performance. Besides weak GDP growth, which was the primary culprit, other factors

included the eurodebt crisis, the transition from undeclared to declared money (which significantlyreduced assets held offshore), and the growing confidenceof wealthy citizens of emerging economies

to manage their assetsthemselves.

Growth of assets under management worldwide, 200712, by region


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New rules and regulatory challenges

The financial industry faces an unprecedented degree of regulation, covering a wide range of issues:capital, liquidity, proprietary trading, derivatives, corporate governance, and the transparency ofoffshore assets and income. These costly, complex rules have become a major if not the mostimportant factor affecting the strategy of wealth managers. This is true globally, althoughEuropean firms have arguably experienced the most pain; regulations on the continent have driven

overall cost increases by 5 to 10 percent since the financial crisis. If there is any good news on theregulatory front, its that new global rules are finally taking clea r shape, ending years of uncertaintyabout how to prepare. Also, in an ironic twist, these regulations will likely raise the industrysbarriers to entry, which may ultimately help wealth managers preserve their margins. We see themajor regulatory challenges for wealth managers falling into two main categories: taxation andtransparency, and client protection and suitability.

Client behavior

Besides the myriad regulatory issues reshaping the global wealth management landscape, theindustry must also placate clients whose daily experiences on sites such as Google and Amazon, andon devices such as smartphones and tablets, are influencing their expectations for wealth

management. Clients want plentiful, transparent information at their fingertips, as well as thefreedom to conduct research and make decisions wherever and whenever its convenient. That mightbe at home on the couch after the kids are put to bed, or on the train commuting to and from work.As more and more high-net-worth individuals are motivated to use technology and emergingchannels to manage their wealth, the industry is moving toward a 24/7 multichannel, digitalenvironment dictated by clients especially for standard products and services. About half of wealth


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managers surveyed expect the number of self-directed investors to increase, while only 6 percent

expect it to decline.

Client protection and suitability

Besides creating taxation and transparency issues, new regulations are also changing traditionaldistribution, compensation, and pricing models in the wealth management industry, altering well-established ways of doing business. In the past, product manufacturers paid banks handsomedistribution remunerations (retrocessions). But recent legislative initiatives aimed at eliminatingconflicts of interest such as MiFID II and the Retail Distribution Review spell the end forthese business practices. The U.K. has banned retrocessions since the beginning of 2013, and stricterregulations are expected soon in the European Union (E.U.) and Switzerland. Most of thosesurveyed expect that these bans will lower product costs for clients and profits for banks as hasalready proven the case in the United Kingdom. Interviewees also expect that integrated players withtheir own asset management capabilities will prove more profitable than pure distribution banksgoing forward. On the issue of suitability the matching of riskiness to client risk tolerance infinancial guidance regulators have pushed national and international client protection initiativessuch as packaged retail investment products to improve client information, eliminate conflicts ofinterest, and document client meetings. The current draft of MiFID II also contains suitability rules.For example, a client relationship manager (CRM) must be certain that a client is sophisticatedenough to

Understand the financial markets and a particular investments associated risks. If the client lackssufficient understanding, the CRM is at risk of being sued for mis-selling. Suitability rules like thisincrease sales and marketing risks for wealth managers, along with their cost burdens.


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Client behavior

Not surprisingly, younger HNWIs embrace the new technologies with gusto, and their digitalapproach to wealth management has become much more sophisticated. Generation Y investors(those born since the early 1980s, currently in their 20s and 30s), are not simply making trades


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online. They are joining peer-to-peer networks and other virtual communities to benchmark theirown results and make investment

Decisions. Some platforms leverage social media by allowing participants to follow successfulportfolio managers and replicate their portfolios and trades. Clients still desire personal consultationsfor more complex wealth management decisions, but they also expect these interactions to occur

whenever and wherever they want.

Enter new digital players

Three types of digital providers are targeting the wealth management

market: investment advisors that provide real-time customized advice including goal setting,allocation, monitoring, and rebalancing; portfolio review providers that offer financial managementportals to track portfolio and advisor performance; and investment communities that offer a platformto share and discuss investment ideas. But their long-term viability is uncertain. So far these digitalinnovators have mainly managed to destroy the value pools of incumbent players by offering digital

services for free or at a much lower price point, rather than taking market share. Nevertheless, theyare forcing incumbents to make significant technology investments to keep pace. Over time, a moreserious threat to todays wealth management firms will be established online brokers that decide tocomplement their transactional expertise with wealth management services. For example, CharlesSchwab has made several acquisitions to expand its fee advisory offerings and is rolling out 80branches in 2014. It has already enjoyed some success: Revenue from advisory services sawcompound annual growth of 30 percent from 2009 to 2012

Four response priorities

We believe wealth managers can keep pace with the industrys changingdynamics and capitalize onthe recovery in 2014 and 2015 by concentrating on four priorities: focus on markets that offersuperiorgrowth by applying a capabilities lens, rethink the value proposition;go digital; and adoptaFit for Growth approach.

