India's rich to get richer, boom in capital markets contributing to this trend: Bernstein Report
According to a recent report by Bernstein, India's wealth managers are witnessing robust growth, driven by rising demand from the country's uber-rich.
These firms, which cater to the top 1 per cent of Indian households, are delivering more than 20 per cent profit growth and 20 per cent return on equity (RoE).
It stated "India's uber-rich are only going to get richer. The top 1 per cent households (the uber-rich) in India control approx. USD 11.6 Tn in total assets, of which approx. USD 2.7 Tn are in liquid financial assets that wealth managers can service".
The report highlighted that these liquid assets include bank deposits and non-promoter equity holdings. Indian households are gradually shifting more of their incremental savings and wealth into financial assets, boosting the addressable market for wealth managers.
The boom in India's capital markets is also contributing to this trend. The ultra-rich are converting their illiquid promoter holdings into liquid financial wealth through IPOs, stake sales, and block deals.
The report stated "The uber-rich are cashing in on the capital market boom, converting illiquid promoter holdings to liquid financial wealth through IPOs, stake sales and blocks".
At the same time, a new class of wealthy individuals is emerging from the startup ecosystem, including founders and early employees, further expanding the base of high-net-worth individuals (HNIs).
This growing cohort of the uber-rich is increasingly seeking professional advice to manage their expanding financial portfolios.
However, the advisory market is still largely dominated by self-managed funds, unorganized players, and traditional banks. Specialized wealth managers currently hold only an 11 per cent share in the USD 2.7 trillion liquid financial asset pool.
The report noted that these specialized players are well-positioned to grow due to their comprehensive product offerings and personalized services delivered by experienced relationship managers.
The report expects these firms to grow their assets under management (AuM) by 20-25 per cent in the near term, and at a compounded rate of 18-20 per cent over the next decade.
This growth will be driven both by the increase in the liquid asset pool of the ultra-rich, projected to grow by 13 per cent annually, and a gain in market share by wealth managers, expected to rise from 11 to 17 per cent.
Overall, the rich individuals of the country will continue to rise and with that the AuM of specialized wealth managers is set to grow from the current USD 300 billion to USD 1.6 trillion over the next decade.
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