INTRODUCTION

Indian Economy is growing at more than 7% p.a. Disposable income of Indian citizen is
growing at very high rate. India has 12th highest number of millionaire and rate of growing is
much higher than other countries
As people are become wealthier, there is need for systematic management of their wealth.
The rate of growing wealth in Upper Middle Class and Middle Class is very high. They
represent highest amount of saving and investment. There are various reasons for that.
As people become more awake and caution about their proper managing wealth, there are
plaintiff opportunities available in wealth management sector. In India, wealth management
sector is underdeveloped. As financial sector reforms and relaxed regulatory framework
allowing wealth management sector to become more open and competitive. There are few
players in wealth management sector which providing services to Ultra high net worth to
High net worth Individuals. There are mass-affluent and mass- market available in wealth
management sectors, which was ignored by large players.
Opportunities does not come alone, it come with various challenges. Wealth management
services are new to mass-affluent and mass- market, they are unaware about wealth
management so first major challenge is to create awareness about wealth management.

CONCEPT OF WEALTH MANAGEMENT

The term Wealth management formed with two words: Wealth & Management. Wealth can be
defined as an abundance of items of economic value, or the state of controlling or possessing
such items, usually in the form of money, real estate and personal property. The meaning of
Wealth is - Funds, Assets, investments and cash. Management is the art of getting work from
other people with the best possible means.

"Wealth Management is an all-inclusive set of strategies that aims to grow, manage, protect
and distribute assets in a much planned systematic and integrated manner". Wealth
management deft with funds Asset, instrument, cash and any other item of similar nature.
While defining Wealth Management They have to think in planned manner.

There are two aspects to the wealth management process; protecting assets from creditors,
market crashes or slowdowns, taxes, lawsuits and other unexpected events, and growing asset
values through methods that actively manage risk and reward profiles to clients needs.

Wealth management is a financial service concept that emerged as a specific offering during
the decade of the 1990s. Generally, firms that offer a wealth management package provide a
wide range of financial services to their clients that will include such basic elements as estate
planning, asset management, and even private banking options. The use of a wealth

management service can be helpful when an individual has amassed a large amount of assets
and needs assistance in managing all of them effectively.

In the best examples of wealth management, the client will be able to take advantage of a
wide range of services that can include the management of everything from the mundane
daily task of balancing the check book to long range planning for a trust or estate. One of the
more popular aspects of a wealth management package is managing investments and
managing the tax planning that is associated with the task. The financial service can also be
helpful for people who are just beginning to amass a large number of assets, and would rather
spend time dealing with other issues than managing finances.

Because wealth management is a form of private banking services, persons wishing to enter
the field usually prepare by obtaining educational credentials that are directly connected to
financial disciplines. A wide range of professionals may be involved in the extension of
wealth management services. Attorneys, certified public accountants, insurance professionals
and brokers may all be involved in providing services to wealth management clients. In
recent years, accredited courses and seminars on wealth management have become more
common as the demand for this type of service has increased.

The services included with a wealth management package will often include management of
the investment portfolio, with brokers empowered to buy and sell on behalf of the client.
Attorneys will help to structure family corporations, trusts, and other components that can

make estate planning more complete. When it comes to taxes, a wealth management service
will also prepare all reports and returns, offer advice to the client on tax elements involved
with various aspects of the estate, and in general provide advice that is in the best interests of
the client.

HIGH NET WORTH INDIVIDUALS

High-net-worth individual (HNWI) is a term used by some segments of the financial services
industry to designate persons whose investible assets (such as stocks and bonds) exceed a
given amount. Typically, these individuals are defined as holding financial assets (excluding
their primary residence) with a value greater than US$1 million.

However, there are distinct classifications of HNWI and the exact dividing lines depend on
how a bank wishes to segment its market. For example, an investor with less than US$1
million but more than US$100,000 is considered to be "affluent", or perhaps even "SubHNWI". "Very-HNWI" (VHNWI) can refer to someone with a net worth of at least US$5
million.
By 2007, the expansion of HNWI assets led to the creation of a super class of HNWIs, known
as Ultra-high-net-worth individuals (UHNWIs), i.e. those with US$30 million in liquid
financial assets according to the Cap Gemini and Merrill Lynch World Wealth Report 2006 or
with a disposable income of more than US$20 million.
HNWIs are in high demand by private wealth managers. The more money a person has the
more work it takes to maintain and preserve those assets. These individuals generally demand
(and can justify) personalized services in investment management, estate planning, tax
planning, and so on.

Global HNWI Population (2015)

While HNWI wealth growth was a modest 4% in 2015, HNWI wealth continued to hit new
record highs, aided especially by Asia-Pacific overtaking North America as the number one
wealth market. Faltering growth in the Americas constrained global HNWI wealth expansion.

Japan and China emerged as engines of global growth, registering double-digit increases in
HNWI population and ultra-HNWI wealth growth. Together, the two countries drove nearly
60% of global HNWI population growth. Brazil was the poorest performing country, losing
7.8% of its HNWI population and 5.9% of ultra-HNWI wealth.

Ultra-HNWI wealth, long a driver of overall HNWI wealth, did not provide its usual boost in
2015. Dampened by Latin America, the global ultra-HNWI population expanded by just 4.2%
and wealth by only 2.5%.
Excluding Latin America, however, ultra-HNWI wealth grew more than the other wealth
segments, both in 2015 and over the past four years.

