HNIs prefer sustained yields over high-risk returns

Written by fe Bureau | Mumbai | Updated: Jun 30 2009, 06:33am hrs
Indian high net worth individuals (HNI) people owning assets worth at least Rs 5 crore are increasingly opting for getting sustained appreciation of their investments over gaining high returns in the longer run.

This was conveyed by PricewaterhouseCoopers (PwC) associate director Robin Roy on Monday in Mumbai while presenting the latest global survey done by his firm on wealth management and private banking.

In 2007, such a survey done by PwC had 20 wealth managers in India. However, the firms latest survey encompassed the views of 10 wealth managers from the Indian banking industry. The other 237 wealth managers that participated in the latest survey were from 39 foreign countries.

Roy said, Our survey suggests that investment in equities is no more the prime focus of Indian HNIs due to the volatility observed on bourses. The HNI population in India now prefers to gain sustained returns over a period of time while deploying a sizeable chunk of their funds in debt instruments. Investments in gold, and arts crafts and paintings too are preferred avenues for them.

As per the PwC study, due to lack of quality service and poor investment performances, many HNIs have disassociated themselves with wealth management services offered by private banks in India.

The buoyancy observed in UAEs real estate market is also due to Indian HNIs increasing preference for alternate investments over locking funds in traditional capital market instruments, Roy said.

PwC survey indicates that Indian wealth management services industry is expected to undergo a massive consolidation in the next two years. It will be very difficult for any small boutique firm offering wealth management services to Indian HNIs if its assets under management (AUM) are not worth at least Rs 500 crore. Servicing HNIs is a costly business in India, mainly due to fees charged by wealth management professionals and the taxation. The responses of foreign wealth managers operating in the global markets revealed in the survey that placing clients at the centre of the business model, providing objective advice and possessing a strong brand are keys to success.