The sustained economic expansion has created enough wealth over the last decade, boosting the prospects of wealth management business in India. The rise in growth of SIP as a disciplined investment product adopted by households and the emergence of newer instruments such as AIFs indicates how deep the financialisation has seeped into the economy especially outside the main cities, Sandeep Jethwani, Managing Partner and Head – Advisory Group, IIFL Wealth & Asset Management's told Financial Express Online. This expansion of wealth is one major trigger for the growth of wealth management business in India, he added. Commenting on the IIFL’s latest strategy to acquire businesses to expand horizons, Sandeep Jethwani also told Ashish Pandey of Financial Express Online that the acquisitions have helped the company to solidify its presence in regions where we have less presence.
Here are the excerpts of the complete interview:
What should we make out of IIFL Wealth acquiring businesses in the last couple of years? Is it an indication that the company is now adopting inorganic growth as against the earlier formula of organic expansion?
The acquisitions we have done over the years help us fortify our presence in regions where we have less presence. Besides, these deals also bring us some top-quality talent by way of sales and non-sales teams and our combined efforts will further strengthen our reach and offerings for high net worth clients.
What are the big triggers for growth in the wealth management business?
The sustained economic expansion over the last 10-years, has created pools of wealth in India, which have traditionally been held in assets classes like gold and real estate. How deep the culture of financialization has seeped into India, is demonstrated by the accelerating growth of SIP (Systematic Investment Plans) as a disciplined investment product, being adopted by households, and the emergence of newer instruments like AIFs.
Besides financialization of savings, the other triggers for growth for wealth management industry are a robust economic outlook; an increasing proclivity for sophisticated financial assets; a continued large share of national income accruing to the wealthy; a steady growth in the HNWI population; wealth expansion or Wealth/GDP growth expected as GDP per Capita continues to expand and professionalization of the wealth and asset management industry as the economy develops.
There are reports of IIFL Wealth moving more towards the advisory model. Tell us more about this.
With the launch of IIFL-One platform, we aim to bring about a generational shift in wealth management in the country. IIFL-One platform aims to bring transparency into the relationship with the client for a nominal fee and move away from the traditional industry norm of pushing products. IIFL-One aims to drive the “Netflixification” of the wealth management industry in India, i.e. move to a subscription model with a better understanding of the client and closer alignment with their needs. It’s an all-in-fee platform, where product-based commissions are eliminated. HNI clients are offered institutional grade portfolio management processes and portfolio discipline for their personal portfolios at a very competitive all-in fee, coupled with a host of privileges like access to preferred lending terms, wealth structuring and estate planning services. The initiative will bring down the overall cost paid by the client in the long run, as well as eliminate the incentive to churn the portfolio completely, bringing tremendous alignment with clients’ requirements.
Mutual funds are growing outside the main cities. How is it with wealth management companies?
Wealth is also being created outside the main cities. We have started to focus on the second layer of cities like Rajkot, Kolhapur and Nashik, where there is enough traditional wealth that has been built up over a period of three or four generations. The wealthy in these regions are getting to understand the benefits of quality wealth management advice.