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WELINGKAR INSTITUTE OF MANAGEMENT DEVELOPMENT &RESEARCH

SPECIALISATION PROJECT

ON

WEALTH MANAGEMENT INDUSTRY IN INDIA

BY

DUBE ROHIT RAJESH

PGDM- RETAIL MANAGMENT 2012 – 14

(FINANCE SPECIALISATION)

ROLL NO:- 34

PROJECT FACULTY GUIDE

Prof. KANU DOSHI

Welingkar Institute of Management Development & ResearchPage 1

APPENDIX’C’

PROJECT COMPLETION CERTIFICATE

This is to certify that project titled “WEALTH MANAGEMENTINDUSTRY “ is successfully done by Mr.Rohit Dube in partial fulfilment

of his / her two years full time course ‘Post Graduation Diploma inManagement’ recognized by AICTE through the Print. L. N. WelingkarInstitute of Management Development & Research, Matunga, Mumbai.

This project in general is done under my guidance. I validate the conceptual

construct presented in the project and not the source of content used.

___________________________(Signature of Faculty Guide)

Name: Prof.Kanu Doshi.

Date: ______________________


ACKNOWLEDGEMENT

I take this opportunity to express my gratitude and sincere thanks to my

Project guide, Prof. Kanu Doshi, Finance Dean, for his guidance during the

course of my project. I would also like to thank him for the valuable inputs

and constructive approach which helped me perform better and enabled me to

gain a better understanding of the nuances of the project.

I thank my Business School, Prin L.N Welingkar Institute of management

development and research for imparting theoretical knowledge during the

PGDM program that would be essential for us to be a part of the corporate

setup, and facilitating this process of learning by providing us with an

excellent faculty who have helped shape our journey of business exposure

during the tenure of this course


Table of Contents

Sr. no Topic Page no.

1 Executive Summary 3

2 Introduction. 5-7

3 Wealth management services 8-11

4 List of Asset clsses 12-23

5 Advantages and limititations 24-25

6 State of world health 25-26

7 Wealth management industry in india 26-28

8 Opportunities for players 29-30

9 Conclusion 31

10 Bibliography and Reference 32


INTRODUCTION

DEFINE WEALTH

Wealth usually refers to money and property or something which haseconomic value attached to it. It is the abundance of objects of value and alsothe state of these objects. The use of the word itself assumes some socially-of identifying objects, land, or money as "belonging to" someone, i.e. anotion of property and a means of protection of that property that can withminimal (or, ideally, no) effort and expense on the part of the owner.Concepts of wealth vary among societies. Anthropology characterizessocieties, in part, based on a society's concept of wealth, and the institutionalstructures and power used to protect this wealth. Several types are definedbelow. They can be viewed as progression. Industrialization emphasized therole of technology. Many jobs were automated. Machines replaced someworkers while other workers becamemore specialized.

Labour specialization became critical to economic success.However,physical capital, as it came to be known, consisting of boththenaturalcapital (raw materials from nature) and the infrastructural capital (facilitatingtechnology), became the focus of the analysis of wealth.

SOURCES OF WEALTH

Wealth is created through several means.

⇒ Natural resources can be harvested and sold to those who want them.

⇒Material can be changed into something more valuable through proper laborand equipment.

⇒also create wealth by allowing faster creation of wealth.

⇒create wealth by allowing it to be created faster or with new methods


WEALTH MANAGEMENT

Wealth management is defined as a comprehensive service to optimize,protect and manage the financial well being of an individual, family orcorporation. its basic definition covers advice on loans, investments andinsurance o give a broad picture of how individuals should best deploy theirfinancial resources. A broad picture may include tax advice, estate planning,business planning, and their financial needs.

Wealth management means taking care of the needs of the clients, theirfamilies and theor business for long term, consultative relationship. It is bestconceptualized as platform where a number of different sets of services andproducts are provided. It is a full service model, which can offer advice oninvstestment managemenet, estate planning, retirement, tax, asset protection,cash flow and debt management.

Wealth management is a next step in financial planning. It challengesadvisers, especially those with high net worth clients to bring together allaspects of a clients financial life into a single platform investment advice toestate planningto long term insurance.the components and the methods ofapproaching them, vary as widely as the number of practitioners who aremoving in to this area.

Wealth management is a broader term than investment managementInvestmenet management is the science of choosing in investments- such asstocks, bonds and derivatioves and combining them in a way that respects aclients specific risk-to-reward needs. It is also frequently called “moneymanagement’ or asset management. On the other hand, Wealth managementprocess is founded on the values of the client first what is important to them?what goals do the haveand how do they want to accomplish them? What istheir timeline for implementing these values and accomplishing these goals?


Wealth management is an ongoing process. It involves keeping track of theneeds and their changing definition of success. A professional service whichis the combination of financial/investment advice, accounting/tax services,and legal/estate planning for one fee. In general, wealth management is morethan just investment advice, as it can encompass all parts of a person'sfinancial life

The term Wealth management formed with two words Wealth & Management. The Meaning of Management They have already seen inthe steeringintroduction. The meaning of Wealth is – Funds, Assets, investments and cashit means the term Wealth management deft with funds Asset, instrument, cashand any other item ofsimilarnature.While defining Wealth Management They have to think in planned manner.