1.Apply a capabilities lens

First, wealth managers need to define clearly which markets they intend to play in onshore and/oroffshore. As noted earlier, wealth managers are understandably drawn to markets that promisesuperior underlying growth, but the expense and patience required to compete in some of these

markets make profits elusive. Going forward, wealth managers need to apply a capabilities lens toidentify the markets where they can most effectively compete and maintain long-termdifferentiation. Even


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The biggest wealth managers can no longer be all things to all people. This inevitably requires somedifficult trade-offs in terms of markets to play in, client segments to target, and business models toadopt. Managers need the discipline and rigor to stick to whatever capabilities strategy they chooseand execute diligently over time.

2

Rethink the value proposition

New regulations on suitability and compensation, as well as the demands of clients for tailoredsolutions and digital access to financial information, are forcing banks to rethink how they bundleproducts and services in tiered service offerings that appeal to different client segments and enablethe wealth manager to control the cost-to-serve

Appropriately for the different segments. These packages should include digital clientcommunication elements including post-advisory services suchas notifying clients when a productdrops off the banks recommendation lists. The industry also needs new pricing models. Clients wantto know exactly what they are paying for, and regulators want clients to have the ability to compare

prices across the industry. Transparency is the name of the game. This will fundamentally changehow wealth management services get priced. Two-thirds of banks believe that pricing will shift fromfee- and transaction-based models toward pay for advice or flat-fee arrangements. In fact, somebanks have already introduced such pricing models, particularly in the U.K., where new clientprotection and suitability laws are already in effect. Though the U.K. experience suggests that pay-for-advice pricing will become more widespread, many wealth managers still doubt the HNWIswillingness to pay for advice. Self-directed clients in particular are highly price sensitive and shopfor the lowest rates and commissions. But even less self-directed, less price-sensitive investorsincreasingly demand transparent pricing schemes, such as flat fees for basic packages, all-in fees foradvanced packages, and volume/transaction fees clearly linked to established thresholds. Withretrocession payments phasing out, banks may need to reduce their product partnerships for

economic reasons and build or buy their own menu of offerings to maintain an adequate diversity ofinvestment options. On the flip side, if product providers choose to vertically integrate by building orbuying in-house retail distribution capabilities, they could compete effectively against wealthmanagers, given their pricing advantage. In a world of increased transparency around advice andinvestment performance, wealth managers must perform more rigorous risk profiling of clients andtake a more controlled and centralized approach to investment management for both tactical andstrategic asset allocations. This could represent a major culture change for many wealth managers,but those that are making the change are already reaping the benefits.

3 Go digital

The perceived imperative to digitize the business model varies by region to a surprising degree. Inthe U.S., digitization is a top priority. Wire houses see digitization as a way to profile and segmentclients for target product and service offerings. Discount brokers see digitization as a way to providehigh touch, low cost services. Wealth managers use digitization to track client interactions for

compliance and audit purposes. And, overall, managers in the U.S. tend to be on the

Lookout for novel digital offerings they might mimic, acquire, or gain


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Through partnership. In other parts of the world, digitization is a greater priority for large playersthan small players. Some even argue that being non-digital is a differentiator and part of their valueproposition. Overall, Latin American wealth managers gave the lowest priority to digitization60percent said its not relevant, and 20 percent more described digitization as a low priority. This

despite the fact that digitization is critical to fulfilling wealth managers stated priorities for 2014

15: to better understand client needs, generate client-centric holistic advice, and deliver a superiorclient experience. Demographics may influence digitizations low priorityamong wealth managersin general. New technologies appeal strongly to clients in their 20s, 30s, and 40s, but some HNWIclients are 65 years of age or older and may still prefer low-tech, high-touch interactions with anadvisor. There are five pillars to a digital agenda: Build a 360-degree view of clients assets andbehavioral profiles to provide high-quality, competitive, and personalized advice. Provide high-speed, always-on access to portfolio, research, and advice through mobile technologies, such asadvisorclient chat, videoconferencing, and interactive applications (financial planning and portfoliosimulations, for example). Enhance the quality and personalization of advice using big dataanalytics to identify the most relevant opportunities for each client. Streamline and automate back-office operations to eliminate time consuming manual activities. Establish a social media presence

to evaluate client sentiment (through mining text on blogs and forums), to communicate withexisting clients (for example, by enabling advisors to connect with LinkedIn groups and Twitterfollowers), and to strengthen the financial advisors community (using internal blogs and enterprise

social networks, for instance).


