wealth management business

8/7/2019 Wealth Management Business

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WEALTH MANAGEMENTWEALTH MANAGEMENT


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l Investment management is the processInvestment management is the processof managing financial assets like,of managing financial assets like,stocks, bonds, cash and mutualstocks, bonds, cash and mutualfunds in order to achieve a specificfunds in order to achieve a specific

goal like retirement or collegegoal like retirement or collegefundingfunding..

l Wealth management expands the focusWealth management expands the focusconsiderably by looking at virtuallyconsiderably by looking at virtuallyeverything that impacts aneverything that impacts an

individuals net worth: a privatelyindividuals net worth: a privatelyheld business, personal residence,held business, personal residence,vacation property, insurance, loans,vacation property, insurance, loans,art, gold, taxes, the needs ofart, gold, taxes, the needs ofbeneficiaries and so on.beneficiaries and so on.

l A coordinated team of financialA coordinated team of financial

What is Wealth Management?


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Wealth ManagerWealth Manager Private BankerPrivate Banker

CLIENTCLIENT

Portfolio ManagerPortfolio Manager

Provides comprehensiveProvides comprehensivefinancial and goal planningfinancial and goal planning

Wealth manager with the help of a team of legal and financial

experts create solutions tailored to the clients unique needs

Coordinates your personalCoordinates your personaland banking needsand banking needs

Develops your overall investment strategyDevelops your overall investment strategyResponsible for day-to-day investmentResponsible for day-to-day investment

management of your assetsmanagement of your assets

Trust AdministratorTrust AdministratorEnsures terms and provisions of theEnsures terms and provisions of theclientsclients

trust are properly Implementedtrust are properly ImplementedCollects and distributes incomeCollects and distributes incomeCoordinates tax preparationCoordinates tax preparation

Tax consultantsTax consultantsReal estate managementReal estate managementspecialistsspecialistsPersonal care coordinatorsPersonal care coordinatorsMortgage specialistsMortgage specialists

Other SpecialistsOther Specialists


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AlternativeAlternative

InvestmentInvestment

ss

PrivatePrivateBankingBanking

AssetAsset

ManagementManagement

FinancialFinancialplanningplanning

Hedge FundsHedge Funds

Private EquityPrivate Equity

Real EstateReal Estate

Tax Preparation &Tax Preparation &

PlanningPlanning

Trust &Trust &

Estate PlanningEstate Planning

RiskRisk

ManagementManagement

C LIE NTCreditCredit

Cash MgmntCash Mgmnt

Checking &Checking &

SavingsSavings

AcctsAccts

Asset AllocationAsset Allocation

Cash Flow AnalysisCash Flow Analysis

RetirementRetirement

Education PlanningEducation Planning

Life InsuranceLife Insurance

Long term careLong term care

AnnuitiesAnnuities

Portfolio Tax MgmntPortfolio Tax Mgmnt

Stock Option ExerciseStock Option Exercise

Estate Plan DevelopmentEstate Plan Development

Trust and WillTrust and Will

consultationconsultation

Fiduciary ManagementFiduciary Management

Personal Care servicesPersonal Care services

Individualized PortfoliosIndividualized Portfolios

Concentrated Stock StrategiesConcentrated Stock StrategiesMulti Manager AccountsMulti Manager Accounts


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Wealth Management CustomersNet Savings and Deposits above 100k$

50M$UHNWI

Mass CustomerMass AffluentCustomer50k$

AffluentCustomer100k$

HNWI 500k$VHNWI 5M$

Wealth Management CustomerSegments


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Wealth management customersAffluent and HNWI above 35 years

C u sto m e rA g e Credit Volume Savings Volume DepositVolumeLess than35 years %15 %20 %5

Between35 and 55years%60 %30 %30

More than55 years %25 %50 %65

Slide 18

Universal Bank Business

Universal Bank Business volumes


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The Role of Banks

:Source IBM Institute for Business Value Analysis


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The Role of Banks

l Retail Banking

l Corporate Banking

l Treasury Services

l Investment Banking

l

l Private Banking & Asset Management

l

F u n dB a s e d Transition FeeBased


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Importance of Wealth AdvisoryServices

l Diversifies Product Line-Upl Value Proposition to other businesses

l Increases Fee Based Revenue

l Increases Profitability

l Enhances Brand Value


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Private Banking

l Private banking is a term which refers to majorinstitutional banks which offer financialservices to private individuals. These bankswould normally have two distinct divisions -private banking, and corporate banking.

l

Historically private banking has been viewed asvery exclusive, only catering forhigh net worth individuals with liquidity over $1million, although it is now possible to opensome private bank accounts with no more than$50,000. An institution's private banking

division will provide various services such aswealth management, savings, inheritance andtax planning for their clients.

l The word "private" also alludes to bank secrecyand minimizing taxes via careful allocation of

assets. An offshore bankaccount may be usedfor this purpose.
http://en.wikipedia.org/wiki/Corporationhttp://en.wikipedia.org/wiki/High_net_worth_individualhttp://en.wikipedia.org/wiki/Bank_secrecyhttp://en.wikipedia.org/wiki/Offshore_bankhttp://en.wikipedia.org/wiki/Offshore_bankhttp://en.wikipedia.org/wiki/Bank_secrecyhttp://en.wikipedia.org/wiki/High_net_worth_individualhttp://en.wikipedia.org/wiki/Corporation


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The Role of the PrivateBanker


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What does the HNWI clientexpect?