WEALTH MANAGEMENT RANGE

The Indian market has been segmented by Wealth managementservice providersinto five categories, namely:

•Ultra-high net worth, or Ultra-HNW (in excess of US$30 million), will haveatotal population of 10,500 households by 2012.

•Super high net worth (between US$10 and $30 million) will have atotal population of 42,000 households by 2012.

•High net worth (between US$1 million and $10 million) will have atotal population of 320,000 by 2012.

•Super affluent (between US$125,000 and $1 million) will have a totalpopulationof 350,000 households by 2012.

Mass affluent (between US$25,000 and $125,000) will have a total populationof 1.8 million households by 2012.Mass market (between US$5,000 and $25,000) will have a totalpopulation of 39million households by 2012


WEALTH MANAGEMENT SERVICES

Wealth management as an investment-advisory discipline incorporatesfinancial planning, investment portfolio management and a number ofaggregated financial services. High-net-worth individuals (HNWIs), small-business owners and families who desire the assistance of a credentialedfinancial advisory specialist call upon wealth managers to coordinate retailbanking, estate planning, legal resources, tax professionals and investmentmanagement

Key Elements of Wealth Management Services

Wealth management services involve fiduciary responsibilities in providingprofessional investment advice and investment management services to aclient. Depending on the mandate of the services given to the Wealth Manager, wealthmanagement services could be packaged at various levels:

a)Advisory b) Investment Processing (transaction oriented)c) Custody, Safekeeping and Asset Servicingd) End-to-end Investment Lifecycle Management

SERVICES PROVIDED BY WEALTHMANAGEMENT INSTITUTIONS

(1) Custodian Services(A) Securities Safekeeping(B) Income collection from Securities(C) Settlement of Securities trades as directed(D) Payment of fund when directed(E) Timely settlement delivery

(2) Trust Services(A) Charitable Trust(B) Revocable Trust(C) Irrevocable life Insurance Trust(D) Special Need Trust(E) Institutional Trust


3) Retirement Plan Services(A) IRA’s Custodian Or Trustee(B) Defined Benefit Plans(C) Defined Contribution Plans

In most basic sense, wealth management services involvefiduciaryresponsibilities in providing professional investment advice andinvestmentmanagement services to Institutions, funds (Pension/mutual/Hedge),corporations, trusts as well as HNWIs. In the present context of ourdiscussion, we would keep our focus limited to HNWIs.Some of analogous terms used for wealth management could beconsidered as Portfolio Management, Investment Management andmany times FundManagement or Asset Management.

ROLE OF A WEALTH MANAGER

Depending on the mandate of the services given to the Wealth Manager,wealthmanagement services could be packaged at various levels:

a) AdvisoryWealth manger’s role is limited to the extent of providing guidance oninvestment/ financial planning and tax advisory, based on client profile.Investment decisionsare solely taken by the client, as per his /her ownjudgment.

b) Investment Processing (transaction oriented)Client engages wealth manager to execute specific transaction or setof transactions. Investment planning, decision and further managementremainvested with the client.

c) Custody, Safekeeping and Asset ServicingClient is responsible for investment planning, decision and execution.Wealthmanager is entrusted with management, administration and oversightof investment process.


d) End-to-end Investment Lifecycle ManagementWealth manager owns the whole gamut of investment planning,decision,execution and management, on behalf of the client. He is mandatedto makefinancial planning, implement investment decisions and managethe investment.

Wealth management services comprises of following key function areas of:

(a) Financial Planning(b) Portfolio Strategy Definition/ Asset Allocation / StrategyImplementati

on(c) Portfolio Management –Administration, Performance Evaluation and

Analytics (d) Strategy Review and Modification

a) Financial Planning

Client Profiling

Client profiling takes in account multitude of behavioural,demographic and investmentcharacteristics of a client thatwould determine each client’s wealthmanagementrequirements. Some of key characteristics to be evaluated fordefiningclient’s investment objective are:

•Current and future Income level•Family and life events•Risk appetite / tolerance•Taxability status•Investment horizon•Asset Preference /restriction•Cash flow expectations•Religious belief (non investment in sin sector like - alcohol, tobacco, gambling firms,orcompliant with Sharia laws)•Behavioural History (Pattern of past investment decisions)•Level of client’s engagement in investment management (active / passive)•Present investment holding and asset mix


2) Portfolio Strategy Definition / Asset Allocation

Defining Portfolio Strategies and Portfolio Modeling

After establishing investment objectives, a broad framework for harnessing possibleinvestment opportunities is formulated. This framework would factor for risk-returntrade-off of considered options, investment horizon and provide a clear blueprint forinvestment direction. Investment strategy helps in forming broad level en visioning ofasset class (Securities, Forex, Commodity, Real State, Reference and Indices, Art/Antique and LifestyleAssets (Car,Boat,Aircraft)), market, geography, sector and industry. Each of these asset classes is tobe comprehensively evaluated for inclusion in portfolio model, in view ofdefined investment objectives. While defining the strategy, consideration of clientpreference or avoidance for specific asset class, risk tolerance, religious beliefs is the keyelement, which would come into picture. Thus, for a client with a belief of avoidance ofinvestment in industries (alcohol, tobacco, gambling etc.) is to be duly taken care of.Likewise, for a client looking for Sharia-compliant investment, strategy formulation shouldconsider investment options meeting with the client expectations.