Global HNWI wealth is projected to nearly triple in size from 2006-2025 to surpass US$100
trillion by 2025, propelled by strong Asia-Pacific growth. If past growth rates hold, AsiaPacific is likely to continue to be a dominant force over the next decade, representing twofifths of the worlds HNWI wealth, more than that of Europe, Latin America, and Middle East
and Africa combined

STATE OF ASIA PACIFICs WEALTH

India is home to the fourth largest population of millionaires in the Asia-Pacific region, with
2.36 lakh such high net worth individuals, while Japan topped the list with 12.60 lakh people,
a report says.

According to the Asia-Pacific 2016 Wealth Report, by New World Wealth, India was ranked
among the top five Asia Pacific countries in terms of the number of High Net worth
Individuals (HNWIs). HNWIs (millionaires) were defined as those individuals with net assets
of $1 million or more (nearly Rs 6.77 crore or more).
At the end of 2015, there were 12, 60,000 millionaires in Japan, while China ranked second
with 654,000 HNWIs and Australia was at the third place had 290,000.

Others in the top 10 in terms of number of HNWIs in Asia-Pacific include Singapore at the
fifth place with 224,000 millionaires, Hong Kong (6th, 215,000), South Korea (7th, 125,000),
Taiwan (8th, 98,200), New Zealand (9th, 89,000) and Indonesia (10th, 48,500).

Interestingly, India is among the top five Asia Pacific countries in terms of total private
wealth held, but at the bottom in terms of per capita income.

India's total individual wealth stood at $4,365 billion (nearly Rs 29,551,050 crore), while
China, which topped the list, had a total individual wealth of $17,254 billion (nearly Rs
116,809,580 crore). Total individual wealth refers to the private wealth held by all the
individuals in each country, including all property, cash, equities and business interests.

On per capita basis, India was last among the bottom three, as the average wealth per person
stood at $3,500 (nearly Rs 23,68,10), while that of Australia, which topped the ranking, stood
at $204,000 (nearly Rs 13,802,640).

"As reflected, Australians are the wealthiest individuals in Asia Pacific with $204,000 (nearly
Rs 13,802,640) in wealth per person, whilst people in Pakistan are the poorest with $1,600
per person (nearly Rs 10,82,56)," the report added.

It also noted that there were around 3.5 million HNWIs living in Asia Pacific, with combined
wealth holdings of $17.7 trillion (nearly Rs 119,740,499 crore).

Asia-Pacific HNWI numbers have increased by 115% over the past 15 years, compared to the
worldwide HNWI growth rate of 82% and going forward, HNWI numbers in Asia Pacific are
expected to rise by 50% over next 10 years, reaching around 5.2 million by 2025, it added.

Over this period (by 2025), India is expected to see a 105% growth in HNWI population to
483,800 from 236,000, the report added.

WEALTH MANAGEMENT SERVICES

Wealth management offers the following services:

Investment planning: assists a person in investing his/her money into various investment
markets, keeping in mind his/her investment goals.

Insurance planning: assists a person in selecting from various types of insurances, selfinsurance options and captive insurance companies.

Retirement planning: it is critical to understand how much funds a person require in

his/her old age.

Asset protection: begins with his/her financial advisor trying to understand his/her
preferred lifestyle and then helping a person deal with threats, such as taxes, volatility,
inflation, creditors and lawsuits, to maintaining this lifestyle.

Tax planning: helps in minimizing tax returns. This might include planning for charity,
supporting his/her favourite causes while also receiving tax benefits.

Estate planning: helps in protecting a person and his/her estate from creditors, lawsuits
and taxes. This service is critical for every person whose net worth is high.

Business planning: This service aims at optimizing the tax free advantages of running
his/her own business.

INVESTMENT PLANNING
Everyone needs to save. Once a person has saved enough to take care of emergencies, a
person should start thinking about investing and to make his/her money grow. A person
should plan his/her investments so that a person can reap adequate benefits and achieve
his/her financial goals.

Investment Planning Process includes:

Risk Profiling

Asset Allocation and Portfolio Construction

Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)

Regular review of progress and Portfolio Rebalancing

Essentially, Investment Planning involves identifying his/her financial goals throughout

his/her life, and prioritising them. Investment Planning is important because it helps a person
to derive the maximum benefit from his/her investments.

His/her success as an investor depends upon his/her ability to choose the right investment
options. This, in turn, depends on his/her requirements, needs and goals. For most investors,
however, the three prime criteria of evaluating any investment option are liquidity, safety and
return.

Investment Planning also helps a person to decide upon the right investment strategy. Besides
his/her individual requirement, his/her investment strategy would also depend upon his/her
age, personal circumstances and his/her risk appetite. These aspects are typically taken care
of during investment planning.

Investment Planning also helps a person to strike a balance between risk and returns. By
prudent planning, it is possible to arrive at an optimal mix of risk and returns, that suits
his/her particular needs and requirements.

INSURANCE PLANNING
"Insurance is not for the person who passes away, it for those who survive, goes a popular
saying that explains the importance of Insurance Planning.

It is extremely important that every person, especially the breadwinner, covers the risks to his
life, so that his family's quality of life does not undergo any drastic change in case of an
unfortunate eventuality.

It is extremely important that every person, especially the breadwinner, covers the risks to his
life, so that his family's quality of life does not undergo any drastic change in case of an
unfortunate eventuality.

