What Made Global Players To Exit Wealth Management Biz In India?

A mix of regulatory as well as cultural factors has forced large global players to exit from the wealth management business in India

- Aniruddha Bose

Turn the clock back ten years and the significant shifts undergone by the wealth management industry in India come to surface. India was then at the cusp of a powerful bull run that would see its benchmark indices double in less than two years.

In 2006 alone, 78 new IPOs (initial public offerings) hit the market, mopping up close to Rs 30,000 crore. A plethora of mutual fund NFOs (new fund offers) followed suit. High net-worth individuals (HNIs) with expanding risk appetites and swelling liquidity were more than eager to write cheques to the growing workforce of slick, freshly minted MBAs. Companies jostled for a piece of the pie and assets managed by wealth management companies grew quarter on quarter.

Then came the crash of 2008, shattering illusions that many HNIs harboured about their advisors. Several lost money and even more lost jobs, as wealth management businesses globally scaled back their workforce.

Between 2008 and now, we’ve seen a fair recovery in the stock markets. The total wealth held by HNIs in 2015 was reportedly close to Rs 280 lakh crore, with wealth in financial assets (the key driver of wealth management businesses) more than doubling in the past six years. And yet, large global players have been scaling down or opting out of the fray altogether, leaving domestic players to battle it out.

Anshu Kapoor, Head, Private Wealth Management, Edelweiss Broking, believes that international wealth management players could have done more to adapt themselves to the Indian market. “Global firms tried to replicate global models in India and they did not work as expected because needs of Indian clients are very different. Many firms also could not scale up as they had built up unsustainable cost structures,” he said.

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