Guided with the investment strategy, constituents in portfolio model are determined, which woulddirectly and efficiently contribute towards client’s investment objectives. Thus, abroadlevel investment guidance of – “investment in fixed income in emerging market” wouldfurther determine classification within Fixed Income such as Govt. or corporate bonds,fixed or variable rate bonds, Long or short maturity bonds, Deep discounted or Par bonds,Asset backed or other debt variants. Return profile, risk sensitivity and co-relationof constituents within portfolio model would help to determine the size (weightage) ofeach individual constituent in the portfolio.

Strategy Implementation

Having decided the portfolio constituents and its composition, transactions to acquirespecific instruments and identified asset class is initiated. As acquisition cost would behaving bearing on overall performance of the portfolio, many times process of assetacquisition may be spread over a period of time to take care of market movement andacquire the asset at favourable price range.


c) Portfolio Administration

Portfolio Administration involves handling of investment processes and asset servicing.This would also require tax management, portfolio accounting, fee administration, clientreporting, document management and general administration relating with portfolio andclient. This function would involve back office administration and custodial servicesto manage transaction processes (trading and settlement) – interfacing withbrokers/dealers/agents, Fund managers, Custodians, Cash Agent and many other marketintermediaries.

d) Performance Evaluation and Analytics

Performance evaluation of the portfolio is an ongoing process. Portfolio return iscontinuously monitored and analyzed with respect to defined portfolio objectives.Analysis dimension could be varied – simple and complex. These may include -absolutereturn, relative return (in comparison to chosen benchmark), trend, pattern, cost impact,tax impact, concentration, lost opportunity and other form of sensitivity and what-ifanalysis. Any deviation of portfolio performance observed during performance evaluationwould lead to strategy review and any possible alignment of portfolio strategy e) Strategy Review and Alignment

Recalibration of Portfolio Strategy

Based on performance evaluation and future outlook of the investment, portfolio strategyis evaluated on periodic basis. To keep it aligned with the defined investment objectives, portfoliostrategy is suitably re-calibrated from time to time. Many times, review of portfoliostrategy would be necessitated due to change in client profile or expectation

CONCEPT OF ASSET CLASSES

Asset Mix

Asset mix is the allocation of a portfolio between asset classes, it balancesreturn and risk. Returns are a combination of the income from an investmentand the price appreciation over the period. Risk isusually proxied by the“standard deviation” of returns, how much thereturn changes about the long-term average.


LIST OF DIFFERENT ASSET CLASSES

1. Fixed deposit2. Mutual Fund3. Equity4 Commodities5. Art Fund6. Real-Estate Fund7. Insurance product8. Structured product9. Gold10.Currency

Fixed Deposits

FDs, are the most popular today. With FDs you deposit a lump sum of moneyfor a fixed period ranging from a few weeks to a few years and earn a pre-determined rate of interest. FDs are offered by both banks and companiesthough puttingyour money with the latter is generally considered riskier. Merits and Demerits

The main advantage is that FDs from reputed banks are a very safeinvestment because such banks are carefully regulated by the Reserve Bankof India, RBI, the banking regulatorin India.Note that company FDs isn’t as safe as bank FDs because if thecompany goes bankrupt you may lose your money. Make sure you check the creditrating of a company before investing in its FDs.

Youshould be especially wary of companies which offer interest ratessignificantly higher than the average to attract your money. The other advantage ofFDs is that you have the option of receiving regular income through theinterest payments that are made every month or quarter. This option isespecially useful for retirees.

On the flip side, a fixed deposit won’t give you the same returns that you may get in thestock markets. For instance a stock-portfolio may rise 20-30per cent in a good yearwhereas a fixed deposit typically earns only 7-10percent


A fixed deposit also doesn’t offer protection against inflation. If inflation rises steeply during the maturity of the FD your inflationadjusted return willfall .The rate of interest on FDs varies according to the maturity with longerdeposits generally earning a higher interest rate. Interest paid onafixed deposit is paid either monthly or quarterly according to the investor’schoice. So if you invest Rs 3 lakhs in a one year fixeddeposit which pays 8per cent you can earn Rs 2,000 of interest every month or Rs 6,000 of interestevery quarter.

MUTUAL FUND

A mutual fund is a professionally managed firm of collective investments thatcollects money from many investors and puts it in Stocks , bonds, short-termmoney market instruments, and/or other securities.

Thefund manager, also known as portfolio manager,investsandtradesthe fund’s underlying securities, realizingcapital gainsor losses and passing anyproceeds to the individual investors. Currently, the worldwide value of allmutual funds totals more than$26 trillion.

Since 1940, there have been three basic types of investment companiesin theUnited States: open-end funds, also known in the US as mutual funds; unitinvestment trusts (UITs); and closed end funds.

Similar funds also operate inCanada. However, in the rest of theworld, mutual fund is used as a generic term for various types of collective investment vehicles, such as unit trusts, open-ended investment companies (OEICs),unitized insurance funds, andundertakings for collective investments in transferable securities(UCITS).