Insurance Planning is concerned with ensuring adequate coverage against insurable risks.
Calculating the right level of risk cover is a specialised activity, requiring considerable
expertise. Proper Insurance Planning can help a person look at the possibility of getting a
wider coverage for the same amount of premium or the same level of coverage for the same
amount of premium or the same level of coverage for a reduced premium. Hence, there is a
need for proper insurance planning.

Insurance, simply put, is the cover for the risks that we run during our lives. Insurance
enables us to live our lives to the fullest, without worrying about the financial impact of

events that could hamper it. In other words, insurance protects us from the contingencies that
could affect us.

So what are the risks that we run? To name a few - the risk on our lives that is, the worries of
replacement of the incomes that we contribute to the running of the household), the risks of
medical contingencies (since they have the capability of depleting our wealth considerably)
and risks to assets (since the replacement of these can have tremendous financial
implications). If we can imagine a situation where our goals are disturbed by acts beyond our
control, we can realize the relevance of insurance in our lives.

Insurance Planning takes into account the risks that surround a person and then provides an
adequate coverage against those risks. There is no risk not worth insuring his/herself against,
and insurance should first and foremost be looked as a measure to guard against risks - the
risk of his/her dreams going awry due to events beyond his/her control.

RETIREMENT PLANNING
Retirement planning is the important task of deciding how a person will live once he/she
retires. Retirement planning involves the consideration of a number of factors, including at
what age a person hope to retire, how much money a person will need to cover living
expenses coupled with the things a person plan to do once a person retired, and where his/her
money will come from. Generally speaking, retirement planning is planning his/her finances
for the period of life after a person stop working.

Each person's situation is unique, and therefore, retirement planning isn't one standard plan
for every person. Saving money for retirement through one or all of the available retirement
planning options is the first place to start. Many employers have retirement planning options
available to their employees. Some companies have pension plans, Even without company
sponsored plans, retirement planning is possible for any individual who wisely invests his or
her money. A person can choose to talk to a financial planner, but usually for a fee. Another
option is to discuss investment and savings options with the bank where a person currently
have his/her checking or savings account. Many banks offer free advice to their account
holders hoping to gain more of their business through long-term savings.

Retirement planning involves more than just saving money. It's important to determine as
closely as possible what his/her potential expenses and compare them to his/her potential
income. For instance, if a person will be able to pay his/her mortgage off before retiring, that
is one less expense a person will need to cover. It may be necessary to find a way to pay an
extra small amount towards his/her mortgage while working in order to have that debt

absolved before retirement, thereby lowering the amount of money a person will need each
month.

Depending on what age a person hope to be when a person retire, retirement planning should
also involve tax planning. By doing a little research and talking to financial professionals, a
person should be able to come up with a savings and investment plan that works for a person.
A person can begin retirement planning at any stage in life, though earlier is better. Be
prepared to make changes in his/her plan as his/her life changes, and when a person finally
reach retirement, the retirement planning a person done will leave a person better prepared to
relax knowing his/her finances are taken care of.

ASSET PROTECTION
Asset protection is a way of protecting an individuals assets in the event of legal proceedings
being brought against the individual. There are a number of reasons why a person may wish
to do this. A main factor is to limit the amount of assets that can be recovered if legal
proceedings are put in place. Another is to protect how much monetary value is actually
placed under one's name. The less money or assets people know a person have, the less likely
they are to target a person for theft or in a court case.

The act of placing his/her assets into a business entity or trust means that another person
cannot gain access to these assets. The assets also cannot be identified as his/hers by
criminals who, on seeing his/her worth, may try to use identity theft to gain access to his/her
assets. Anyone who has a substantial amount of wealth can find asset protection
advantageous. It is particularly helpful to people who work in professions with a propensity
towards litigation. Lawyers, doctors and business owners are at higher risk from lawsuits, and
asset protection can be a help in the worst eventuality.

Asset protection does not mean that the person is trying to get out of paying if he or she is
liable. Those with asset protection are simply making it more difficult for people to target
them as easy pea persons, which they may perceive them as if they had knowledge of their
wealth. The amount of litigation and lawsuits, combined with the size of awards won in these
cases, makes asset protection a very important financial option to consider.

There are a many different ways that a person can set in motion the process of asset
protection. A person can place stocks, share and cash into offshore bank accounts. A person
can invest his/her money in living trusts or partnerships and companies. The safest forms of
asset protection investment are tested ones, which have successfully protected assets from
litigation in previous court cases. Use these methods of protection as an example of how a
person should invest his/her assets and a person should not get caught out in any eventuality

TAX PLANNING
Tax planning is a broad term that is used to describe the processes utilized by individuals and
businesses to pay the taxes due to local, state, and central tax agencies. The process includes
such elements as managing tax implications, understanding what type of expenses are tax
deductible under current regulations, and in general planning for taxes in a manner that
ensures the amount of tax due will be paid in a timely manner.

One of the main focuses of tax planning is to apply current tax laws to the revenue that is
received during a given tax period. The revenue may come from any revenue producing
mechanism that is currently in operation for the entity concerned. For individuals, this can
mean income sources such as interest accrued on bank accounts, salaries, wages and tips,
bonuses, investment profits, and other sources of income as currently defined by law.
Businesses will consider revenue generated from sales to customers, stock and bond issues,
interest bearing bank accounts, and any other income source that is currently considered
taxable by the appropriate tax agencies.