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4Adopt a Fit for Growth approach

Wealth managers have worked hard over the past two years to lower their cost bases, but the efforthas not been enough to overcome the escalating cost of doing business. In response, wealthmanagers need a strategic, ongoing approach to fixing their cost base and positioning themselves forgrowth. Taking aFit for Growth approach starts by articulating a clear and compelling cost agendafrom the front line to the back office; continues with building lean and resilient processes, systems,operations, and organization structures; and culminates in the institutionalization of capabilities thatkeep resources flowing to good costs and away from bad costs. Growth markets need anapproach to cost management very different from one appropriate for mature

Markets. For wealth managers, the process of cutting costs while growing stronger manifests itself inseveral identifiable moves: Exit markets of nonstrategic importance where the company does nothave the capabilities to win, and make sure no stranded costs remain; set client profitabilitystandards and, when these standards are not met, fix, sell, or close the book; introduce tiered serviceofferings to align cost-to serve

with client value; avoid duplicating activities across the organization (e.g., multiple house views),which drives up costs, confuses clients, and creates compliance risks; build or buy only whendifferentiation is possibleotherwise partner with low-cost specialists across the value chain; andavoid damaging fat-tail events by adopting

Careful policies for managing reputational and operational risks and a zero tolerance fortransgressions

An attractive industryDespite the trials of the last few years and the challenges that lie ahead, wealth management is anattractive growth industry for the long term with return on equity superior to that of any otherfinancial-services segment. As noted earlier, the number of HNWIs is growing two to three timesfaster than GDP growth in many regions of the world; that, plus the continued strong economicactivity in the worlds most robust

Emerging markets, bodes well for the industry. Yet this positive outlook does not make theindustrys transition any easier to manage today. Given the regulatory load, changing clientbehavior, and new competitors enabled by digitization, the costs of doing business have never beenhigher and earnings are under intense pressure. However, we believe that by focusing on the

priorities set forth in this paperapply a capabilities lens, rethink the value proposition, go digital,and apply aFit for Growth approachwealth managers can navigate the industrys transformationand capitalize on the continuing global recovery in 2014 and 2015


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LEVERAGING PRIVATE WEALTH

MANAGEMENT

Liberalization of economy has led to mushrooming of private banking systems in India. Privatewealth management companies are helping people manage their wealth. Investors are gettingattracted to private equity firms, which are now a lucrative option for a good ROI.

Leveraging private wealth management

Private banking has been a part of the Indian economy ever since banking system started inIndia. After the liberalization of the Indian Banking Industry by the Reserve Bank of India,private banking systems in India gained a lot of momentum. Senior private bankers began settingup private wealth management firms to provide wealth management services. People beganseeking their services to plan their wealth management strategy.
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Pivot, tweak or pounce: Strategic challenges in wealth management

The private banking sector used to have a reputation as being rather cozy as well as lucrative. No

longer. Multiple developments in the last few years have driven major change. Clients and

providers alike now have dramatically different constraints and expectations. The opportunity

remains to develop sound, profitable business. But clear strategic decisions are needed.

Private banking and wealth management have always been attractive business sectors. Wealthyindividuals not only have more money, but they also require specialist investment managementsupport, income protection and tax advice for which they are willing to pay a significant price.The numbers of such individuals are growing, despite the financial crisis, both in developedmarkets and particularly in high-growth emerging markets, such as Asia and Latin America.From the banks perspective, wealth management carries low credit risk and, as a result, requireslower regulatory capital. A high proportion of revenue comes from recurring fees. With lowoverheads and limited need for an extensive branch network, this adds up to traditionally

profitable business.

Change and challenges

But the wealth management business is changing and will change further in the wake of the crisisand as regulatory changes begin to bite. One significant challenge is that margins are comingunder increasing pressure. While assets under management have recovered since the financialcrisis in 2008, increases in adviser remuneration and other expenses have resulted in a highercost-to income ratio. This trend is being exacerbated by current market conditions, as investorsprefer capital preservation products, which generate low fees for the wealth managers.

Investors are also becoming much more demanding of their relationships with wealth managers.In a world where returns are low, assets have suffered losses and trust has been damaged, clientsare far less willing to take the performance of wealth managers for granted. They want morevigorous action to generate returns; they want strong frameworks for risk management andwealth protection; and they want transparency and justification over fees and charges. They areincreasingly wary of bespoke products and in-house funds; they are looking for portability andlow-cost asset classes such as exchange-traded funds. The internet offers them the ability tocompare the performance and costs of service providers in an instant.

