Personal Finance Outlook 2013: Wealth management business, an idea whose time has come
Rajiv Bajaj
The year 2012 witnessed a flight to safety, where investors preferred lower assured returns over taking risks in the markets. It was the year of debt, where a lot of money flow came into debt funds of mutual funds, fixed income schemes, bonds and NCDs.
It was also the year of physical asset classes, with continued money flow seen in real estate and gold, backed by their recent performance. The fundamental belief that gold is simply an inflation hedge was challenged on a continued basis in 2012; the traditional belief that real estate is a long-term investment was challenged, too, since people have now started investing in real estate for short-term gains as well, ignoring the illiquidity risk.
In terms of talent in this industry, I believe that people did not really view wealth management as a career option. Hence, there was limited number of fresh talent coming into the industry. Due to regulatory changes, some people were even seen exiting the business, and only the long-term players are present now.
A greater appreciation for fee-based models has been witnessed in 2012.
Also, customers have been demanding clarity in the way information is presented to them. Thus, they are looking for simplicity, clarity of communication and ease of administrative procedures, ie, taking an online, paperless route to manage things, whether it is viewing their
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