In many cases, a primary goal of tax planning is to apply current laws in a manner that allows
the individual or business to reduce the amount of taxable income for the period. Thus,
planning for taxes involves knowing which types of income currently qualify for as exempt
from taxation. The process also involves understanding what types of expenses may be
legitimately considered as deductions, and what circumstances have to exist in order for the
deduction to be claimed on the tax return.

There are three common approaches to tax planning for the purpose of minimizing the tax
burden. The first is to reduce the adjusted gross income for the tax period. This is where
understanding current tax laws as they relate to allowances and exemptions come into play.

A second approach to tax planning is to increase the amount of tax deductions. Again, this
means knowing current laws and applying them when appropriate to all usual and normal
expenses associated with the household or the business. Since these can change from one
annual period to the next, it is always a good idea to check current regulations.

ESTATE PLANNING
Whether or not it's something we want to think about, it's important to set our affairs in order
so our loved ones won't be burdened with too many details in the event of our passing. Estate
planning is important because it ensures our assets will be transferred smoothly and
effortlessly when we're longer here to oversee them.

Estate planning includes, among other things, writing out one's Last Will and Testament,
naming a Power of Attorney and installing trusts. Estate planning isn't only for the wealthy,
either. Anyone with assets would be wise to look into it. If a person have a home, a car, a
retirement fund, stocks, bonds, or any other investments, it would be in the best interests of
his/her family for a person to meet with an estate planning professional.

The benefits of estate planning are many. The first and most important is that a person get to
designate where, or to whom, his/her assets will go. To not do so means his/her relatives may
end up fighting over everything in court. Thanks to estate planning, his/her family will have
minimal court and attorney fees regarding the distribution of his/her property. If a person
prefers his/her estate be left to charity, this, too, can be handled through estate planning.

With careful estate planning, a person will be able to take care of his/her family after a person
gone. His/her final expenses and lack of income can put a serious dent in the family's
finances. It's best to plan accordingly to avoid putting his/her family in a position where they
will run out of money.

Estate planning will allow his/her money to flourish after a person is gone. A person will be
able to set up accounts and trusts for children and grandchildren which allow money to grow.
A person will be able to specify at what age the children will be allowed access to these
funds. If a person afraid someone will be irresponsible with his inheritance, this may be a
good idea.
A person will also be able to name guardians to his/her underage children so they're not
dragged around through the courts or social service system in the event of his/her untimely
death. Estate planning will also help in the event that a person become physically or mentally
impaired. It will ensure that the cost of his/her care will be covered and a person will be given
the best care a person can afford.

His/her passing will be hard enough on his/her family. With estate planning a person can be
sure his/her affairs are in order. This will ease some of the burden after a person gone. His/her
family will thank a person for it.

FUNCTIONAL AREAS OF WEALTH MANAGEMENT

Financial Planning

Portfolio Strategy Definition/ Asset Allocation/ Strategy Implementation

Portfolio Management - Administration, Performance Evaluation and Analytics

Strategy Review and Modification

Financial Planning
Client profiling takes in account multitude of behavioural, demographic and investment
characteristics of a client that would determine each client's wealth management
requirements. Some of key characteristics to be evaluated for defining client's investment
objective are:

Current and future Income level

Family and life events

Risk appetite / tolerance

Taxability status

Investment horizon

Asset Preference /restriction

Cash flow expectations

Religious belief (non-investment in sin sector like - alcohol, tobacco, gambling firms,

or compliant with Sharia laws)

Behavioural History (Pattern of past investment decisions)

Level of client's engagement in investment management (active / passive)

Present investment holding and asset mix

Based on the client profile, investment expectations and financial goals of the client could be
clearly outlined. Defining investment objectives helps to identify investment options to be
considered for evaluation. Investment objective for most of the investors could be generally
considered amongst the following:

Current Income

Growth (Capital Appreciation)

Tax Efficiency (Tax Harvesting)

Capital Preservation (often preferred by elderly people to make sure they don't outlive

their money.)

Portfolio Strategy Definition / Asset Allocation

After establishing investment objectives, a broad framework for harnessing possible
investment opportunities is formulated. This framework would factor for risk-return trade-off
of considered options, investment horizon and provide a clear blueprint for investment
direction.
Investment strategy helps in forming broad level envisioning of asset class (Securities, Forex,
Commodity, Real State, Reference and Indices, Art/Antique and Lifestyle Assets (Car, Boat,
and Aircraft)), market, geography, sector and industry. Each of these asset classes is to be
comprehensively evaluated for inclusion in portfolio model, in view of defined investment
objectives.
While defining the strategy, consideration of client preference or avoidance for specific asset
class, risk tolerance, religious beliefs is the key element, which would come into picture.
Thus, for a client with a belief of avoidance of investment in sin industries (alcohol, tobacco,
gambling etc.) is to be duly taken care of. Likewise, for a client looking for Sharia- compliant
investment, strategy formulation should consider investment options meeting with the client
expectations.

Determination of Portfolio Constituents and Allocation of Assets

Guided with the investment strategy, constituents in portfolio model are determined, which
would directly and efficiently contribute towards client's investment objectives.

Thus, a broad level investment guidance of - "investment in fixed income in emerging

market" would further determine classification within Fixed Income such as Govt. or
corporate bonds, fixed or variable rate bonds, Long or short maturity bonds, Deep discounted
or Par bonds, Asset backed or other debt variants.

