As Indians—and India—become more wealthy, a slew of experts are cropping up to help manage the wealth. Until fairly recently, professional wealth management was relying on a trusted accountant or insurance agent, a banker-turned-confidant, or signing up for services offered to a few super rich at a handful of foreign bank here in the country. Or, as most people are prone to do, taking the do-it-yourself route.
But as the number of Indian millionaires grows—there are some 83,000, according to a 2006 report on Asia Pacific wealth by Merrill Lynch-Cap Gemini—there are many more options. Even public sector banks such as State Bank of India and Punjab National Bank are starting to join the fray (see related article on page 14).
The wealthy can also increasingly turn to a number of brokerages for primarily investment-oriented wealth management advice. And there has been a proliferation of so-called Portfolio Management Services, or managed accounts as they are called in the West, that allow people with certain minimum investments—often Rs10 lakh to Rs1 crore, depending on the manager—to avail of the services. The new wealth managers are individuals, often with a banking background, who have turned wealth management entrepreneurs, setting up boutique firms that are growing primarily through word of mouth.
They differentiate themselves by citing their ability to offer highly customized services and personal attention to their clients.
The boutique firms also claim that their advice has less bias, in the sense that they don’t have a vested interest in steering clients to a specific fund or service, unlike some banks and brokerages.
“In a large set-up, the whole orientation towards wealth advisories is short-term,” insists Tushar Chhabra, founder of Elite Wealth Management, New Delhi. “You have to deliver results in a phased and targeted manner, which may or may not be in the best interest of the client who has entrusted the money to you. But, if you are on your own, you can think of building a relationship with your client.”
The flip side is that getting advice from a large financial institution also means that it can offer one-stop shopping for the client, including operations and services both in India and abroad. “Every client of ours not only has personal access to his relationship manager and support staff, but also to the top management, including the chief executive officer (CEO), business head and branch head. Further, the client is also given access to the research and products team and, through this, he gets a firm-wide experience and is not limited to a single relationship manager,” says Vipul Shah, head of the private wealth management group at JM Morgan Stanley Financial Services. Adds Sutapa Banerjee, a senior vice-president and head of private banking at ABN Amro: “We ensure that we have a multiple-touch model for client engagement so that our clients interact with not just one manager, but also with in-house experts on various asset classes.”