India is on the upswing. With a population of more than 1.3 billion, it is the world’s second most populous country after China. Prior to its economic reforms in the 1990s intended to the help the nation move toward a more market- and service-responsive economy, India had followed a path of self-reliance, which largely kept the country segregated from the world economy. The Guardian reports that only two Indians were on the global annual Forbes billionaires list in the mid-nineties. The economy since has rapidly expanded and with it the ranks of the ultra high net worth (UHNW) and high net worth individuals (HNW). According to TradingEconomics.com, the Indian economy grew 8.2% in 2018 making it the fastest growing that year.
The Numbers
The Economic Times lists the following numbers for the wealthy:
- Fifty five Indian billionaires own more than USD 1 billion;
- 626 individuals own between USD 100 million and USD 1 billion;
- 3,222 individuals have a net worth of USD 20 million to USD 100 million;
- 13,545 individuals have a net worth of USD 5 million to USD 20 million; and
- 81,843 individuals have a net worth of USD 1 million to USD 5 million.
As of December 2018, the Asia Insurance Review reports 284,000 wealthy individuals hold combined assets of USD 1.3 trillion. The publication predicts this number to rise to almost 530,000 within five years, while Boston Consulting Group’s Global Wealth 2018 report shows a 15% compound annual growth rate (CAGR) for the country’s most wealthy in the time period from 2017-2022.
Where India’s Wealthy Invest their Money
According to a 2018 Knight Frank study based on responses from 500 private bankers and wealth managers, 95% of India’s wealthy with net assets of USD 50 million or more were invested in equities, compared with 62% globally. This is surprising for a country that is traditionally known to heavily invest in gold and real estate.
Asset classes and percentages as reported by Knight Frank were:
- Equities 95%
- Properties 13%
- Cash 34%
- Private Equity 66%
- Alternative Investments 48%
- Bonds 45%
- Gold 6%
- Crypto Currency 18%
Managing Clients’ Expectations
India’s wealthy look for personalized and professional financial services and advisors who are willing to go the extra mile, or as The Financial Times puts it, “…a highly personalized service, and an implicit promise to cater to every need, whim, fancy and emergency.”
So what exactly do rich Indians want? These services can range from financial advice to support for how to buy a plane or yacht, real estate investments, collateralizing commercial real estate for investments, establishing a business in a foreign country, securing a bridge loan for a pending IPO, or delicate estate and succession planning matters. The right advisor soon becomes an indispensable part of these wealthy clients’ lives. The expectations, however, are high. The Financial Times describes them as follows, “If I’m trusting you with my money, I’ll expect you to be no less than the best in the world in growing my money. I’ll also count on you to be my friend, investment banker, life coach, concierge, legal adviser, 3 am counsel, shrink, credit arranger, voice of sanity and immigration lawyer, all rolled into one.”
No doubt, these relationships can be professionally and personally demanding. Nevertheless, for the culturally adapt and hardworking, they are an opportunity to build a long-lasting and lucrative practice.
As always, I would love to hear from you. You can reach me at michael.welter@migam-global.com.