Return profile, risk sensitivity and co-relation of constituents within portfolio model would
help to determine the size (weightage) of each individual constituent in the portfolio.

Strategy Implementation
Having decided the portfolio constituents and its composition, transactions to acquire specific
instruments and identified asset class is initiated. As acquisition cost would be having bearing
on overall performance of the portfolio, many times process of asset acquisition may be
spread over a period of time to take care of market movement and acquire the asset at
favourable price range.

WEALTH MANAGEMENT PROCESS

Wealth Management involves preparation of financial plan that help client to achieve their
goals and objectives. Financial Planning is a process. If the process is strictly followed, the
chances of meeting your objectives and achieving Financial Independence will be
considerably improved.

Stage 1: Identify Goals and Objectives

Stage 2: Collect Data
Stage 3: analyse Information
Stage 4: Produce Plan
Stage 5: Implement Plan
Stage 6: Review of Plan & Objectives

Stage 1: Identify Goals and Objectives

The starting point is to identify Client goals and objectives. This step is done by asking the
soft questions which really get client thinking about where he/she what to be financially. A
Wealth Manager or Financial Planner discuss with them what aspirations and intentions they
have, what concerns they have and how important each of these are. Furthermore, A Wealth
Manager or Financial Planner discuss their attitude to investment and other risks which is
especially important, as it will be critical to investment portfolio construction, a key aspect of

your Personal Financial Plan. Finally, it is crucial to understand how each of these issues
makes them feel, so that a wealth Manager or Financial Planner can help them to prioritise
their objective. Financial planning is not about selling products. It is about developing a
financial game plan.
Stage 2: Collect Data
Next, wealth manager or financial planner needs to collect factual information. It is crucial to
understand clients personal circumstances, current financial situation and how you have
arrived there. The more detail the better, because the clearer this picture of client and their
finances is, the clearer the starting point of our journey. The best advice cannot be given in
isolation. Wealth manager or financial planner does this by completing our Financial Review
document. Wealth manager or financial planner will consider their family, income and
expenditure, employment status, tax position and existing financial products so that wealth
manager or financial planner can appraise the appropriateness of them in relation to their
financial plan. It is important to work out clients disposable income (net monthly income
minus monthly expenditure).

Stage 3: Analyse Information

The third stage is to for us to analyse your current financial position, and to fully review your
existing Investment. Wealth manager or financial planner considers clients goals and
objectives identified in stage 1, to determine the 'gap' between the goal and the reality. This
'Gap Analysis' will enable us to clearly understand the journey client will need to travel in
order to achieve his/her goals and wealth manager or financial planner can present this in
Investment Plan.

Stage 4: Produce Investment Plan

Stage four involves the creation of a roadmap or journey plan, which communicates the most
efficient route from A to B. This roadmap is clients Personal Financial Plan. It will analyse
clients financial arrangements and make recommendations as to how their existing finances
can be utilised. This will cover their assets, investments, liabilities and income. The way in
which client spends his/her money is also a vital aspect of the analysis. Therefore, a review of
clients expenditure, in both the short-term and over the long-term will help to establish how
robust the overall financial plan is. The plan will identify the cost of achieving Clients
objectives, financial independence and plan for any disasters which may arise. Financial Plan
can be multi-generational and can cover the effective and efficient distribution of assets on
death, in accordance with goals and objectives of clients

Stage 5: Implement Plan

The fifth stage of the process is to implement the plan. This stage includes an action plan
which will be provided once wealth manager or financial planner and client have both agreed
the plan. It could include amalgamating some or all of Clients existing investments,
cancelling unsuitable investments

and would list all recommendations. Without the

implementation stage, the rest of the planning process can be worthless.

Stage 6: Review of Plan & Objectives

The final stage is to regularly review the plan and make modifications where required.
Reviews normally occur on an annual basis. The overall aim of the financial planning process
is to help client reach his/her financial goals and develop or maintain his/her desired lifestyle,
in the most efficient way possible. Financial planning gives consideration to strategies for the
creation, distribution or protection of wealth specifically to meet your financial objectives.

KEY ELEMENTS OF WEALTH MANAGEMENT

Wealth management services involve fiduciary responsibilities in providing professional
investment advice and investment management services to a client. Depending on the
mandate of the services given to the Wealth Manager, Wealth management services could be
packaged at various levels:

A.

ADVISORY

Wealth manger's role is limited to the extent of providing guidance on investment/ financial
planning and tax advisory, based on client profile. Investment decisions are solely taken by
the client, as per his /her own judgment.

B.

INVESTMENT PROCESSING (TRANSACTION ORIENTED)

Client engages wealth manager to execute specific transaction or set of transactions.

Investment planning, decision and further management remain vested with the client.

C.

CUSTODY, SAFEKEEPING AND ASSET SERVICING

Client is responsible for investment planning, decision and execution. Wealth manager is
entrusted with management, administration and oversight of investment process.

D.

END-TO-END INVESTMENT LIFECYCLE MANAGEMENT

Wealth manager owns the whole gamut of investment planning, decision, execution and
management, on behalf of the client. He is mandated to make financial planning, implement
investment decisions and manage the investment throughout its life.