On the policy and regulatory front, profound changes in attitudes to financial services are still

working their way through. The industry is under greater scrutiny and greater pressure to reformitself than ever before. Traditional banking privacy is rapidly being destroyed as banking secrecyin offshore centers and in traditional private banking locations such as Luxembourg andSwitzerland is being blown away by a combination of regulatory and fiscal authorities. TheForeign Account Tax Compliance Act (FATCA) will require effectively full disclosure of allaccounts held by US nationals anywhere in the world. Tax authorities are increasingly extractingaccount information from domestic institutions and passing it over to counterparties in otherjurisdictions. Specific regulatory initiatives, such as the Alternative Investment Fund Managers


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Directive (AIFMD) and the Markets in Financial Instruments Directive (MiFID) II in Europe aswell as the complex set of new regulations emerging under the Dodd-Frank Wall Street Reformand Consumer Protection Act in the US are all having serious ripple effects throughout privatebanking.

These pressures all increase operating costs and require extensive and expensive investment ininformation technology, systems and processes. The demands of compliance, reporting, moreactive client account management and other factors can no longer be satisfied with traditionalback-office systems and low-technology customer relationship channels.

The industry is under greater scrutiny and greater pressure to reform itself than ever before.Traditional banking privacy is rapidly being destroyed as banking secrecy in offshore centers andin traditional private banking locations such as Luxembourg and Switzerland is being blown

away by a combination of regulatory and fiscal authorities.

Strategic options

Wealth management firms that want to survive these increasing pressures and succeed in the newenvironment have a number of options available. The least radical, but most challenging toaccomplish, would be to sustain the existing business model attempt to drive it back toacceptable profitability. This is what we term the tweak strategy. It involves rationalizingunprofitable clients and increasing revenue per client by cross-selling a broader range of servicesand products. On the operations side, it means ruthlessly streamlining processes and driving upefficiency across the whole front-to-back office chain. It will be especially challenging toreconcile the costs of necessary investment with improving profitability and to satisfy increasingclient demands while streamlining and automating the relationship.

A second approach is to look much more strategically at the future business and regulatoryenvironment and at the longer-term requirements for success in order to reconfigure the businessaccordingly. We refer to this as a pivot strategy. This may involve disposing of unprofitable

businesses or client books; developing and focusing on particular niche products or marketsectors where high value can be added; and perhaps changing the geographical target ofoperations to focus more closely on areas such as Asia, which have the most rapid growth inhigh-net-worth (HNW) individuals.

Finally, churn in the marketplace is likely to increase and open up other opportunities. Morestringent regulatory capital requirements may force multinational parents of private banks todispose of assets in the course of optimizing their balance sheets, especially in the case of

smaller companies where the fixed cost of implementing new regulations becomes tooburdensome. On the other hand, the sector is still significantly fragmented. Industry estimatessuggest that the 20 largest wealth managers, who have a little over US$11 trillion of assets undermanagement, only account for around 10 percent of the total private wealth available to betargeted.1 The current turmoil is likely to stimulate consolidation of the industry. Those who aredetermined to expand their presence, especially in developing markets, should find significantopportunities to do so, but need to be prepared to actto pouncewhen necessary.


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Potential

Significant potential remains, despite the pressures facing the industry. The Boston ConsultingGroup estimates that over the 5-year period ending 2016, private wealth will reach US$151.2

trillion, with an overall compound annual growth rate (CAGR) of 4.2 percent.2 Within this total,growth in HNW and ultra-high-net-worth (UHNW) households is expected to be more rapid, at 6percent and 7.5 percent, respectively. These investors are relatively more resilient than averageretail investors. They have deeper pockets and access to timely and sophisticated advice, whichalso helps them ride out market cyclicality better. They remain an attractive prospect.

The big opportunities will increasingly be found in Latin America and in Asia. The Julius BaerGroup, which currently derives one-third of its assets under management from developingmarkets such as these, expects this proportion to grow to over 50 percent by 2015. HNWindividual wealth in Asia-Pacific region is forecast to grow at over 10 percent until 2016. Moresignificantly, only around 17 percent of Asias HNW individuals have wealth management

relationships with their banks. Thus, a large pool of HNW individuals remains untapped.

This is not to say that success will come easily. New regulatory requirements will mean strongerprocesses for risk management, customer protection and capital management. Business modelswill have to remain flexible and responsive to rapid changes in the global distribution of wealth.The days of easy profits in private banking may be over, and rightly so, but significantopportunities remain for those who are prepared to grasp them.

