India’s average annual GDP growth rate of 7% has led to a rise in the number of high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals in the country.
India’s wealth management market is projected to reach $539.90 billion in Assets Under Management (AUM) by 2024, driven by increased awareness of strategic investment management.
Invezz spoke to Nitin Chaudhary, founder of NC Financial Advisory Services and a well-known market analyst, to understand the key trends shaping wealth management today. Edited excerpts:
Invezz: What are some new trends in wealth management that have emerged in the past decade?
Investors are moving away from traditional investment products. You may have already heard that banks are struggling to grow their deposits.
The most significant shift is in investor mentality.
A typical investor is no longer satisfied with plain vanilla fixed deposits (FDs); they want to explore new products and asset classes.
Another factor is the equity markets. Whether it’s mutual funds or direct stock exposure, they’ve performed exceptionally well in the past three years.
This has attracted previously risk-averse investors who are now more willing to take the plunge.
Growing exposure to startups
A major trend in the past 7-10 years is increased exposure to startups. Previously, this asset class was almost inaccessible.
Ten years ago, it was rare to hear of someone investing in a particular company based on its promising business idea.
Today, startups in sectors like fintech, health tech, IoT, artificial intelligence, and machine learning are gaining significant traction.
More HNW and UHNW investors want a share in these ventures. Even if they don’t take large stakes, they want startups to be part of their portfolios.
The Indian angel investment network has also grown significantly. Today, notable figures are personally investing in startups.
Invezz: Are investors also considering crypto as part of their wealth management portfolios?
Without a doubt, crypto has gained popularity as an asset class in recent years. People are investing heavily in it.
However, for Indian investors, the biggest challenge is compliance. The Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI), and the government have left crypto investments in a regulatory grey area.
There are no clear guidelines on how crypto should be regulated or treated.
While it’s not illegal to hold or trade crypto, as evidenced by the 30% tax on crypto gains, compliance concerns remain a major issue.
This uncertainty discourages HNW individuals from making crypto a significant part of their wealth management. If, for example, someone allocates just 2% of their portfolio to crypto, any compliance issue could jeopardize their entire investment.
As a result, despite interest in crypto, many investors hold back due to regulatory ambiguity. We don’t advise or deal in crypto, but some clients do hold small crypto wallets, often outside our advisory.
Risk appetite across different age groups
Invezz: There’s talk of younger people, particularly those in their 40s, becoming more interested in wealth management and succession planning. What’s your experience?
At our firm, we categorize clients into three segments.
First, we have the ‘achievers’—individuals over 45-50 years old who have already amassed significant wealth.
They are generally risk-averse and prioritize portfolio security over high returns. They invest in safer options like shares, mutual funds, debt, and bonds.
Next are the ‘new wealth creators,’ aged between 30 and 45. They hold prominent roles in companies or are startup founders.
They have raised substantial capital and earn strong salaries. This group is more open to taking risks and exploring newer products, including startup funding, derivatives, and sometimes crypto.
Finally, we have Gen Z, the youngest segment. These individuals, often from affluent families, are generally less focused on wealth accumulation and investment. They tend to splurge more of their earnings or inherited wealth.
For them, even small savings or Systematic Investment Plans (SIPs) are considered significant.
Invezz: What do you think drives this behavior in younger investors?
It’s largely a ‘live for today’ mindset. Whether they’re earning well or have access to family wealth, young clients prioritize maintaining their current lifestyle over long-term savings. When they come in for portfolio planning, they make it clear they don’t want to cut down on expenses to plan for the future.
ESG investing in India
Invezz: ESG (Environmental, Social, Governance) investing is gaining traction globally. What’s the situation in India?
People are aware of ESG, but its adoption has been slow in India.
All major mutual funds have ESG-dedicated portfolios that invest in companies with strong ESG scores.
However, the returns on ESG investments haven’t been very encouraging, which has hampered their popularity among investors.
While large corporations are moving toward ESG, it hasn’t become a key factor in Indian wealth management yet.
We expect this to change as awareness around climate control and sustainability grows.
Geographical trends in wealth management
Invezz: Are there any geographical trends in wealth management in India?
Traditionally, equity and mutual fund investments were concentrated in states like Delhi, Gujarat, Maharashtra, and Karnataka.
But we’re now seeing increased participation from northern states like Uttar Pradesh, Bihar, Jharkhand, and Rajasthan.
Investor awareness has improved significantly in smaller towns. Land holdings in rural areas have also delivered strong returns, which people are now reallocating into diverse asset classes.
Tier 2 and Tier 3 cities have shown notable growth in asset allocation and investment awareness.
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