PURPOSE OF WEALTH MANAGERS

Wealth Manager serves various purposes in financial planning which are as follows:

To generate returns in such a manner that would address long terms and short term

objectives of the client/ customer

To manage customers wealth by striking a balance between safety and growth of the

investments

Commitment to rational approach to investing with strong emphasis on ethics and

values

Strong belief in achieving excellence in their processes and also their knowledge base

and skills

Adherence to long term conservative approach by avoiding speculation

they try to be the best in the domain of Investment Advisory

Shared values of the team are dignity, respect and fairness for everyone

Role of the Wealth Manager

During financial Planning, a wealth manager or financial planner plays various roles, so that
this process complete with minimal fault. Financial planner or wealth manager need

To Review clients current circumstances.

to listen clearly to what they say.

To understand their goals, requirements and concerns.

To Provide Education regarding investments

To develop the right strategy to move forwards.

To Analyse Risk and then develop an appropriate investment strategy

To Be Mindful of any shortfalls and to make client aware of them.

To Minimise taxation implications or any consequences of tax changes.

To implement the proposed financial plan

To Monitor progress towards objectives.

To Communicate on a regular basis.

HOW WEALTH MANAGEMENT FIRM OPERATE IN INDIA?

In India, Wealth Management firm operate as different way. There are Many Private Banks,
Financial Institution, NBFC and Local Advisory firms in Wealth Management sector. Most of
banks have opened a division called wealth management. Whereas some financial institution
have open wealth management office in metro cities. Business Model, Advisory Model and
Operation Model of Wealth Management sector are as follows

Business Model

Firm moved from boutique model to selling a wider range of products from across

segments, helping to capture a larger client base and providing greater diversification in the
challenging business environment.

Aims to achieve traction in client relationships and become a one-stop shop for all

client needs.

Plans to grow through distribution so business can expand beyond metro areas.

Operates like a global Private Bank, leveraging strength in cross-border accounting,

which is a weakness among regional/local firms.

Advisory Model

Team-based model offering clients access to a wide range of experts.

Operating Model

Seeks to capture economies of scale by leveraging existing capabilities, such as using

existing core banking systems for asset allocation, triggers, and so on.

Middle and back-office optimization helps to drive profitability.

Wealth Management Firms In India

KOTAK SECURITIES
Kotak Mahindra Bank 'Kotak' has one of the largest, oldest and the most respected Wealth
Management teams in India providing solutions to the High Net worth Individuals. With our
existence of over eleven years and the widest range of wealth management solutions, Kotak
has emerged the largest player by a wide margin. The client base ranges from entrepreneurs
to business families, as well as employed professionals. Kotak provide financial advice and
manage wealth for 30% of India's top 300 families
Products
Direct Equity: Direct Equity investment generally refers to the buying and holding of shares
of stock on a stock market by individuals in anticipation of income from dividends and
capital gains as the value of the stock rises.
Mutual Funds: A Mutual Fund is a professionally managed pool of money from investors
with similar investment objectives. Mutual funds offer diversification and professional
management of money. Diversification reduces the risk because all stocks may not move in
the same direction in the same proportion at the same time.
Insurance: Insurance needs are dependent on responsibilities and financial commitments,
which are defined by life stage and needs.
Structured Products: A structured product is generally a pre-packaged investment strategy
which is based on derivatives, such as a single security, a basket of securities, options,
indices, commodities, debt issuances and foreign currencies. A feature of some structured

products is a "principal protection" function which offers protection of principal if held to

maturity.
Private Equity: Private equities are equity securities of unlisted companies. They are
generally illiquid and thought of as a long-term investment. Private equity investments are
not subject to the same high level of government regulation as stock offerings to the general
public. Private equity is also far less liquid than publicly traded stock.
Real Estate: Real estate funds are founded by a group of real estate professionals/experts to
'manage' property/real estate for the investor. Apart from sale of property, real estate funds
also make money from rentals on property owned by them. Some real estate funds may not
actually own property as that may involve above-average risk from volatility in property
prices.
Estate Planning: Estate planning is a process involving the counsel of professional advisors
who are familiar with goals and concerns, assets and how they are owned, and

family

structure. It can involve the services of a variety of professionals, including

lawyer,

accountant, financial planner, life insurance advisor, banker and broker.

Estate planning covers the transfer of property and may or may not involve tax planning.
Commodities*: Commodity trading provides an ideal asset allocation; also helps hedge
against inflation and buy a piece of global demand growth. Investors must understand the
demand cycle that commodities go through and should have a view on what factors may
affect this. Because commodities prices usually rise when inflation is accelerating, they offer
protection from the effects of inflation. Few assets benefit from rising inflation, particularly
unexpected inflation, but commodities usually do.

Art*: As with any investment, need to do

research and go beyond comfort zone. The art

market is fickle and there are no guarantees of profitability, but with a little legwork and
forethought one can fill home with images that may prove worthy investments down the line.
The price of art is affected by such an array of intangible factors that valuing it can never be
an exact science.
PMS and NDPMS: Investing in equities requires time, knowledge and constant monitoring of
the market. For those who need an expert to help manage their investments, Discretionary
Portfolio Management Service (PMS) comes as an answer.
Asset Allocation Model

Seeks to estimate future market movement

Tracks various parameters to be used as lead indicators

E.g. factors denoting liquidity, economic growth, volatility, risk spread etc.