INDIAN WMS Industry OverviewAs with any almost any element of the financial markets in India, wealth management is at an

early stage of development. Only about 1% of the population owns equities to articulate the

opportunity in the Indian wealth management market the country has more billionaires than Japan.

The Indian economy is the tenth largest in the world in terms of nominal GDP and ranks as the

third largest in terms of GDP based on Purchasing Power Parity (PPP), behind only United States

of America and China. With the economy performing well after the global economic downturn of

2008, recording a GDP growth rate of 9.2% in FY11 and 6.2% in FY12, the GDP growth slumped

to a 10 year low of 5% in FY13. FY13 was a year of challenges for the economy with a slowdown

experienced in agriculture, manufacturing as well as service sector. This coupled with rising

current account deficit, high inflation, weakening exports due to weak global demand and delayed

policy action slowed down the GDP growth rate. As a result, even Foreign Direct Investment

inflows took a hit, registering a 38%1 decline from FY12, making foreign investors wary about

India. Growth is expected to remain at 5% in FY14. Agricultural sector owing to normal monsoon


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and growth in Exports is likely to give a boost to the economy. However growth in manufacturing

and service sectors are expected to remain subdued

The Indian Economy is growing at a robust rate. Indian Financial Services Industry gets a rub-off ofthis growth, but also has some complexities to shoulder along the way. The challenges are a

transition from Commission based to Advisory based services as a result of No load regime inMutual Fund schemes. The investor today is not only looking for a financial product in isolation butin a holistic manner for meeting his/her life goals and risk factors. Therefore, there is a crying needto enhance and upgrade the skill set of the financial product advisor in order to protect andsafeguard the interest of the investor and develop a long term relationship with him.

The Wealth Management industry in India is a prime example of the success of free competition inthe country. Wealth Management is one of the fastest growing disciplines of the banking sector andwith a GDP growth rate hovering around the 9% mark and a strong future outlook, Indias growthstory is making it an increasingly attractive market for wealth management firms. This trend isexpected to continue, with India estimated to become the third largest global economy by 2030.

Given the nascent stage of the market and a demographic and regulatory environment that issignificantly different from elsewhere in the world, Wealth Management Business Houses considerthe following to succeed in the Indian market:

Building of brand and focus on overcoming the trust barrier.

Invest in advisor technology to improve advisor productivity and retention.

Evaluate a partnership-based model, coupled with innovative use of technology, to increasereach.

Focus on transparency and compliance, while targeting customers with attractive, segmentfocused products.

Current Primary Focus of Wealth Management Business Houses

Qualified advisors will be the best brand ambassadors for new firms seeking to gain acompetitive edge against established players.

Investor education programs could deliver information pertaining to various asset classes andthe associated risks, fee structures and benefits of each.

Establishing trust is a vital component for any successful brand-building exercise in India.

Strategies Opted by Wealth Management Business Houses

Invest in brand building to build trust.

Invest in advisor technology to improve productivity and advisor retention.

Offer a 360-degree view.

Shifting to a profit-sharing model (where the advisors fees are based on the overall

performance of the portfolio) would help mitigate issues to some extent.


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Immediate Issues before Wealth Management Business Houses

Difficulty in putting a value to your service & advice.

Building the right business model.

Maintaining brokerage structure may be difficult and cumbersome and bulky.

TechnologyOnline platforms with direct investments.

Immediate cash-flow concerns.

Need for Qualified Advisors!

The Current Indian Financial Advisory Market is looking for Brand building through itsQualified Advisors as Brand Ambassadors.

Qualified Advisors shall develop trust with the clients on a better footings.

Qualified advisors will be the best brand ambassadors for new firms seeking to gain acompetitive edge against established players.

Advisor platforms that offer lead management, portfolio management, financial profiling,asset allocation and transaction management capabilities can integrate multiple touch pointsand improve advisor experience.

IFAs require a qualification to equip themselves with the required skill set and knowledge to call

themselves as Qualified Advisors

Individual Wealth in India

The amount of individual wealth in India is arrived by a summation of all asset classes in whichinvestments are made by individuals. It does not consider government and institutional holdings. Inthis report, Financial assets and Physical assets, where investments are made by individuals of Indiaare considered. Also International investments made by these individuals in financial and physicalassets have been considered. As on FY13, Indian Individual wealth in financial assets stands at`109.86 lakh crore whereas Indian Individual wealth in Physicalassets (Gold & Real Estate Investments) stands at `92.06 lakh crore. Hence the total IndividualWealth in India stands at `201.90 lakh crore. Due to the stupendous growth and development infinancial markets in the last two decades since liberalisation, Indians now have 54.4% of theirwealth invested in financial assets.