Types of mutual funds

Open-end fund

The term mutual fund is the common name for what is classified as an open-end investment company by the SEC. Being open-ended means that, at theend of every day, the fund issues new shares to investors and buys backshares from investors wishing to leave the fund. Mutual funds must bestructured as corporations or trusts, such as business trusts, and anycorporation or trust will be classified by the SECas an investment company ifit issues securities and primarily invest in non-government securities.

An investment company will be classified by the SEC as an open-endinvestment company if they donot issue undivided interests in specified securities (the definingcharacteristic of unit investment trustsor UITs) and if they issueredeemable securities.

Exchange-traded funds

A relatively recent innovation, the exchange-traded fund or ETF, is oftenstructured as an open-end investment company. ETFs combine characteristicsof both mutual funds and closed-end funds. ETFs are traded throughout theday on a stock exchange, just like closed-end funds, but at prices generallyapproximating the ETF’s net asset value.

Most ETFs are index funds and track stock market indexes. Shares are issuedor redeemed by institutional investors in large blocks (typically of 50,000).

Most investors purchase and sell shares through brokersinmarket transactions. Because the institutional investors normall purchaseand redeem in kind transactions, ETFs are moreefficientthan traditional mutual funds (which are continuously issuing andredeeming securities and, to effect such transactions, continuallybuying andselling securities and maintaining liquidity positions) and therefore tend tohave lathery expenses.


Equity funds

Equity funds, which consist mainly of stock investments, are themostcommon type of mutual fund. Equity funds hold 50 percent of allamounts invested in mutual funds in the United States. Often equity funds focusinvestments on particular strategies and certain types of issuers.

Bond funds

Bond funds account for 18% of mutual fund asset Types of bond fundsinclude term funds, which have a fixed set of time (short-, medium-,or long-term) beforethey mature. Municipal bond funds generally returns, but have taxadvantages and lathery risk. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential for high yield, these bonds also comewithgreater risk.

Money market funds

Money market funds hold 26% of mutual fund assets in the UnitedStates.Money market funds entail the least risk, as Well as of return. Unlikecertificates of deposit (CDs), money market shares are liquid and redeemableat any time. The interest rate quoted by money market funds is known as the7Day SEC Yield

Funds of funds

Are mutual funds which invest in other underlying mutual funds (i.e., theyare funds comprised of other funds). The funds at the underlying level aretypically funds which an investor can invest in individually. A fund of fundswill typically charge a management fee which is smaller than that of a normalfund because it is considered a fee charged for asset allocation services.


The fund should be evaluated on the combination of the fund-level expensesand underlying fund expenses as these both reduce the return to the investor. Most FoFs invest in affiliated funds (i.e., mutual funds managed bythesame advisor), although some invest in funds managed by other(unaffiliated) advisors. The cost associated with investing in anunaffiliatedunderlying fund is most often higher than investing in an affiliatedunderlying because of the investment management research involved ininvesting in fund advised by a different advisor.

Recently, FoFs have been classified into those that are actively managed(inwhich the investment advisor reallocates frequently among theunderlyingfunds in order to adjust to changing market conditions) and those that arepassively managed (the investment advisor allocate assets on the basis of onan allocation model which is rebalanced on regular basis).

The design of FoFs is structured in such a way as to provide a ready mix ofmutual funds for investors who are unable to or unwilling to determine theirown asset allocation model. Fund companies such as TIAA-CREF, American Century Investments, Vanguard, and Fidelity havealso entered this market to provide investors with these optionsand take the“guess work” out of selecting funds. The allocation mixesusually vary by thetime the investor would like to retire: 2020, 2030,2050, etc.

The more distant the target retirement date, the more aggressive the asset mix

Hedge funds

Hedge Funds in the United States are pooled investment funds with looseSEC regulation and should not be confused with mutualfunds.Some hedge fund managers are required to register with SEC asinvestment advisers under the Investment Advisers Act. The Act doesnot require anadviser to follow or avoid any particular investment strategies, nor does itrequire or prohibit specific investments.


Hedgefunds typically charge a management fee of 1% or more, plus a “performance fee” of 20% of the hedge fund’s profits. There may be a “lock-up”period, during which an investor cannot cash in shares.Avariation of the hedge strategy is the130-30 fun for individual investors

Equity investment

Generally refers to the buying and holding of shares of stock on a stockmarket by individuals and funds in anticipation of income from dividends andcapital gain as the value of the stock rises. It also sometimes refers to theacquisition of equity (ownership) participation in a private (unlisted)company or a startup (a company being created or newly created). When theinvestment is in infant companies, it is referred to as venture capitalinvesting and is generally understood to be higher risk than investment inlisted going-concern situations.

Direct holdings and pooled fund

The equities held by private individuals are often held via mutual funds orother forms of pooled investment vehicle, many of which have quoted pricesthat are listed in financial newspapers or magazines; the mutual funds aretypically managed by prominent fund management firms (e.g.Fidelity Investments or The Vanguard Group. Such holdings allow individualinvestors to obtain the diversification of the fund(s) and to obtain the skill ofthe professional fund managersincharge of the fund(s). An alternative, usually employed by largeprivateinvestors and pension funds, is to hold shares directly; in the institutionalenvironment many clients that own portfolios have what are calledsegregated funds as opposed to, or in addition to, the pooled e.g. mutual fundalternative

Commodity markets

Commodity markets are markets where raw or primary productsareexchanged. These raw commodities are traded on regulatedcommodities exchanges, in which they are bought a n d s o l d i n standardizedcontracts.