Also accounts for qualitative macroeconomic factors

Quantitative models outputs ratified by highly qualified Investment Committee

Takes into account unforeseen non-quantifiable events

Combination of parameters indicate future course of capital markets

Combination of high liquidity, high volatility, high risk spread, etc. could denote

imminent fall in markets

Combination of low risk spread, low equity risk premium, etc. could denote imminent

upswing in the markets

Proprietary Lead Indicator Model

Indicates phase in the economic cycle through Overweight, Neutral, and Underweight

Bands

Call to be taken as per the phase in economic cycle indicated

Investment Philosophy
The mission is to provide clients with wealth management services that result in a
performance that meets or exceeds their investment goals. Exposing clients to undue risk is
contrary to this mission. They believe that the tools of Modern Portfolio Theory empower
with a methodology for building superior investment portfolios. This has been tested in all
types of market conditions for decades and has consistently protected investor wealth from
the perils of non-diversification.

ICICI BANK
Investment process starts with understanding of background, investment objectives, risk
tolerance and existing investment pattern. A comprehensive risk-profiling exercise helps in
evaluating risk appetite and understanding investment objectives, which are kept in mind
while building portfolio.
Investment Planning
Based on investment goal, wealth requirements, investment horizon and risk profile, they
construct a suitable asset allocation plan. During this exercise, they also evaluate and realign
existing investments as per the suggested asset allocation.
Portfolio Construction
From wide range of investment avenues, icici construct appropriate solutions to implement
investment plan and evolve a tailor-made portfolio for specific requirements. This would
involve execution of investments in debt, equity, structured products or alternative asset
classes as per the suggested asset allocation.
Portfolio Maintenance
Company monitors investments and periodically suggest rebalancing in the portfolio for
maintaining the asset allocation or aligning portfolio to changes in macro-economic factors
that might affect investments.
Portfolio Review
As investment preferences or financial goals change over a period of time, they review
portfolio periodically with to discuss and implement any changes in asset allocation or
portfolio strategy. All with a view to keeping your portfolio healthy at all times.

Products and Services

1.

Icicidirect.com

With a 3-in-1 account consisting of a trading account, ICICI Bank savings account and demat
account, one can stay connected to the market at all times. With a 3-in-1 account consisting of
trading, ICICI Bank account and demat account:

Competitive priced brokerage rates

Reduced account opening charges

online share trading services

2.

Mutual Funds

Bank offers advice on the entire universe of mutual funds. So be it equity funds, where look
for growth and capital appreciation or debt funds for capital preservation, they can help select
the right mix to suit. Choose from an array of more than 15 fund houses with innumerable
schemes.

3.

Structured Products

Structured Product offerings are tailor-made to suit your investment objective and risk
appetite. These services include Portfolio Management Services and specially designed
products that are Equity or Index-linked in nature.
4.

Alternate Asset Products

These offer products which complement your existing investments eg. Art Funds, Private
Equity Funding, Realty Funds.
5.

Life Insurance & Retirement Solutions

With assistance one can choose a plan customized to his benefit.

6.

General Insurance

They offer products in areas of Health Insurance, Home Insurance, Travel Insurance and
Motor Insurance.
7.

Fixed Deposit; Choose from wide variety of Fixed Deposits. Be it that Recurring

Deposit for monthly savings plan, or Floating rate Deposits to take advantage of dynamic
interest rates.

STANDARD CHARTERED
Priority Banking - personalized Wealth management program at Standard Chartered Bank. It
is their endeavour to be the Right Partner in all their personal and business ventures. That's
why Priority Banking has been tailored to offer you the highest level of service, appropriate
to unique requirements and status.

Products
1.

Excel Banking

In today's fast moving, technology-driven world, you need bank to keep pace with banking
needs. That's why you need Excel Banking - a much personalised Wealth management
service that has been designed to help make the most of money, without taking up most of
time.

With the services of their personal Relationship Manager customer can access complete
Wealth management solutions, from routine banking and transaction management to more
complex investment services and insurance advisory services? What's more, you also get fee
waivers on premium savings and current accounts and preferred pricing on a range of
complementary banking products and services.

2.

Parivaar Account

Parivaar is a unique Wealth Management Solution from Standard Chartered Bank that offers
family flexibility, convenience and essential tools for Wealth accumulation and preservation.
Parivaar is much more than a regular Savings Account. It allows you maintain individual
identity while allowing you to tap family's financial strength.
Asset Classes Used
1.

Equities

2.

Debts

3.

Mutual funds

4.

Commodities

5.

Structured Products

Investment Philosophy
They have developed a different and more focused approach to wealth management.
Understanding that wealth means different things to different people, they believe that no one
is better placed to help acquire wealth and grow it, use and enjoy it, protect it and pass it on.
The investment philosophy uses sophisticated profiling and portfolio construction techniques
to aim for investments that deliver market-leading performance in the way you want, because
while performance is key, it is performance that suits that really matters.

CHALLENGES FOR WEALTH MANAGEMENT

While immense business potentiality of this emerging sector is a driving point for most of the
firms, they face many challenges in formulating winning services offering meeting the client
needs. In the following section, we would briefly take a look on the key challenges area in the
present context.

1.

Awareness about Wealth Management

Awareness is biggest challenge area for Wealth Management Sector. Most of the people are
not aware about wealth management sectors. In India people assume that wealth management
and portfolio management are same, and provide same service. There is need for creation of
awareness about wealth manage concept in India.

2.

Highly Personalized and Customized Services

Unlike other stream of financial services, mostly being transactional /commoditized in nature,
wealth management services require client specific solution and service offering. No one
solution exactly meets the needs of other client. In a situation of highly personalized and
customized nature of service offering, developing any form of generic service model does not
support growth of the business.