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Drivers of Wealth

GDP Growth World GDP is growing very fast in last in 20 years Interest rates were low and stable around the world

. %BRIC countries had and average real GDP growth of 7 2

Increase in Market Capitalization Emerging markets showed strong market returns

US and European small and mid cap companies performed

well


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The Wealth ManagementProcess


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Savings cycle

W ea l th A c c um u l at io n W e al th Co n su m p ti o n

AGE

RISK TAKINGCAPACITY

EARNINGCAPACITY

Retirement

LIQUIDITYMANAGEMENT

SURPLUSMANAGEMENT

WEALTHMANAGEMENT


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Wealth creation cycle

/Individual Savings A c DepositsCards

Business Current Account Family Members Accounts HUF Account

/Business Investments A c Trust Accounts Alternate Investment Vehicles

LIQUIDITYMANAGEMENT

SURPLUSMANAGEMENT

WEALTHMANAGEMENT

Forced SmallSavings Relatingto Tax Exemptions

,Basic Assets like Car,House Consumer,Durables jewellery Investments in securities

Additional Fixed Assets Alternative Investments Investments in securities Promoter Holdings

VEHICLE INVESTMENTS


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Client Segmentation

l Mass Affluent and HNIl Require brand confidence

l Require SUPERIOR service and quality

l Require a VISIBLE benefit to switch

l Require conveniencel

l Super HNIl Require comprehensive and Unbiased

Wealth Advisory Services

l

Require qualified and trained advisorsl Require confidentiality

l


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T h e ro a d to p ro fita b ility

Segment Model Research Segment Model

Product Development Launch

Enhancement

Earnings from a Private Banking customer

- Liabilities- Investments -Liabilities

-Investments-Assets-Insurance- EstatePlanning

Solutionstomeetcustomerneeds

Assets

Multi ProductRelationship

- TransactionBanking

-Liabilities


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Critical Issues

l Defining the Marketl Re-Visiting the Organisational Strategyl Regulatory Environmentl World standard talentl Client Centric Orientation

l Compliance & KYCl The Advisor Client Relationshipl Customer Retentionl Effective use of Technology

l Adapt to the Changing Environmentl There is no QUICK FIX SOLUTION


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Criteria for selection of PrivateBanker

16.1%

17.6%

20.2%

24.1%

30.5%

36.3%

49.6%

0% 15% 30% 45% 60%

Prestige

Technology

Product FeaturesLong History/ Tradition

High Service Quality

Low Fees/ Commissions

Strong Investment Performance

: ,.Source Survey of 45 top global private bankers


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Superior product propositionDedicated Wealth Manager A Single PointContact

Investment AdvisoryMultiple DeliveryChannels

Secondary&Debt EquityMarkets

Mutual Funds Pure GoldPrimaryMarket

Any WhereBanking

Insurance

AssetProducts

Cards

DepositoryDirect( -On linePlatform )For execution

Property Services

/Single A CStatement

22


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The Road to Success

l Client & Product Profitability Assessmentl Resources, Training & Rewards to

Perform

l Robust Support Processes

l Defined Product Mix and DeliveryChannels

l Strong Technology Backbone

l Branding & Strategy


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The Road Ahead


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Sophistication & needs of HNWIsto rise

O th e r

A lte rn a tiveIn v e s tm e nts

A s s e tM a n ag e me n t

B an kin g Deposits Loans CreditCards TradeFinance

MutualFunds Equities Bonds

PrivateEquity

Structured

Products

HedgeFunds

RealEstate

Commodities Art

TaxPlannin

g

Insurance

PensionFamily

OfficeTrustAdmin

Charity

Now2011


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Private Banking: Future


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l There will be further growth in thenumber and type of wealthmanagement players in India

l To provide distinct and structuredservices

l To augment revenues as WM is lessrisky and not overly competitive

l FIs, independent financial advisors and

Investment banks

Wealth Management: 2011 andbeyond


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l There will be a significant increase in thenumber of wealthy individuals in India

l BRIC Report India to be the thirdlargest economy in the world afterChina and US in the next 30 years

l Rising number of entrepreneurs andprofessionals leading to new moneyand mass affluent segments

l Wealth Managers to service thissegment in terms of reach,technology, products andknowledgeable staff

l



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l Increasing deregulation will enablecustomers to diversify their wealthlocally and globally

l Full capital account convertibility

l Wider choices for investment, savingsand protection needs

l Designing new schemes/ products andservices

l



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l Increased client sophistication andcompetition for client business willrequire wealth managers to deploysegment specific customer satisfactionand retention strategies

l Wealth Managers to be trained inmarketing, relationship management,regulation and compliance, and

product knowledgel Competition for scarce, competent,

specialist Wealth managementpersonnel will increase



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l Increased customer demand forsophisticated products will result inWealth Managers offering a wide arrayof more complex products and services

l Encompassing gold, real estate,commodities, art, hedge funds,structured products (eg., inversefloater notes, principal protectednotes etc.,), insurance and pension.

l Wealth managers will need to innovateand offer appropriate products andservices to meet the needs of wealthyindividuals in times of economic boomas well as depression



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l Wealth managers will introduceprofitability models and tools tomeasure and enhance theirperformance

l Wealthy clients generate more fees, butalso incur higher costs due to higherlevels of service required



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l Technology tools will be critical for bothenabling revenue generation as well asachieving operational effectiveness

l Technology tools covering areas offinancial planning, straight throughprocessing product and accountaggregation, and performancemonitoring

l To help Wealth Managers as well asclients who prefer self-directedlearning


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