Sunday, March 24, 2013

WEALTH MANAGMENT GROWTH PHASE


Wealth management has become very popular in the Indian economy right from 2006 onwards when Indian capital markets were the hot spot of investments. New types of financial products were introduced to reap the part of savings into complex investment models. Complex investments since where the funds were invested were never told to the investors. Later on it was found that products failed to meet the minimum commitment of capital protection. Even at the time of redemption it was found the fund value stood at 50% of the original investments.

Well the biggest flaw was not in the products of Portfolio management was that every one took these models of investments as capital appreciation model with no risk of erosion of investment capital. Well historically its has been found that whenever a new financial product comes into an booming capital market particularly a market like India flaws into the capital market will be there in the initial days. Thanks to the SEBI since it has worked and protected the mango people of the society from the scavengers of the financial market.

Wealth management is altogether a different concept. It is not a PMS but it drives more into the depth of individual portfolio management. I will better term it as IPM rather than mixing it up with any other product name.

Traditionally wealth management focused at the back of HNI clients but now the entire business model has changed where the focus is being driven towards every segment of the market. Rising cost of operation with decline in market performance has created a ripple effect on the client segment which has resulted to a significant drop in the revenues of the wealth management company.

Now they are converting themselves into a one stop setup for all financial planning solutions followed with extending their products to every inch of the society. Technology and social networking sites has also contributed to a huge significant level of transformation in business models. We now companies like Policy Bazzar.com, Apna paisa.com and many more companies have extended their products through technology advances. Thanks, to Smartphone since investments and notifications have become easier.

Since technology has created higher margins for the business from the phase of negligible margin level of the business while serving clients without technology. But still I find that the perception about wealth management and IPM is still far from exploration. Poor level of governance followed with various financial scams and miss selling of products have forced the investors mind to peep into wealth management segment. The trust and faith of in monetary matters has dried up. Even Banks that are being respected as the best of trustable friends have also joined the bandwagon of miss selling.

Another factor which is acting as a barrier for the segment to grow is that earlier wealth management companies or IPM use to share key information with HNI and Ultra HNI clients. That information was only available to the top notch segment of society. Exploration of technology has erased off that cream data exchange business model. Information is now available freely. At the same time growing educated population of the economy followed with Smart Phone gap of information has narrowed down to an considerable point.

I find now investors asking for critical data analysis and interpretation of complex economic outcomes. This has increased more after the debacle of 2008 and now it is compounding with the global uncertainty. That’s has created the competition in business as well as eliminated the craps from the capital market.

New young generation of employees followed with a matured class of investors who are now categorized under the affluent and young affluent retrospectively. IPM focuses on young goals and matured goals during the process of wealth management. But the intense competition of the market with stringent regularatory business model has lead to backdrop for the industry. Well it is not back drop but it is lack of euphoric zeal which is missing in the market since after 2004 the Indian capital market created rag to riches which has created a ripple effect for the segment. Fast money printing business days are over. It is now the period of patience to build business models and financial products.

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