3. More Focus on Return:

One of major challenges is clients major focus on return. Clients are always asking question
related to return. They want return as per original financial planning. If there any deviation
from return then they need explanation and they change wealth manager.

4.

Competition from Bank

Wealth Management sector faces very tough competition from Banks. Banks have huge
customer data and information about their cash balance and their investment pattern. On basis
of that, Banks have created Relationship division which nothing back door entry of Banks in
wealth management sector. Whereas Wealth Manager face competition for customer
acquisition

5.

Tough Competition from Individual Service Provider

Wealth Management service is package of various services like Investment Planning,

Insurance Planning. Retirement Planning, Tax Planning etc. There are lots of stock broking
firm who provide Investment planning service. There are lots of individual insurance agent
and there are lots of CA who providing Tax Planning Facilities.

6.

Personal relationship driving the business

To meet client expectation of personal attention, mode of communication in wealth

management services tends to be highly personalized. Thus, the conventional grids of
communication, such as call centre, data centre does not fit well. Success of wealth
management services heavily draws on personal interaction with the dedicated relationship
Manager, who takes care of whole investment management lifecycle for bunch of clients on
one-to-one basis. This essentially requires service firm to invest heavily in human processes
to groom and retain a team on competent relationship managers with cross functional skills.

7.

Evolving Client Profile

The biggest challenge in providing wealth management service offering is to factor and
reckon the evolving nature of client profile, in terms of investment objective, time horizon,
risk appetite and so on. Thus, a service model developed for a particular client cannot remain
static over a period of time. Any service model has to be flexible enough to consider the
dynamic nature of client profile and expectations arising out of it.

8.

Client Involvement Level

The conventional adage the more money you have, more effort is needed to manage it
proves to be otherwise in case of HNWIs. Generally, client involvement in managing the
finance remains on the lower side. This brings onus of managing the whole gamut of
investment and due performance single-handedly on the shoulders of investment manager.

9.

Limited Leveraging Capabilities of Technology (as an enabler)

In the recent times, we have witnessed technology a key enabler to help business to expand
its market reach with reduced cost of services offering. Online banking and online
trading/brokerage services are the best examples in this regard. Technology leveraging has
helped services firm to achieve universal proliferation of market with substantially reducing
transaction cost.

As business rules and service definitions to guide the applications tends to be quite composite
in wealth management services, leveraging the capabilities of technology to meet the
business requirement may not be highly feasible in the initial years.

10.

Intricate Knowledge of Cross-functional Domain

By very nature of wealth management, it not just involves matters of plain vanilla finance but
has intricate relationship with many elements of domestic / international law, taxation and
regulatory norms. In order to provide sound investment guidance, a relationship manager is
required to have intricate knowledge of domestic/cross-border finance, accounting, legal and
taxation subjects.

Questionnaire

1. Are you aware about the wealth management services?

wealth management services

yes

38%

no

62%

This shows the lack of awareness among the people about different type of wealth
management services. Only 38% of people were aware about the wealth management
services.

2. Do you think you need a wealth management plan??

wealth management plan

19%
yes

no

81%

Out of the 32% people who were aware about the wealth management services only
19 % people thought they need a wealth management plan.

3. Do you have an investment plan?

investment plan

yes
no

42%
58%

This shows that 58 of the respondents are cautious towards investments plans for
themselves and their family showing concerns towards security of them from any
mishap.

What aspects do you consider before investment?

aspects before investment

25%

57%

12%

welth creation
tax relaxation
risk and return
all

6%

Before investment not only HNIs but a layman also thinks about the various aspects such as
tax relaxation, wealth creation, risk & return etc. out of the surveyed more than 50% have
chosen all these aspect to be considered before selecting any investment plan.

What is your preferred investment objective?

Most people have equity as there preferred investment objective.

6.Do you take advice from any financial adviser before investing?

Take Advise from Financial Adviser

A) Yes
B) No; 20; 54%

B) No

A) Yes; 17; 46%

CONCLUSION
The starting stage of life put a force on people to create wealth so that gradually with the pace
of life they should not face any sort of financial problem. With the phases of life the needs
change and so their financial management need and here the pre-planned financial planning
helps to overcome and satisfy any sort of financial needs.
Bank provides many wealth management services to the HNIs. These HNIs are those
customers who have huge investible money but need some assistance to invest their money
for higher returns in present unstable market scenario.
Some services provided by the Bank are good and giving good business to bank but for few
products, it needs to concentrate a lot and properly mold its approach and strategies to attain
and cater to the investors who are still not aware of the stupendous services offered by the
bank. And also the equity market and in Foreign Exchange market are still untapped by the
Bank which also need proper heed.
To compete with private wealth management service providers the Bank has to take some
innovative steps and measures. Increase level of services, decrease response time for any
requirement of clients these are concluded after the responses and feedbacks of HNIs to those
questions asked to them for wealth management services. Overall the Bank is performing
well in some areas but to sustain in the competitive market it is essential to be innovative and
aggressive.
Overall India represents the greatest opportunities to Wealth Managers over the coming years.

Bibliography

Websites

www.wisegeek.com

www.wealthmanagement.kotak.com

www.icicibank.com

www.standardchartered.co.in

www.capgemini.com/Solutions / Wealth Management

www.wikipedia.com

www.economywatch.com

Newspapers

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