Knowledge Session

Wealth Management Services- An

Opportunity to Banks for
Business/Profit Augmentation.

 Investors Perspective
Wealth Management the next
frontier for the banks
Wealth Management Services

Session Objective

 Investors Perspective
Wealth Management the next
frontier for the banks
Wealth Management Services

Wealth Management?
Wealth Management is an advanced investment advisory

discipline that incorporates financial planning and specialist

financial services.
The key objectives are to provide high net worth individuals

and families with tailored retail banking services, estate

planning, taxation advice and investment management, with
the goal of sustaining and growing long-term wealth.

Wealth Managers Role is in Managing the Cycle of Fear, Greed & Hope of
Investors

Managing Investors Psyche

Wrong emotion dominates at wrong time
Fear

Greed

Cycle of Fear, Greed & Hope

Hope

Wealth Management process

Risk Profile: Life Cycle

Risk
Tolerance

Debt

Equity

High

20%

80%

Moderate

40%

60%

Low

60%

40%

Married With Older children

Moderate

40%

60%

Married With children settled

High

30%

70%

Retirement Stage

Low

70%

30%

Stage
Young Unmarried
Young Married
Young Married + Children

7/15/16

Build Your Portfolio

 Investors Perspective
Wealth Management the next
frontier for the banks
Wealth Management Services

Wealth Segmentation-India
The Target Market

> 2.5 crores

10 lakhs 2 crores
2 10 lakhs
< 2 lakhs

Ultra
High
Net
Worth
High Net Worth

Mass Affluent

Private Banking
Preferred Banking

General
Banking

Mass Aspiring
Industry Sources

WEALTH MANAGEMENT: AN EMERGING SEGMENT

The number of HNWIs in India has seen a
steady rise and has grown at a CAGR of 16.6
per cent between 2011 and 2014.
High net worth households in India to grow at

HIGH NETWORTH HOUSEHOLDS IN INDIA

600,000

500,000

USD 1 - 5 MILLION

400,000

USD 5 - 30 MILLION

a faster rate till 2019 growing at a CAGR of

ABOVE USD 30
MILLION

300,000

TOTAL WEALTH
HOLDINGS OF
MILLIONAIRES

about 21.5 %
India has recorded largest growth in HNWI
population, 26.2 per cent of population is part
of HNI group and 28.2 per cent of the global
HNWI wealth

200,000

100,000

2009 2010 2011 2015 2020

Source: BCG Report
2015

GROSS NATIONAL SAVINGS TO CONTINUE GROWING AT

A HEALTHY PACE
Gross national savings in India stood at

USD 647 billion in 2014, and is expected

to reach USD 1,012 billion by the end of
2019
Gross national savings are estimated to

grow at a CAGR of 6.3 per cent

Indias HNWIs wealth is likely to expand

at a CAGR of 19.7 per cent and reach

around USD 3 trillion by 2020

Source: BCG Report

2015

WEALTH MANAGEMENT: ORGANISED SEGMENT

HAS GROWN RAPIDLY
Organised

Financial

segment (Banks
Institutions)

of

and

the

the

wealth

management industry is rapidly gaining

ground, indicating that the sophisticated
players are gaining client confidence
Expectations of India being the third

largest economy in the world by 2030 is

attracting new entrants in the wealth
Source: BCG Report
2015

management space.

Financial Performance of SCBs

100,000.00
90,000.00
80,000.00
70,000.00
60,000.00
50,000.00
40,000.00
30,000.00
Amount in Bn

20,000.00
10,000.00
-

Interest Income and Other Income makes the top line of banks and 85-90% of

the total income comes from Basic Banking

 Profits of SCBs are rising at a CAGR of 15% while the private sector is 25%.
Commissions and Fee based Income are significant contributors to the net profit of the Private

Sector Banks .

Vying for a Market Share

All the banks are lining up for a pie of the fast growing wealth

management industry.
TheSuccess mantras required under WMS will be vastly different from

what they have employed all these years in their bread-and-butter

business of banking.
Wealth management is a knowledge business and deals with customers

who have specific short and long-term investment plans and cash flow
requirements.
WM relationship is primarily driven by personalization, readiness of

information, and high degree of confidentiality, and is based on a longterm relationship with the customer.

CHALLENGES FACED BY THE INDIAN BANKS IN

DEVELOPING VIABLE WEALTH MANAGEMENT
OFFERINGS
CUSTOMER STRATEGY
Identifying and migrating appropriate customers from banking services to more lucrative wealth.
Overcoming negative image in advisory capabilities and ability to provide best-of-breed investment
products.
Assessing the viability of providing a wealth management offering to the mass affluent.

OPERATIONAL EFFECTIVENESS
Breaking out of silos to transition from a product centric to a customer centric organization.
Integrating different components of offering to provide a single point organizational design.
Creating an environment that is focused on customer service.

ORGANIZATIONAL DESIGN
Building or partnering to offer more complete asset management, retirement and estate planning and
protection capabilities.
Ensuring more rigorous adoption of know your customer rules.

TECHNOLOGY STRATEGY
Improving customer relationship management (CRM) implementation to enable the identification of
potential wealth-management clients and provide an integrated view of customer information across
all product groups.
Using technology as a platform for serving the mass affluent.
Integrating legacy and new systems

How should the Banks treat their

customers?
The way that they would like to be treated as a customer
By looking after long term financial needs
By helping them solve their financial problems
By recommending products that work for them

Why cant the Banks do that today?

Performance pressure
Targets
Incentives
Senior management push without accountability
System of profit-at-any-cost

Average bank customer feels like this.

 Investors Perspective
Wealth Management the next
frontier for the banks
Wealth Management Services

RBI Wealth Management guidelines for Investors

Appropriateness and suitability of products/services.
Understand the products well before buying it.
Do not take hasty decisions
Make your investments goal based
Start with analysing your financial needs

RBIs Charter on Customer Rights

Banks should ensure:
Fair treatment of the customers without discrimination.
Transparency.
Honest dealings in spelling out the costs and risks associated with the financial products.
Confidentiality of customers data.
Customers right to proper grievance redressal and compensation for lapses.

Bank Employees to be made liable for the financial products they sell.
Banks should appoint an internal Ombudsman to handle grievances of the customers.

Investor Awareness
Check the charge structure
Ensure that the banks do not enhance your account type without your prior

consent.
Whenever you sign any bank document try keeping a copy with Bank

acknowledgement
Read carefully the policy documents the proposed form before signing.
Read the terms and conditions and dont hurry.
Compared the offered services with other competitors
Once you buy any MF/Insurance Policy, you will be responsible for your own

losses.

Contd.....
Do your own research
Shop for alternatives
Watch out the poor processes in Banks
Dont fall for emotional blackmail
Watch out for bad investment advice
Watch out for wrong charges and deductions
Customers lose when Banks end relationships.

Conclusion
Total retail investor loss estimated at more than Rs 1.5 trillion

over the past 7 years.

Selling insurance to a 70 year old is like forcing a diabetic to eat

sugar.
Financial products are not bad in their own right, but the wrong

financial product can kill.

Customer Service is a business need of banks and

not social service.

THANK YOU