India is a country of abundant opportunities. The economic boom has resulted in an increase in income levels, which has enabled more people to put their money into good investments.
However, managing these millions is not an easy feat, especially for a layman. And this is why wealth management in India is becoming one of the most sought-after services. Simply put, it is a piece of investment advice or assistance to manage a person’s finances. These services are offered to clients with two main goals – growth and safety of their existing investment.
Furthermore, let’s be honest – Investments for High Networth Individuals (HNI) can be terrifying because their wealth falls under different taxation brackets and their investible surplus amount is much higher than the average retail investor. A wrong decision while investing can lead to a cycle of wealth loss and tax ramifications!
Understanding the HNI Ecosystem in India
As of 2021, the number of High Networth Individuals in India has increased by 11%, creating a significant demand for financial advisory and management services. In response to this demand, several banks began offering advisory services under Alternative Investment firms (AIF) and Portfolio Management Services (PMS) to skirt the SEBI regulations barring banks from offering advisory and distribution services to the same clients [October 2022].
This new SEBI rule was announced as there was an intrinsic problem with this model. If an HNIs wealth is managed by the same entity that earns a commission at distribution, there is a high chance this entity will conduct its process to maximize its commissions. This puts the bank’s interests in direct conflict with their HNI clients in the long run.
This safeguard measure has positioned Advisory Firms as ideal wealth managers and financial custodians for HNIs that lead busy lives and long working hours.
We have served 400+ High Networth Individuals through our tailored. My fame-Financial Asset Management and Executive platform, which help us to achieve financial target according to our client needs.
What Are The Problems Faced By High Networth Individuals?
High Networth Individuals have unique financial goals but there are some problems we have noticed across the board, as follows:
Protection of Wealth
Many High Networth Individuals have lost a lot of money because of market fluctuations in the past. If assets are not invested with a proper strategy can lead to an extreme wealth loss cycle. The investments should include a wide range of distribution to lower the risk of fluctuations.
Lack of time for financial planning
Most HNIs don’t have time to do financial planning and investments without a proper strategy are bound to fail. Financial planning requires a lot of time and consistent effort over time to get the desirable results. HNIs are busy with their jobs or business and they lack the bandwidth to give attention to the detail for proper financial planning.
Effective Tax Management
It is difficult to keep up with the ever-changing Taxation code in India for High Networth Individuals because the Taxes for HNIs keeps on fluctuating to balance the economy of the country. It is essential for HNIs to manage their investments accordingly to elevate short-term financial gains.
Retirement Planning
Retirement planning is mandatory for everyone, especially for High Networth Individuals. HNIs are used to a certain living standard all their life and a sudden shift after retirement can be very distasteful. Their wealth has to be invested well in liquid and non-liquid assets to avoid an economic crisis after retirement.
What are the services under Private Wealth Management?
Due to the many intricacies involved in managing the wealth of High Networth Individuals; it is advised to let the professionals take care of it.
Here’s a list of services that come under Private Wealth Management:
Portfolio Management Services (PMS)
PMS is offered by a Portfolio Manager with a calculated risk to return ratio. An Investment Portfolio is a mixture of structured products, cash, real estate, commodities, stocks, and fixed income. PMS is customized for HNIs and the services are tailored according to the client’s willingness to the risk factor.
Tax regulation
High Networth individuals need special tax care because of their vast investments, some High Networth Individuals operate their business abroad which falls under different taxation rules.
Document management
High Networth Individuals make a lot of investments and have many financial assets, before authorizing a deal, it is essential to go over all documents thoroughly by a professional to avoid any hidden liabilities in the future.
Key Takeaway:
Wealth management in India is prospering and presents itself as a promising profession for the new age India. This could be just the beginning of the boom that this industry is yet to see.
Most High Networth Individuals seek professional advice to manage their wealth as a wrong financial decision can lead to endless taxation and financial loss. In many cases, HNIs qualify for additional benefits and opportunities, hence it is essential to make an informed and calculated financial decision.
We at Annveshan believe in face-to-face appeal for advisory services. Working closely with our clients gives us the advantage to understand their financial needs precisely, which helps us build long-term professional relationships.