Asset Class Amount (` Cr) Proportion (%)


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Investments in fixed deposits & bonds form the largest component of the total individual wealth infinancial assets with 23% of Indian Individual financial wealth being held in this asset class. DirectEquity comes a close second attracting 22.1% of total individual wealth in financial assets. Assetsheld in Fixed Deposits have been increasing overthe past couple of years as banks are now offeringhigh interest rates in the range of 8-12%. Indian Equity market saw the Nifty giving a return of

9.39% as compared to a -8% in FY12. Growth in equity markets was also largely driven by higherinflows from foreign institutional investors (FIIs).


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Key Trends

Overall wealth held by individuals in India is expected to double to `411 lakh crore in the next 5years. However the ratio of financial assets to Physical assets in total wealth (55:45) are expected tobroadly remain the same.

The Wealth held in Real Estate (excluding Primary Residence of the Individual) is expected todouble in the next 3 years.

In the coming years with improvement in the economy and the percentage of households owningprimary homes set to increase to greater than 90%, the fresh inflow into physical assets will

increase at a decreasing rate.

With expected upturn in the economy there will be a gradual shift of more financial savings beinginvested in equities.

Even with a higher minimum investment size, alternative investments such as high yield debt,private equity, real estate funds and hedge funds will remain popular among the HNIs.

With the expansion of workforce and pension benefits being limited for the newer generation fromemployers/government, retirement/pension funds are expected to grow at a rapid pace in the nextdecade.


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Individual Wealth: India versus World

In this age of global integration, trends in Indian asset allocation should ideally be similar to trendsof asset allocation globally, Table 20 shows the proportion of investments in key asset classes byindividuals in India and globally

As is evident that investment in debt instruments is highest among asset classes

Both globally and in India. Investments in Alternative assets form a larger portion in India ascompared to that done globally primarily because of investments in Gold, where Indian individualspreference to invest in Gold is still higher as compared to other nations. Investing in Equity in Indiais still very low as compared to globally, however we foresee this to gradually increase in thefuture.


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Future of Indias Individual Wealth

The global economy is still going through an upheaval and there are uncertainties ahead. The globaleconomic recession and crisis has, quite expectedly, impacted India, too. It is well known that - on apurchasing power parity basisIndia is already, at over USD four trillion of GDP, the third largesteconomy in the world. In the next 15 to 18 years this size is expected to grow, as per various studiesand estimates, four to five times. As a result many foreign investors and a majority

of global companies and businesses are making a beeline for the Indian market, which promises abooming middle class, expanding steadily in the next few decades. Indias GDP for FY13 is `100lakh crore and is expected to grow to `176 lakh crore by FY18. Individual wealth in financial assetsis expected to grow from the current `109.86 lakh crore to `228.36 lakh crore by FY18. Investmentin Physical assets is expected to increase from the current `92.06 lakh croreto `183.15 lakh crore byFY18.

Hence the total wealth is expected to more than double from the current `201.92 lakh crore to`411.51 lakh crore


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Competitor Information (Kerala circle)

1.Geojit BNP Paribas

Geojit BNP Paribas, today, is a leading retail financial services company in India with a growing

presence in the Middle East. The gamut of value-added products and services offered ranges

from equities and derivatives to Mutual Funds, Life & General Insurance and third party Fixed

Deposits. In 2007, global banking major BNP Paribas joined the company The needs of over

672800 clients are met via multichannel services - a countrywide network of over 522 offices,

phone service, dedicated Customer Care Centre and the Internet

2. Acumen Capital Market India Pvt Ltd

Acumen Capital Market (India) Limited provides stock broking services. The company was

formerly known as Peninsular Capital Market Ltd. before it changed its name in May, 2008. The

company was incorporated in 1995 and is based in Kochi, India. Acumen Capital Market (India)

Limited operates as a subsidiary of Acumen Group. Acumen has emerged as a leading financial

services provider, having a network of 40,000 customers, spread over 12 states across the

country, served by over 375 associates

3.Doha Brokerage & Financial Services Ltd

Doha Brokerage & Financial Services Ltd, the flagship company of the DBFS group had its

origin in 1992 as one the first corporate brokerages in India and one of the leading financial

service companies in the country. Select group, as it was known then had a very humble

beginning with branches in select locations in Kerala. The group has a network of over 280

branches spread across India and offices in Middle East. DBFS has trading licenses in BSE and

NSE for cash and derivative segment. We have memberships in premier commodity exchanges

like MCX, NMCE and NCDEX

4.Sharewealth Securities Ltd

Sharewealth Securities Ltd is the first corporate member of National Stock Exchange of India

