What is Wealth Management?
Wealth Management career is a pool of services aimed at handling every aspect of the High Net Worth Investors’ asset base and helping it to expand. It involves financial advisory services, accounting & tax planning, estate planning, will drafting services as well as other matters that require expert advice. Wealth Managers are mainly experienced bankers who are also Certified Financial Planners or Certified Wealth Managers.
Wealth Management as career option
A Wealth Management career has not been taken up very seriously in India. When it came to building a rewarding career in finance, Investment Banking was the first preference. But times are changing now. With evolution in thought process, growing awareness about wealth creation, and various macroeconomic factors, aspirants are earnestly considering a career in Wealth Management.
(1) Increase in wealth creation in India
India is witnessing an era of wealth creation. A report by Oxfam released ahead of the World Economic Forum in Davos states that India added 17 new billionaires last year, raising the number to 101 billionaires. The report further indicated that the wealth of these billionaires grew from Rs 15.78 lakh crore to over Rs 20.67 lakh crore in 2017-18. Increase in the number of billionaires, young entrepreneurs selling their companies, growing investment in new age asset classes, etc. are some of the factors that have contributed to the increased wealth accumulation in the hands of few. Though there is inequality in distribution of wealth in India, the overall growth in wealth during 2018 is phenomenal.
(2) Growing awareness about wealth management
Accumulating wealth is difficult, but managing the accumulated wealth is even more difficult. However, the digital age, uncertain economic conditions and inflationary headwinds have compelled Indians to take a hard look at managing their corpus of wealth. A report by cognizant says that wealthy citizens in India are relatively younger than those in other countries. Hence, these is the category of people most exposed to information and reports of all kinds. The level of financial awareness in absolute sense is quite low among Indians. However, it is growing albeit at a slow pace.
(3) Lucrative pay package of wealth managers
Economic Times reported that due to the huge corpus of asset under management, wealth management career experts have the potential to earn upto Rs 1 to Rs 2 crores. Most of these earnings come from commission which is roughly 28% to 30% of the revenue earned by the wealth managing company. Along with this are lot of perks which could be luxury cars, signature watches or exquisite jewellery. This kind of attractive pay package and glamour quotient has led many private bankers to shun their jobs and join wealth management firms.
(5) Lack of quality talent in wealth management
Though there is a spurt in demand, the Indian wealth management industry is still in nascent stages. Most the HNI clients want specialized advice but there is dearth of quality wealth managers who can do this. The industry faces a talent gap in recruiting and retaining highly qualified, experienced and ethical wealth managers. It is crucial that this gap is filled. Most of the wealth management firms are thus scouting for promising resources from outside or headhunting from the crème-del-a-crème of corporate banks, asset management or treasury business.
(6) Increase in number of wealth management firms
There is constant emergence of wealth management firms in India. There are global entrants like Citibank, Standard Chartered, Credit Suisse, domestic firms with expanded product offerings, many banks such as HDFC and ICICI as well as many non-banking entities which are foraying into this space. This shows the current demand for wealth management is huge. With so many players in this space, there is bound to be constant demand for certified and experienced wealth management professionals.
According to data and estimates from various HR Managers and head-hunters, domestic wealth management institutions are planning to hire more than 500 private bankers as Wealth Managers, over the next 12 months. India is witnessing more demand for quality wealth Managers as compared to conventional profiles like investment bankers, equity researchers etc.
To be more precise, there will be increased demand for senior Private Bankers who can take up the role of Wealth Managers effortlessly. As the rich is becoming more rich and the regulatory regime focusses on safeguarding the interest of the investors, a career in Wealth Management career is sure to be a rewarding and long-term.