This article focuses on the history and current debates regarding globalcommoditymarkets. It covers physical product (food, metals, electricity)markets but not the ways that services, including those of governments, norinvestment, nor debt, can be seen as a commodity.Articles on reinsurance markets,stock markets,bond marketsandcurrencymarketscover those concerns separately and in more depth. One focus of thisarticle is the relationship between simple commodity moneyand the morecomplex instruments offered in the commodity markets.

ART FUND Wealth management now includes art, real estate investments. WITH pricesof paintings rising 10 times in the last two years, three new financial entitieshave launched ‘art advisory’ services as part of Wealth management services.While Citibank has been providing art advisory services like art insurance,art storage and using art as a tradable collateral for some time, the recentsurge in prices has driven Yes Bank, ABN Amro and Dawnay Day to start thisservice

.The works of M.F. Hussain, Jatin Das or Anjolie Ela Menon are soughtafterby art lovers not only for their aesthethic value but also as anasset. Artgalleries are involved in art valuations, i.e. mapping thepricing history of anartist or research on art.Art is now being treated as an investment and high net worthindividuals areprompting banks to look at alternative assetclasses,such as art or real estate, for investment as a part of Wealthmanagement products.

Diversified portfolio

Individuals looking at alternative investments rather than the usualinvestments in equity-related products. “Investments in alternative asset classes give clients a diversifiedportfolioacross a variety of asset classes,” Yes Bank is expected to launch a Wealthmanagement service that will offer investment in real estate, art andjewellery. It expects to kick-start the real estate service during thisfiscal. “The bank is planning tie-ups with real estate consultant agencies.


The service will largely cater to non-resident Indians seeking opportunities toinvest in real estate in the country,”.

Tie-ups with galleries

In the art segment, tie-up with art galleries. “Contemporary Indian art will beat focus. The hiring specialists in the field for advisory,” High net worthindividuals in India are increasingly looking at contemporary Indian art as agood investment. With the advent of private art funds and galleries, art isbecoming an emerging asset class.ABN Amro advises clients on investment inart. However, the execution depends on the client in conjunction with expertsin the field.

I t i s difficult to generalise. The majority of clients begin with aninvestmentof around 4-5 per cent of their portfolio,” targets customers with Rs 2-2.5crore threshold for investment.

According to the banks, some clients also invest in these asset classes orminimize risk because they are looking at protecting their capital. Investmentin these asset classes requires a review of client’s age,personal ability to take risk and most importantly, client’s interest.

What percentage of assets would be allocated to alternative assets woulddepend on the client’s interest and ability to take risk.

REAL ESTATE FUND India Real Estate Fund is a significant component of the Indianrealtymark e t f l ooded w i th Ind i an and fo r e ign f i nanc i a l i n s t i t u t i ons . The growing increase in the industrial, commercial and residential project shave boostedthe real estate market in India. This has thrown open unlimited scope for theincoming of the India Real Estate Funds. The profits have encouragedfinancial assistance from not only domestic funds but also lured many foreigninvestors to participate in the


India Real Estate Fund.

The cooperating assistance from the government has furtherencouragedliquidity flow into the India real estate market sector.Theforeign contributions in the India Real Estate Fund have beenwitnessing asteady rise of 40%-45% per year. The domesticfinancialinstitutions have also build up their investments like their foreigncounterparts. T h i s c o m b i n e d p a r t i c i p a t i o n s f r o m b o t h a l o n g w i t h contributions of the corporate houses has accelerated the growth of India RealEstate Fund

Leading India Real Estate Fund:

Some of the leading India Real Estate Fund are :

1) HDFC Property Fund- HDFC India Real Estate Fund (HI-REF), the first scheme HDFC PropertyFund, invest in all the stages of the real estate projects. 2) DHFL Venture Capital Fund- DHFL Venture Capital Fund,promoted by Dewan Housing, has a focus on developingproperties rather than investing in real estate.

3)Kshitij Venture Capital Fund - Kshitij Venture Capital Fund, a groupventure of Pantaloon Retail India Ltd., will be deploying funds exclusively indeveloping malls specially in western and southern India.

1) India Advantage Fund (ICICI)

2) Kotak Mahindra Realty Fund

•India Real Estate Mutual Fund:

The further involvement of the real estate mutual funds have improved thequality of the construction practices. The 10The Five-Year Plan has proposed that Securities and Exchange Board of Indiawould regulate the India real estate mutual funds.


•Real Estate Investment Trusts:

The primary difference between Real Estate Investment Trusts and amutualfund is that investments made in the former are traded inrealestate stocks and not invested in company stocks moreover theyprovides aheavier liquidity than the mutual funds.