Ltd, Bombay Stock Exchange Ltd and MCX Stock Exchange Ltd(MCX-SX) from THRISSUR,

the Cultural Capital of Kerala. Sharewealth is also a Depository Participant with CDSL (Central
http://www.justdial.com/Ernakulam/acumen-capital-market-india-pvt-ltd-%3Cnear%3E-Veekshanam-Road/0484PX484-X484-090708170810-N2A3http://www.fundoodata.com/companies-detail/Sharewealth-Securities-Ltd/54927.htmlhttp://www.fundoodata.com/companies-detail/Sharewealth-Securities-Ltd/54927.htmlhttp://www.justdial.com/Ernakulam/acumen-capital-market-india-pvt-ltd-%3Cnear%3E-Veekshanam-Road/0484PX484-X484-090708170810-N2A3


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Depository Services (India) Ltd).

Sharewealth Securities Ltd has two group companies, Sharewealth Commodities Pvt Ltd

(Member: MCX, NCDEX, NMCE ,ICEX & NSEL) and Sharewealth Financial Services Ltd

(AMFI Registered Mutual Fund Distributor). Sharewealth has a group (Overseas Joint Venture)

company at Abu Dhabi, Sharewealth Financial Consultancy LLC.

Registered & Corporate offices of Sharewealth Group of companies are at Thrissur.

Top Wealth Management Companies in India

1. ICICI Asset Management Company

ICICI group is the third largest fund based asset management company in India. Thisfinancialcompany was founded in 1954 and currently K V Kamath is the chairman of the firm.

Market Capitalization: Total revenue of the ICICI financial services is around Rs 2000

crore to Rs 4000 crore. The profit of the company is around Rs 80 Crore to 90 Crore and

growing at the rate of 25% every year.

Business and Services: Core Banking, Financing, Asset Management.

Employees: 8000 to 15000.

Headquarters: The bank is based in Mumbai with offices and operations all over the

country.

Website: www.icicibank.com

2. HDFC Asset Management Company

HDFC Asset Management Company was formed in the year 1990 HDFC has over 318 outlets

including 77 offices across India and it covers over 90 locations.

Market Capitalization: market value of the HDFC is around $3.5 billion, for asset

management services profit is around Rs 400 Crore approx.

Business and Services: Banking, Wealth Management Services, Loans, Financial

Security Services.

Employees: 1700 to 2000 for various operations.

Headquarters: Corporate Office is in Mumbai and Deepak Parekh is the chairman.

Website: www.hdfc.com

3. Reliance Asset Management Company
http://topcompaniesindia.com/finance-companies-in-india/http://topcompaniesindia.com/finance-companies-in-india/http://topcompaniesindia.com/finance-companies-in-india/http://topcompaniesindia.com/finance-companies-in-india/


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Reliance Capital was founded in year 1986 and currently Anil Ambani is the chairman.

Market Capitalization: Total revenue is over $1 billion and average asset managed by

44 fund houses is Rs 6,60,000+ Crore

Business and Services: Asset management, Mutual funds, Life and general insurance,

Private equity and proprietary investments, Stock broking, Reliance PMS, Depositoryservices and financial products, Consumer finance and other activities in financial

services.

Employees: 12,500+

Headquarters: The company is based in Mumbai and Sundeep Sikka is the CEO of the

firm

Website: www.reliancecapital.co.in

4. UTI Asset Management Company

UTI asset Management Company was established in the year 2003 and incorporated on the date

Nov 14 2002.

Market Capitalization:Asset managed until this date is around Rs 74233.29 Crore

Business and Services:Mutual Funds, Wealth Management services

Employees:3000 to 4000, company has a network of 149 UTI financial Centers and UTI

international offices in London, Dubai and Singapore

Headquarters: Headquarter of UTI is in Mumbai and Mr Leo Puri is CEO and

Managing Director

Website: www.utimf.com

5. Birla Sun Life Asset Management Company

The company is joint venture between Aditya Birla Group and Sun Life Financials.

Market Capitalization: Total revenue of the firm is around Rs 1000 crore to Rs 2000

crore.

Business and Services: capital market, corporate finance, wealth management services,

commercial real estate and mortgage and structured finance.

Employees: 10,000 to 15000 for various sectors.

Headquarters: Corporate office is in Mumbai.

