Everything You Wanted to Know About Wealth Management Banking in India

21 November, 2024

Introduction

Over the years, the number of high-net-worth individuals (HNIs) has grown significantly. According to a report*, India is likely to have 16 Lakh HNIs by 2027. To serve the financial needs of HNIs, wealth management in banking has become an essential part of a bank's service portfolio. So, what is wealth management in banking and its various aspects? Let's find out.

What is wealth management in banking?

Wealth management in banking refers to a bank's financial services catering to the needs of affluent clients like HNIs. These special advisory services cater to these clients' needs and involve discussions on their financial goals and needs.

A wealth management bank in India is nothing but a separate bank service where skilled professionals closely work with HNI clients to understand their financial objectives and develop customised investment strategies for them.

What do you need to know about wealth management banking in India?

Wealth management in banks has become necessary to cater to HNI clients' needs. By providing this service, banks can not only meet the needs of HNIs but also enhance their revenues. Some of the key trends witnessed in the domain are:

• A hybrid approach to wealth management
  While human connections and personal relationships have been the cornerstone of the wealth management industry, there is a growing demand for convenience and a seamless experience. Digital innovations such as robo-advisors and self-service investment portals meet this evolving need. Wealth managers are increasingly adopting digital tools to automate processes, boost productivity, and respond quickly to customer needs.
  
  

• Emergence of alternative asset classes
  Apart from traditional investment options, wealth managers are gradually exposing and integrating alternative asset classes in the portfolio of HNIs. These include Portfolio Management Services (PMS), Alternative Investment Funds (AIFs), etc. These investment avenues not only have a bigger ticket size but also can offer higher returns in the long run.
  
  

• Going beyond metros
  Post covid, there has been a significant shift in investors' demographics in wealth management. While earlier, the demand for wealth management was mostly from metros, now the demand is coming from tier II cities, such as Kanpur, Indore, Chandigarh, etc.
  
  

Services offered by wealth management banks

Some of the common services offered by wealth management banks are:

• Comprehensive financial planning
  Wealth management banks offer comprehensive financial planning services tailored to the specific requirements of HNIs. These include personalised investment strategies, asset allocation advice, tax planning, estate planning, etc.
  
  

• Risk management
  This is another essential service offered by wealth management banks. They provide several risk management solutions, such as portfolio diversification and hedging strategies to prevent wealth erosion.
  
  

• Investment management and recommendations
  Wealth management banks leverage their expertise and resources to offer bespoke investment strategies that align with HNIs clients' risk tolerance and financial objectives. Through continuous monitoring and periodic reviews, wealth management banks ensure clients' portfolios align with their evolving financial needs.
  
  

• Insurance planning
  Wealth management banks in India offer insurance planning services to HNI clients. This is a part of their comprehensive financial advisory offerings. These services help clients mitigate risks and protect their wealth against unforeseen events like illness, accidents, or natural disasters.
  
  

Wealth management products and solutions

• Mutual funds
  Mutual funds are among the several wealth management products for HNIs. They help them diversify their portfolio, mitigate risk and invest in companies across industry verticals. Since HNIs have a large investible surplus, the ticket size of investments in mutual funds is also big.
  
  

• Bonds
  Bonds are essential to wealth management strategies as they provide stable and predictable returns over time. Issued by governments, municipalities, or corporations, bonds offer HNIs the opportunity to generate income through periodic interest payments.
  
  

• Insurance solutions
  Insurance solutions play a crucial role in wealth management as they offer protection and security for individuals and their assets. These products encompass life insurance and property insurance that safeguard individuals against unexpected events.
  
  

• Remittance
  Individuals working abroad typically send remittances to their families in their home countries. They are an important source of income for millions of households worldwide. From a wealth management perspective, they offer an avenue for HNIs to support their families financially and contribute to their overall well-being.
  
  

Conclusion

HDFC Bank offers a range of wealth management solutions and products such as insurance, mutual funds, RBI and sovereign gold bonds that help you grow your wealth in a disciplined manner. We help you identify wealth creation opportunities through various investment options and offer customised solutions for your wealth management needs. To know more, click here.

*Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. You are recommended to obtain specific professional advice from before you take any/refrain from any action. Investments are subject to changes in tax laws. Please contact a professional consultant for an exact calculation of your liabilities.