•India Real Estate Foreign Funds-

The significant international investments in the India Real Estate Fundarelike:1.Warburg Pincus2.Blackstone Group3.Broadstreet4.Morgan Stanley RealEstate Fund5.Columbia Endowment Fund6.Hines7.Tishman Speyer8.SamZell’s Equity Internationa

Insurance Product

Most of the insurance companies in India are notactively tapping the hugepotential of the rural markets. Unlesstherural markets are given priority consideration, all predictions aboutfu tu r ein s u ranc e i ndus t r y po t en t i a l i n Ind i a a r e go ing to be d i s t an t dreams.The present insurance business is not even able to penetrate20%?30% of the totalpopulation of 1.095 billion, and theprojectedpopu la t i on f i gu re b y 2025 w i l l be app rox i ma t e l y 1 .501 b i l l i on . The o r d e r o f t h e d a y w i l l b e t o r e f o c u s o n m i c r o i n s u r a n c ei n I n d i a t o capture the huge potential of rural customers Unit LinkedInsurancePlan (ULIP) provides for life insurance where the policy value atanytime varies according to the value of the underlying assets at the time

ULIP is life insurance solution that provides for the benefits of protectionand flexibility in investment. The investment is denoted asunits and isrepresented by the value that it has attained called as Net AssetValue(NAV).ULIP came into play in the 1960s and is popular in manycountries in the world. The reason that is attributed to the wide spreadpopularity of ULIP is because of the transparency and the flexibility which itoffers. As times progressed the plans They are also successfullymapped along with life insurance need to retirement planning. In today’stimes,


Currency

The modern hedge fund manager’s liberal tongue-in-cheek definition is: “If itmoves up and down independently, then it’s an asset class.” While currenciessurely do a lot of moving up and down, they also stand out for other reasons:

•The global foreign-exchange (FX) market can be considered by farthe largest market place in the world, not only geographically but also withreference to trading volume. The daily turnover is growing constantly and haslong ago surpassed the $1trillion mark: forty times the size of world trade.

•An important difference between currencies and other markets is that currency pricesallow us to analyze also their reciprocal values. A falling dollar/yen is synonymous with arising yen because the dollar can be expressed in yen and, vice versa, the yen in dollars.By comparison, the dollar is never measured in units, as the Dow Jones for example.

•For the same reason the expression ‘short sale’ – so much maligned in equity trading –does not exist in currency trading because the short sale of a currency is equivalentto apurchase of the other currency.

•For similar reasons, the currency market cannot suffer a ‘crash’ (such asthe stock market crashes of 1929 or 1987) through which the wealth of all marketparticipants dwindles. In the currency market each loss is matched by an equivalent gainof the counter-party.

GOLD Factors influencing the gold price

Today, like all investments and commodities, the price of gold isultimately driven by supply and demand, including hoarding anddisposal. Unlike mostother commodities, the hoarding and disposal plays a much bigger role inaffecting the price, because most of the gold ever mined still exists and ispotentially able to come on to the market for the right price. Given the hugequantity of hoarded gold, compared to the annual production, the price ofgold is mainly affected by changes in sentiment, rather than changes inannual production. According to the WLC annual mine production of goldover the last few years has been close to 2,500 tonnes.


ADVANTAGES OF WEALTH MANAGEMENT The following are the advantages of Wealth management concept.

1) Helpful In Tax PlanningThe Wealth management professional always shows the good path to thecustomers and provide the service of tax planning. How to minimize the taxand save more money?

2) Helpful In Selection of Investment StrategyAnother advantage from the customer point of view is with the help of WMProfessional the customer can easily know the investment strategy andanalyze risk and return.

3) Helpful In Estate Management:With the help of Wealthmanagement professional they can also manage theirestate.Estate management is a task to provide objectiveadministrationof their funds tailored to aimin responsible distribution andprotection of their overall estate.4)

4) Helpful in forward looking :They can say planning, thatrecognizes as their estate grows and changes occurs Theyrequire some team of professionals who help us in future planning

LIMITATIONS

1) WM R ed u ces Th e S cop e Of Man agem en tThough They all know th a t ma nage men t ha s ex i s t enc e a t a l l l eve l s o fl i f e and society but the term Wealth management only related with the higherlevel means rich people, and is not having any plans and provisions for poor andlower and middle level of society.

2) Chances of Fraud Another demerit or limitation of the WM concept is it is not showing theactual position. The customer does n ’ t know abou t t he t h ings go ing onw i th us ing h i s Wea l th and there may be chances of forgery and fraud withcustomers.


3) A ctu a l P i c tu re VS In f la t io nW h a t i s t h e a c t u a l p o s i t i o n o f market they don’t know because everything is done by someWM professionals. So they can not assume Their position inthem a r k e t t h a t a l s o r e s u l t s i n i n f l a t i o n b e c a u s e e c o n o m y i s unknown about the actual state. There may be chance that thecustomers arein risk but they are showing the false return andvice-vers

STATE OF WORLD WEALTH

HNWI (high net worth individuals) SECTOR GAINS IN 2007•10.1 million individuals worldwide held at least US$1 million infinancialassets, an increase of 6.0% over 2006.

•Global HNWI wealth totaled US $ 40.7 trillion, a 9.4% gain from 2006, withaverage HNWI wealth surpassing US $ 4 million for the first time

•The Ultra-HNWI “wealth band” experienced the strongest growth,gaining8.8% in population size and 14.5% in accumulated wealth

•Emerging markets, especially those in the Middle East and LatinAmerica,scored the greatest regional HNWI population gains

•HNWI financial wealth is projected to reach US $ 59.1 trillion by2012,advancing at an annual growth rate of 7.7%For the global economy,2007 was a transitional year that began and ended with sharply opposingmacroeconomic environments:

By the latter end, heightened uncertainty and instability marked the deepchange that was underway. Overall, market performances were solid in 2007.

