Rakesh Rawal, CEO of Anand Rathi Wealth – an arm of the brokerage and investment bank – 18 years in the role, is one of the longest-standing and reputed CEOs in the industry. He oversees assets of Rs 87,797 crores as on June 30, 2025, among one the highest in wealth management. Rawal talks to Nesil Staney about the listed stocks, uber rich client returns expectations and outlook on alpha generation by actively managed mutual funds.
Your proposition for HNI clients?
We offer uncomplicated, objective-driven strategies for our clients, driven by data-backed research and mathematical modeling to align precisely with their wealth objectives. For our clients, we construct portfolios that generate returns of 14 to 15 percent with a beta of 0.6 with Nifty, leading to a Jensen’s Alpha of 4 to 5 percent. Our approach integrates every aspect of financial planning, including targeting superior risk-adjusted returns on investments, taxation, and estate planning.
What are your leading strategies in equity and other assets?
Most of the clients we have seen desire a return objective of 14 to 15%. A strategy is created accordingly with a mix of equity mutual funds and structured products. The exact combination of how much should be allocated in each of these is defined by using Nobel Prize winning models like the efficient frontier.
We expect the Nifty to deliver an annualised return of 11 to 12 percent in the long run, in line with nominal GDP growth. In actively managed equity mutual funds, we expect fund managers to generate 3 to 4 percent outperformance over Nifty. The remaining 35 percent is invested in Nifty-linked structured products, which offer Nifty-linked returns at less than half the risk of Nifty in terms of beta. This results in an overall portfolio return of 14 to 15 percent with a beta of 0.6 relative to Nifty, leading to a Jensen’s Alpha of 4 to 5 percent.
Which regulatory move was most significant for your industry? What are some new regulatory improvements?
One of the most significant regulatory moves for our industry was Sebi’s 2013 decision allowing both advisory and distribution to co-exist within a single wealth outfit. While many in the industry chose the advisory route, we consciously opted for distribution and moved to a trail-based model much earlier. This decision helped us stay aligned with the right category of products, avoiding the push towards PMS and AIFs where investor pressure often led to misaligned recommendations.
Which is your favourite 10 stocks and 5 sectors in the equity markets?
Rather than picking favourite sectors or stocks ourselves, we rely on fund managers to identify the right opportunities. Our approach is to select fund managers who may not always be in the limelight but consistently demonstrate strong stock and sector selection skills. In fact, after auditing several client portfolios investing in direct stocks, we found that in 85% of the cases, they would have been better off investing through mutual funds.
What are the needs of younger affluent investors?
Even for Younger affluent investors, targeting a 14 to 15% return would be a reasonable ask with the inflation been above 7%, they are also wanting to grow their wealth for longer time period with a consistent rate which is double than the inflation rate. Younger affluent investors today are focused on long-term wealth creation with consistency. With inflation above 7%, they are reasonably targeting returns of 14% to 15% which is essentially aiming to double inflation through disciplined, strategy-driven investing that sustains growth over time.
What are clients prioritising — returns, control or diversification?
In our recent client survey, 74% prioritised better risk-adjusted returns over absolute returns, highlighting a clear focus on performance with controlled risk.
Is there a shift from product-led to strategy-led advisory?
Yes, we strongly believe in a strategy-driven approach over a product-led one. Our strategy focuses on setting the asset allocation as the first step, followed by assessing risk and return appetite, rather than handpicking products at the top level and then arriving at a portfolio.
What are the key differences in advisory needs between metros and Tier-II/Tier-III cities?
In my view, investors in Tier-II and Tier-III cities are becoming more financially aware. While their portfolios were traditionally heavy on real estate, we are now seeing a clear shift towards financial assets. This trend is clearly visible. As of June 2025, 18% of the mutual fund industry’s assets, amounting to ₹13.80 lakh crore, came from B30 locations, showing a 24% year-on-year growth. 86% of these assets were invested in equity schemes indicating a growing appetite for equities and a shift away from traditional savings instruments in smaller cities.
How are wealth managers integrating estate planning, philanthropy, and legacy building into their services?
As a wealth management organisation, we focus not only on helping clients grow and manage their wealth, but also place equal importance on protecting it. One of the key tools we use for this purpose is the creation of a Private Family Trust, which acts as a safeguard against potential professional or personal liabilities.
We also recognise that while life is finite, wealth can endure beyond an individual’s lifetime. Since it may not be possible to consume all accumulated wealth within a single lifetime, it becomes essential to have a well-structured estate plan. This ensures a smooth and efficient transfer of wealth across generations, with minimal transmission loss. By integrating estate planning and legacy building into our offerings, we aim to help clients preserve their values and vision for future generations.
How do technology and data tools fit into building long-term advisory relationships?
We see technology as an enabler, not a replacement for human advisory. It helps us build trust through transparency, efficiency, and personalisation. We are using technology today in our organisation to enhance the client reporting, documentation, finding missing links etc. to create a better client experience while maintain data privacy. Therefore, yes data tools definitely fit into building long-term advisory relationships. Technology simply sharpens our execution and enhances long-term relationships.
What are the challenges and opportunities in managing intergenerational wealth within Indian families?
Managing intergenerational wealth is actually less complicated that one thinks especially if the goals are discussed amongst family members and future planning can be done accordingly. In most of these cases, you will see that there is a lot of time which allows the portfolios to feel the impact of compounding. The challenge in today’s intergenerational wealth management is keeping the focus steady without getting distracted with new age investment products, which is where we help investors uncomplicated investing choices.
With most startups increasing ESOPs and Sebi easing rules are there more executives emerging as HNIs?
We believe the wealth management industry, especially in the HNI segment, holds strong growth potential. According to a report released by Anarock Group, the number of HNIs in India is expected to double to 1.65 million by 2027, up from the current 8.5 lakh. Notably, around 20% of these HNIs are under the age of 40, highlighting the rising influence of young wealth creators.
Is products distribution more profitable than investment advisory?
We chose to focus on distribution rather than advisory at a time when other wealth firms were offering mutual fund advisory and distributing other products. In August 2020, SEBI prohibited entities from providing both advisory and distribution services to the same client family. As a result, many wealth firms had to surrender their advisory licenses by October 2020. However, Anand Rathi Wealth was the only one that did not need to make any changes to its business model.