Marketing Aspect of Wealth Management

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WEALTHMANAGEMENTMARKETING OF FINANCIAL SERVICES

Group 4


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What is Wealth Management ??

Concept originated in US in the 1990s Wealth management services involve fiduciaryresponsibilities in providing professional investmentadvice and investment management services toInstitutions, funds (Pension/mutual/Hedge),corporations, trusts aswell as HNWIs.


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Select Players

Bank of Americacorporation

Barclays PLCBNP Paribas GroupsCitibankCredit Suisse GroupDeutsche Bank AGHDFC bank limitedState Bank of India

HSBC Holding PLCICICI Bank limited

ING Group N.V.JP Morgan Chase &CoMerrill Lynch & Co.Inc.SG AssetManagement

Standard ChartedPLC


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Why do people opt for wealthmanagement solutions?

Until the early 1990s the investment wasrestricted largely to real estate, bonds,fixed income and goldOpening up of the equity markets hascaught the imagination of the massesEquity related products are highly volatileand react to events within and outside itsdomain


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Segmentation and Targeting

Ultra HighNet Worth

Class

Premier Class

Emerging Class

More thanINR 1Crore

InvestibleSurplus

INR 25Lakhs to1 Crore

INR 3Lakhs to 25

Lakhs

Top Tier -Private

Banking

Mass

AffluentSegment

Emerging Affluent

Segment

TargetSegment

s


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Positioning

Customers are inclined to seek professionalwealth management but are very l ess t rus t ing & scept ical now

Wealth management provider should bepositioned as:

Trustworthy

Relationship-orientedTailor-fit service provider


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Key Elements of WealthManagement Services

Depending on the mandate of the servicesgiven to the Wealth Manager, wealthmanagement services could be packaged at

various levels: AdvisoryInvestment Processing (transaction oriented)

Custody, Safekeeping and Asset ServicingEnd-to-end Investment Lifecycle Management


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Wealth mangers role is limited to the extent of providingguidance on investment / financial planning and taxadvisory, based on client profile. Investment decisions

are solely taken by the client, as per his /her own judgment.

Advisory

Client engages wealth manager to execute specifictransaction or set of transactions. Investment planning,decision and further management remain vested with theclient.

InvestmentProcessing(transaction

oriented)

Client is responsible for investment planning, decisionand execution. Wealth manager is entrusted withmanagement, administration and oversight of investment

process.

Custody,Safekeeping, Asset

Servicing

End-to-endInvestment

Lifecycle

Wealth manager owns the whole gamut of investmentplanning, decision, execution and management, onbehalf of the client. He is mandated to make financial

planning, implement investment decisions and managethe investment throughout its life.


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Major products offerings

Portfolio management services (PMS)Mutual fundsInsurance products

EquityFixed income instrumentsMortgage lending

Real estate Art fundsDerivatives and structured products


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Revenue Model

Fee BasedPrevalent in Latin America & Europe

A fixed amount charged as customer fee in returnto the advisory

Commission Based

Prevalent in US & AsiaUpfront CommissionInstallments


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Bank Branches

Selection of major outletsCatchment AnalysisMostly Pan IndiaMajorly in Metros & Tier 1 cities


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Marketing Aspect

Brand building ATL & promotional activitiesEvents

Building trust

Customer Engagement

BTL ActivitiesGet together, movies etc.


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Marketing Aspect

Main expenditure on: AlliancesDesigning & implementing the communication

strategyColor, Look & Feel of the brochures, Cards etc.


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Marketing Aspect

Other Players


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Advisory Approaches

TransactorsProduct Expert: Handles high-volume transactions involvingsophisticated products or asset classes, such as foreign exchangederivatives.Investment Broker: Handles transactions involving basic assetclasses, such as equities, fixed income and options.Investment ManagersInvestment Advisor: Offers strategic investment planning, as well asplaying a hands-on role in constructing, reviewing and rebalancingclient portfolios.Relationship Manager: Establishes and nurtures client relationships,delegating portfolio management to internal or external managers.Wealth PlannersWealth Planner : Offers holistic advice in accordance with clientsfinances and short/long-term goals, such as real estate, retirementand generational wealth transfer.

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Wealth Management Overview


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Customer Profiling

STEP 1 Engage and Identify

Customer New Sourcing Referrals

Events

STEP 2 Discover the customer

Needs Financial Goals Risk Apetite


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Customer Profiling (Contd.)

Financial Goals

Accumulation

Phase Transition Phase Distribution

Phase

Risk Appetite

Aggressive

Secured

E n q u

i r e

E D i s c o v e r

D R e c o m m e

n d

R A c

t

S e r v

i c e

A S


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Tangible Aspects

Bank OutletFormsBond PapersCardsBrochures


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The Challenges of Wealth Management inIndia

High entry barrier for both new players and existingplayer Restrictive regulatory environmentConservative mindHighly Personalized and Customized ServicesPersonal relationship driving the businessEvolving Client Profile

Client Involvement LevelPassion InvestmentLimited Leveraging Capabilities of TechnologyIntricate Knowledge of Cross-functional Domain


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Recommendations

Build your brand and focus on overcoming thetrust barrier.Invest in advisor technology to improve advisor

productivity and retention.Evaluate a partnership-based model, coupledwith innovative use of technology, to increasereach.Focus on transparency and compliance, whiletargeting customers with attractive, segmentfocused products.


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Thank You


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Appendices

Demographics of HNWI


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Appendices

Growth in the investible table


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Appendices

WM Objectives & Preferred Channels


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Appendices

Business Models & Main Players


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Glossary

Asset Mix: Asset mix is the allocation of a portfolio between assetclasses, it balances return and risk. Returns are a combination of theincome from an investment and the price appreciation over theperiod.Different asset classes include:

Fixed Deposits

Deposit a lump sum of money for a fixedperiod ranging from afew weeks to a fewyears and earn a pre-determined a fixedrate of interest

+ves: Safe, regular interest income

- ves: lesser returnsthan stock markets,doesnt offer protection against

inflation

Mutual Fund

A Mutual fund is amechanism for pooling theresources by issuing units tothe investors and investingfunds in securities inaccordance with objectivesas disclosed in the offer document.

Diversification reduces riskas all stocks may not movein the same direction in thesame proportion at the sametime

The performance of aparticular scheme is denotedby Net Asset Value (NAV)

Equity Investment Generally refers to the

buying and holding of shares of stock on a stockmarket by individuals andfunds in anticipation of income from dividends andcapital gain as the value of the stock rises

When the investment is ininfant companies, it isreferred to as venturecapital investing and isgenerally understood to behigher risk than investmentin listed going-concernsituations.


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Commodities Market

Commodity marketsare markets where rawor primary products

are exchanged. Theseraw commodities aretraded on regulatedcommoditiesexchanges, in whichthey are bought andsold in standardized

contracts.

Real Estate Funds

The growing increasein the industrial,commercial and

residential projectshave boosted the realestate market in India.

Leading real estatefunds are: HDFCProperty Fund, DHFLVenture Capital Fund,Kotak Mahindra RealtyFund, India RealEstate Mutual Fund

Gold

Given the hugequantity of hoardedgold, compared to the

annual production, theprice of gold is mainlyaffected by changes insentiment, rather thanchanges in annualproduction.

Gold becomesdesirable in times of bank failures, low or negative real interestrates, war, crisis etc.

Other assets include: Insurance Products Structured Product Currency Art Fund

Documents

Marketing Aspect of Wealth Management