September 25, 2023

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Atul Shinghal
There are decades where nothing happens, and there are weeks where decades happen‘. There is definitely an irony in beginning an article on wealth management with a quote attributed to Lenin. But with an exponential growth in retail participation, IPOs of new-generation companies, and a host of new products, it’s probably the best way to describe what’s happening in the markets.
There is plenty of noise, but the signal we have been getting from our customers is clear – the events of the last couple of years have brought about a shift in mindset. One that is far more appreciative of long-term wealth creation than before. Here’s a look at what this mature investor means for the wealth management industry.
Long-term thinking and Holistic Wealth Management
The last two years have caused people to evaluate and re-evaluate their priorities. What has emerged for many is a considered view of the purpose of money. This, in turn, has led to an appreciation of financial planning that helps them achieve their life goals, both long-term and short-term. This informed customer is now looking for qualified and experienced wealth managers, who can provide holistic advice and cater to their unique and evolving needs – from tax advisory to estate planning and will creation and everything in between.
Increased digitisation and the benefits of technology
Digital transformation is not just a buzzword but a trend that has accelerated in our day-to-day lives too. More people have embraced a digital way of getting things done. This increased comfort with digital has many implications for wealth managers.
There are obvious changes at a transactional level – automated workflows, increased security  and so on. But there are shifts at a decision-making level too. Customers are open to, in fact demand, a scientific approach to selecting products. This approach not only takes into account the quality of products, but also hyper-personalises a wealth manager’s selection based on a client’s needs and preferences, including, say, scenario planning, and even societal and environmental concerns. The increase in the amount of data generated by customers means that analytics will play an even more significant role in client engagement, client servicing, and defining customer experience.
Regulatory oversight in emerging investment options
The regulator has always been clear about doing it right for the customer. But with a slew of new financial products from digital gold to cryptocurrency arriving on the scene, policy is now following this intent increasingly. For wealth managers, this means greater compliance costs as they need to assess, much more closely, the products they are recommending to their clients. This means doing the due diligence.
The regulator would like us to remember that this is not an optional task. It is abundantly clear that regulators are going to look out for investor interest first and foremost, irrespective of the newness or excitement associated with products.
Alternative investment options
Speaking of newness of products, investment options are likely to grow across the spectrum. Clients with relatively lower assets under management (AUM) are likely to see wider and improved access to asset classes, thus far accessible to only High Net Worth Individuals (HNIs).
So, for instance, it is becoming increasingly common for clients to invest in startups with small ticket sizes of Rs 2-3 lakh – a trend that is very likely to continue. This means wealth managers will add angel investing options for their customers’ portfolios.
As you can see, the outlook for wealth management is exciting, driven by long-term thinking from investors, digitisation across the board, and new financial products. An increased focus on supportive policy frameworks in the sector will help wealth managers innovatively and responsibly build stronger solutions for their clients. However, all this will remain driven by the bedrock of all strong business relationships – exemplary customer experience.
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