However, closer analysis of th ekey drivers and inhibitors of wealth revealshow the many fundamental changes that took place over the course of theyear led to deteriorating economic conditions in keymarkets, including theUnited States and several mature European nations.

Evenly split, the two halves of the year tell very different stories: steadyglobal growth in the first six months, followed by sharply diverging pathsbetween mature and emerging economies in the second half


In early 2007, strong economic gains spurred impressive performances inequitymarkets and various investment products, reflecting high levels of investor confidence.

Robust growth in emerging markets, driven by high commodity prices andrising domestic demands, supported solid growth in mature economies.Stock markets worldwide performed well into the summer, led by Latin America andEmerging Asia, which saw roughly25% and 17% growth, respectively, through July. A variety of investmentproducts performed well during the first half of theyear; for instance, totalannounced private equity deals worldwide were on pace to shatter their 2006record.

POSITION OF INDIA IN WEALTH MANAGEMENT The wealth management industry in India is experiencing anevolutionaryphase of development, according to Celent. Withtheliberalization of the Indian economy and subsequent growth andprosperity across sectors, the wealth management industry is poisedto gain greater traction.

Celent segments the Indian wealthmanagement market and looks at trends andopportunities at the provider end.According to the report, India is slated to become a US$1 trillionmarket (in assets under management) for wealth managementproviders by 2012, with a target market size of 42 million households In the annual survey done by CapGemini, SA and Merrill Lynch it was found that ranks of millionaires grew 6% in the previous year, because the number of richer people grew in India &China where India is competing China. India & China posted the biggest gainin millionaires advancing by 23% & 20% respectively

According to the report, India is slated to become a US$1 trillion market (inassets under management) for wealth management providers by 2012, with atarget market size of 42 million households. In the annual survey done byCap Gemini, SA and Merrill Lynch it was found that ranks of millionairesgrew 6% in the previous year, because the number of richer people grew inIndia & China where India is competing China. India & China posted thebiggest gain in millionaires advancing by 23% & 20% respectively.


When They are watching the world wide increase in number of millionairesthe facts collected by Cap Gemini, S.A. and Merrill Lynch surveyreport. India has 23%growth in the year (2006-07). The biggest Asianeconomy China stands on second position with 20%, west Asia 16%, UnitedStates 4% and United Kingdom (UK) 2%.So They can understand that there ismore opportunities in the Wealth management business in Asia specially inIndia.

STATE OF WEALTH MANAGEMENT INDUSTRY IN INDIA

Wealth management is just emerging in India. The growth of the economy hasalready been widely showcased. Wealth management services havebeen getting more attention over the last two years. A booming economy,rising stock prices and an increase in salaries and spending power haveturned the spotlight on this sector. The wealth management space was earlierthe preserve of some foreign banks which offered these "exclusive services"to a select few. This was not a service you could apply for. The unsaid taglinewas "Don't call us. We'll call you (if you are that wealthy!)." Today, a numberof private banks offer this service.

Also entering this arena and carving a niche for themselves are standaloneentities that offer the full range of services — investment advice, portfoliomanagement, taxation advice et al. A new report from independent marketanalyst Data monitor (DTM.L) reveals the Indian wealth market is offeringcompetitors enormous opportunities. In the last five years, affluent wealth inIndia has grown at a rate of 17.6% with affluent individuals totalling 618,000at the end of 2007.

India’s large skilled population and robust domestic stock market will ensurethat this wealth continues to grow to almost one million individuals, with acollective wealth of over US $ 200bn by 2012. "India has its own merits asone of the developing BRIC economies (Brazil, Russia, India and China.


Competitors are realising this fact and are beginning to bring their propositions to the table. Today, India is attracting both foreign wealth managers anddomestic banks to set up wealth management businesses.

Going forward this is a trend that is likely to continue," says Alan Shields,Data monitor financial services analyst and author of the study. The numberof mass affluent individuals in India has more than doubled since 1998. Indiais becoming an increasingly attractive market in many industries, and wealthmanagement is no exception. Driving the attractiveness ofthemarket has been the country’s exceptional economic performance over the last decade.

The economy has grown at an average of 7.6% since 1994, due to thecontinued development of the service industry and strong growth in thetechnology sector. The opportunities that have been created by a boomingeconomy have in turn driven individual wealth growth. The wealth of India’sresidents has grown fromUS$79bn in 1998 to US$177bn at the end of 2008.This amounts to an increase of 123% in just five years. Of India’s 1.1 billionpopulation, wealth is concentratedamong a 618,000 individuals.

Of the total individual wealth in India, more than 65%or US $ 116bn isowned by both mass affluent and high net worth individuals.Combined, thisamount of wealth in the hands of just 618,000 individuals. Those withmorethan US$3m in liquid wealth represented the most valuable sub-segment ofthewealth market in India at year-end 2003, owning USD17bn. The bandaccounted for over 9% of total savings and investments despite onlyaccounting for only a tiny percentage of the adult population.


