Only 15% of wealth in India is formally managed: Vikas Satija of Shriram Wealth

New Indian Express

4 days ago

Shriram Group, a financial services conglomerate, has launched Shriram Wealth Ltd, in partnership with Sanlam Group, a leading South African financial services provider. Vikas Satija, MD and CEO, of Shriram Wealth, tells Dipak Mondal of New Indian Express the rationale behind Shriram Group entering the already crowded wealth management space. Excerpts:
Why did Shriram and Sanlam decide to enter the seemingly "overcrowded" wealth management space in India?
The decision stems from the significant growth potential in the Indian market. India's GDP is currently around $4 trillion and is projected to reach $35 trillion by 2047 as part of the "Viksit Bharat" vision. While the organised wealth space in India is currently only $1.2 trillion, it is expected to grow to over $10 trillion in the next two decades. This massive projected growth, coupled with India's 30% savings rate and the fact that only 15% of wealth in India is formally managed (compared to 75% in developed markets), indicates a huge untapped opportunity for organized wealth management.
How will the Shriram brand be leveraged, and what are the target markets?
The Shriram group's presence in over 4,600 branches across the country and its 51-year legacy of trust are significant advantages. This reach is particularly beneficial in tier-two and tier-three cities, which are growing rapidly and where an established brand image can facilitate easier access.
What are the target Assets Under Advice (AUA)?
The target for the first five years is INR 50,000 crore in Assets Under Advice (AUA). This includes assets where they advise clients, even if they are not directly managed. To achieve this, the aim is to have around 500 wealth professionals on board within the next five years.
How are client segments defined, and which segments are being targeted initially?
Client segments are divided into three categories: Mass affluent/emerging affluent with Rs 10 lakh to Rs 2 crore investible surplus. Affluent/HNI (High Net Worth Individual): Rs 2 crore to Rs 25 crore; and Ultra HNI: Above Rs 25 crore
Initially, the proposition is being rolled out for clients with Rs 2 crore and above. The plan is to develop technology and build out the offering for the Rs 10 lakh to Rs 2 crore segment in the next 6-9 months, as catering to this mass affluent segment requires more "Do It Yourself" (DIY) journeys and a larger operational footprint.
What offerings are available for global investments?
As per RBI regulations, individuals can invest up to $250,000 abroad. Clients typically seek global diversification for reasons like funding children's education abroad, diversifying beyond Indian markets, or participating in other growing global economies. The offerings include global funds, portfolio schemes, and direct stocks. Their partner Sanlam has existing schemes, making it easier to provide these options. They act as a referral service for global investments, connecting clients to appropriate advisors abroad (including Sanlam's setup and potential new tie-ups in places like Dubai and Singapore). The Gift City route is another avenue for investing in international funds.
Are startup founders, as potential clients, different from traditionally wealthy individuals?
Yes, generally, startup founders are creating wealth at a much younger age, which often leads to a higher risk appetite. However, it can also be the opposite, where they take significant business risks and therefore prefer conservative personal investments. A lot of new wealth is being generated by startups, particularly in cities like Bangalore, which has become a startup capital.
Are startup founders good at managing their wealth?
No, just like any specialized field, managing wealth requires professional expertise. Startup founders are typically good at their specific business or tech domains. It's crucial for them to engage specialized wealth professionals to manage their money, similar to how the organized wealth market operates in developed countries (75% penetration) compared to India (15% penetration).
What's your view on the situation with Jane Street, and is there a genuine case to be made about it?
It's too early to comment definitively as the matter is still under discussion with regulators (SEBI). However, the general data indicating that 91% of retail investors trading in options and futures have lost money highlights a critical need for more learning and professional guidance in this market segment. Money-making isn't simple, and reliance on speculation is risky. Personally, for retail investors, I believe there's no reason to be in the F&O (Futures & Options) segment.
Would F&O be part of the strategy you provide for clients?
For large clients who are looking to hedge their portfolios, these tools would be used. However, on an investment-only basis for retail clients, we wouldn't typically recommend F&O.