Mumbai: Financial services provider Karvy has decided to focus on fast growing and vastly untapped private wealth management business by launching a new entity Karvy Private Wealth, a top official said on Monday.
The new company would focus on advising and managing wealth of high networth individuals (HNIs) and the super rich.
As per estimates, the total private wealth in the country is worth whopping Rs60 lakh crore, of which organised wealth management companies currently cater to wealth of only about Rs2 lakh crore.
Karvy Private Wealth CEO Hrishikesh Parandekar said that it is still a nascent business. There are only 20-25 organised players comprising foreign and large private sector banks who have been major players in this business, he said.
Parandekar, who had worked with the likes of McKinsey Consulting and Morgan Stanley Private Wealth Management before joining Karvy, said private wealth management is much more than doing financial planning for the rich.
While the basic service remains the same as that of achieving higher return on investment, a private wealth management company would also offer services like advising on philanthropy, creating trusts, making wills, succession planning and in case of large business families even a family constitution, he said.
Parandekar estimated that promoters of different companies together have private wealth of a staggering Rs20 lakh crore going by their market capitalisation.
“It is not liquid wealth but I have the ability to create specific wealth strategies that can address how the promoters should be managing their large wealth exposure to that single stock,” he said.
The fees charged by the private wealth management companies averages only about one percentage point but it works out to be lucrative given the huge volume of investible funds.
“Being positioned as a third party independent wealth advisor and not tied up to any mutual fund, insurance company or a bank clearly positions us as a neutral player when it comes to advising any investment,” he said.
Karvy has got going in this business by acquiring Park Financial Advisors, a boutique financial advisory firm started by four entrepreneurs from IIM Ahmedabad.
The acquisition helped Karvy acquire the clients hitherto managed by Park. Besides, the four founders of Park have also joined Karvy, Parandekar said.
He said the company will try to leverage its relationship with HNIs to grow the business and also ride on the physical reach of another group company Karvy Retail so rapidly roll out the wealth management services.