Demand for wealth-management services to more than double in 5 years: Deloitte

According to the report, even the current demand is not being entirely met by wealth-management service providers.

The total demand for wealth management services, calculated in terms of assets under management (AUM) is set to more-than-double over the next five years, according to a Deloitte report.

The analysts also said that, while the market so far has been driven by services targeted at Ultra-high-networth-individuals (UHNI) and HNIs in the T30 centres, the next wave of demand will come from the B30 centres. T30 refers to the top 30 cities in India and B30 refers to the beyond-30 cities.

According to the report titled Financial Wealth Management Services in India, released on January 22, the total demand is set to grow at 15 percent CAGR between FY24 and FY29, and thus from $1.1 trillion AUM to $2.3 trillion AUM over this period.

The target customer base has been defined as the top 4–5 percent of the households in the country, that is, around 12 to 16 million households, who the analysts estimate to have an average annual income of at least $25,000.

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The growth in demand will be driven by three factors.

As mentioned earlier, the demand from B30 cities will be one factor. The report said, "The contribution of affluent customers in Beyond Tier-30 (B30) to total mutual fund AUM and their contribution to total retail deposits indicates a huge untapped opportunity from a wealth management perspective."

The other two factors have to do with the growing affluence of the Indian population and the shift to financial assets.

The report said, "India’s affluent population, bolstered by GDP growth, increased foreign direct investments, FDI and the start-up ecosystem, is set to drive the demand for wealth management services."

It added, "Indians are transitioning from physical assets to financial products, evident by a 16 percent annual growth in mutual fund AUM from FY17 to FY24."

Vijay Mani, Partner, Banking and Capital Markets Leader, Deloitte India, said that, to grow and profit from this opportunity, wealth managers will need to take a different approach from what has been in the past.

Mani said, "there is a need for a sharper understanding of the customer, better tailoring of products for varying segments, hybrid operating models that blend technology powerfully with Relationship Manager (RM) talent and a keen eye on regulatory compliance.”

According to the report, even the current demand is not being entirely met by wealth-management service providers. It estimated that only $0.7 trillion was being services by them, while the remaining $0.4 trillion AUM was being self managed.