OPPORTUNITIES FOR LOCAL AND FOREIGN PLAYERS

The fact that affluent wealth is growing at a rate of 17.6% compoundedannually is attracting both foreign wealth managers to set up business anddomestic banks to setup wealth management businesses. "There are certainlyopportunities to be had in the Indian wealth market" says Alan Shields headof Asia-Pacific wealth management analysis at Data monitor. "

Whilst on the world stage, the Indian wealth market Is underdeveloped, thereare still a large number of affluent individuals who are not being served bythe current competitors and the pool of potential clients created each year ishuge." Data monitor forecasts that affluent wealth in India will growrapidly. India is still at a stage where the wealth manager is not necessarily acertified entityand the term itself is used rather loosely.

With banks and distribution houses, insurance agents, mutualfund distributors and chartered accountants liberally calling themselves'wealth managers', there is a mind boggling array of people to choose from.So, it becomes imperative to first identify the type of people you can signon as your wealth managers. There are wealth managers in banks who willeagerly do your financial planning if you fall in the HNI (high net worthindividual) block.

Thebanksassign a relationship manager (RM) to you, who is expected to manage therelationship with you by proactively using his knowledge to tailor unique andinnovative financial solutions that will create value. However, he isrestricted by the number of distribution tie-ups he has -- not all of them cansell all products. Besides, as banks and distribution houses increasinglycompete with each other with a similar set of products, an RM may end upjust pushing his own brands instead of delivering long-term advice. The highchurn among RMs in banks often leads to sudden breaks in "relationship"building and a whole lot of miscommunication between the customer and thebank ensues. Then there is everyone else keen on getting a slice of your piewith assurances tomake you richer than you are today.

Your friendly neighbours who sell insurance and mutual funds may notalways be the right source. After all, their interests in selling you a particularproduct is the commission that they earn through selling you a financialproduct. Besides, your accountant or stockbroker may not adopt aholisticapproach to all your financial planning need


If you strictly go by the book and look for a qualification that befits a wealthmanager, then you should go to the 150-oddcertified financial planners(CFPs) who have been certified by the Financial PlanningStandards Board (FPSB), India.

Remember that a true wealth manager uses the financial planning process tohelp you figure out how to meet your life goals through the propermanagement of your financial resources. Once you have identified thecategory of your wealth manager, it boils down to choosing one. Here arenine questions to ask before you hand over that cheque.

And remember to keep asking asyou goalong.Wealth management requires hands-on experience and a strong technicalunderstanding of topics such as personal tax planning, insurance, investments,retirement planning and estate planning and, how a recommendationin one area can affect the others.

Ask the planner what his qualifications are to offer financial advice and if, infact, he is a qualified planner.

Ask what training he has successfully completed. Ask what steps he takesto keep up with changes and developments in the financial planning field.Ask whether he holds any professional credentials including the CertifiedFinancial Planner certification, which is recognised internationally as themark of a competent, ethical, professional financial planner.

Find out how long the planner has been in practice and the number and typesof companies with which he has been associated. Ask about work experienceand its relation to current practice.

Choose a financial planner who has experience counselling individuals on their financial needs.


CONCLUSION

Wealth managers are beginning to investigate innovative segmentationmethods to manage the changing client profile. Over the next 20 years wealthmanagers will hone their segmentation methods. Wealth managers willdevelop segmentation as aserviceefficiency initiative. Segmentation models will apply holistic criteria to wealthmanagement. The most important segments globally will beentrepreneurs and SMES/CEOs. Financial advisers will become an importantseparate client segment for wealth managers The organization of direct clientownership will also change

Availabilityand flexibility will become vital components of the business model Internalrestructuring will aim to integrate client services. The rise of themass affluent represents an opportunity for wealth managers in the mediumterm Wealth managers will capture the higher value mass affluent market byoffering a scaled down wealth management service.

The mass affluent proposition will run along the lines of the current wealthmanagement service. Liability management is currently not part of the wealthmanagement agenda but has proven potential. Clients in developed marketsare seeking more holistic wealth management services Liability managementis clearly a profitable area with a proven existing client base. Theincorporation of lending into wealth management will shift the focus of theservice. Specialist forms of lending will also become common additions tothe offerings of many wealth managers.

Somewillfail due to a persistence of the “asset focused” service model and a lack of commitment. There are significant benefits in the area of liabilitymanagement forthewealthy, and that the importance of liability management as part of wealthmanagement will inevitably grow over the next 20 years, until it becomes akeyservice area. Rising income and wealth inequalities, if not matched by acorresponding rise of incomes across the nation, can lead to social unrest. Anarea of great concern is the level of ostentatious expenditure on weddings andother family events. Such vulgarity insults the poverty of the less privileged,it is socially wasteful and it plants the seeds of resentment in the minds of thehave-nots.


Bibliography and Reference

http://books.google.co.in/books/about/Wealth_Management.html?id=0aRzP6iMoDYC&redir_esc=y

http://www.pwc.com/gx/en/banking-capital-markets/private-banking-wealth-management-survey/index.jhtml

http://www.scribd.com/doc/13581494/AXIS-BANKWealth-management-

http://www.pwc.com/us/en/private-company-services/publications/tax-wealth-management-guide.jhtml

http://www.scribd.com/doc/20750541/report-on-wealth-management




http://www.scribd.com/doc/20750541/report-on-wealth-management



http://www.scribd.com/doc/13581494/AXIS-BANKWealth-management-



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