Website: www.adityabirlafinance.com

6. Kotak Mahindra Asset Management
http://topcompaniesindia.com/mutual-fund-companies-in-india/http://topcompaniesindia.com/top-10-life-insurance-companies-in-india/http://topcompaniesindia.com/top-10-life-insurance-companies-in-india/http://topcompaniesindia.com/top-10-life-insurance-companies-in-india/http://topcompaniesindia.com/mutual-fund-companies-in-india/


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Kotak Mahindra has over 7 million loyal customers. It stated its operation in the year

1998

Market Capitalization: The Net worth of the company is over Rs 7911 Crore

Business and Services:Asset management services and various bonds & funds

Employees:20,000+

Headquarters:Headquarter is in Mumbai and the Company has over 76 branches in 79

cities

Website:www.kotakmutual.com

7. Religare Asset Management Company

Religare Mutual fund is the sole product developed and marketed by Religare asset management

company. The company was registered in National Stock Exchange in the Year 1994. The firm

has over 1 million customers around the world. Market Capitalization: Total revenue is around Rs 120 crore and average asset is Rs

126 Billion

Business and Services: brokerage, health & life insurance, asset management, Small and

medium enterprises (SME) lending, wealth management, institutional equities and

investment banking services.

Employees: 8000 to 10000 across the country.

Headquarters: headquarter of the company is in New Delhi with 2200 offices in 550

cities around the world. Website: www.religareinvesco.com

8. Reliance Mutual Fund

Reliance Mutual fund is subsidiary of Reliance group. Reliance Mutual fund has over 6 million

to 7 million investors

Market Capitalization:Total assets worth Rs 86,327 Crores

Business and Services:Mutual Funds and Asset Management services

Employees:10,000 to 15,000

Headquarters:Corporate office is in Mumbai with presence in over 179 cities

Website:www.reliancemutual.com
http://topcompaniesindia.com/health-insurance-companies-in-india/http://topcompaniesindia.com/health-insurance-companies-in-india/http://topcompaniesindia.com/health-insurance-companies-in-india/


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9. Tata AMC

Tata Group wealth or asset management company is subsidiary of Tata Group, it was established

in the year 1995. It fully enjoys the support of Tata Group. There are around 5 to 10 lakhs

investors that Tata AMC caters to.

Market Capitalization:Total Assets worth around Rs 20,000 Crore to Rs 22,000 Crore

until now

Business and Services:Fund Management, Asset Management, Mutual Funds etc

Employees: 8000 to 10,000

Headquarters:Mumbai, Maharashtra

Website:www.tatamutualfund.com

The Worlds Largest Wealth Manager by Client Assets(June 11 -2014)

Rank YoY Firm AuM

2013 change ($bln)

1 +2 UBS AG 2,055

2 -1 Bank of America Corp. 2,002

3 -1 Morgan Stanley 1,909

4 -- Wells Fargo & Co. 1,618

5 -- Credit Suisse Group AG 887

6 -- Royal Bank of Canada 660

7 +2 Raymond James Financial Inc. 454

8 +2 BNP Paribas SA 383

9 -2 HSBC Holdings Plc 382


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10 -2 Deutsche Bank AG 380

Top Brokerage Companies in India

1. Sharekhan Limited

ShareKhan is an online trading company of SSKI group. It has presence in over 170 cities of the

country and Indias most trusted brokerage firms.

Head Office:Mumbai, India

Number of Terminals: 2000 to 2500

Number of Sub Brokers: 200 to 300

Number of Branches: 510 offices

Number of Employees: 1000 to 2000

Account Opening Fee:Rs 750/- for Classic Account and Rs 1000/- for Trade Tiger

Website: www.sharekhan.com

2. India Bulls

India bulls was founded by Sameer Gehlaut in the year 2000. India bull has a net worth of Rs17,000 crore.

Head Office: Gurgaon, Haryana



Number of Branches: 414 to 450


Account Opening Fee:Rs 1200/- (Rs 250/- for equity + Rs 200/- for Demat + Rs 750/-for software )

Website: www.indiabulls.com


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3. Angel Broking Limited

Angel is counted among top 3 broking firms in India. It was founded in the year 1987 and it

offers various services like ebroking, commodity trading and other wealth management services.

Head Office:Mumbai, India





Account Opening Fee: Stock Trading Account + Demat Account = Rs 500/-, Commodity

Trading = Rs 625/-

Website: www.angelbroking.com

4. Reliance Money

Reliance money is Indias number one broking firm. It has over 3.5 million customers with more

than 6000 outlets around the country.

Head Office:Lower Parel, Mumbai





Account Opening Fee: Trading + Demat = Rs 750/- and for foreign nationals it is Rs

1000/-

Website: www.reliancemoney.com

5. India Infoline Limited

India Infoline was started in year 1996 and has over 2 million customers. Head Office:Andheri, Mumbai





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Account Opening Fee: Trading + Demat = Rs 750/-

Website: www.indiainfoline.com

6. Kotak Securities LimitedKotak Securities was incorporated in 1994 and it is subsidiary of Kotak Mahindra.

Head Office:Nariman Point, Mumbai




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