India's Wealth Management on the Rise

India's thriving economy and an increasing number of high-net-worth individuals (HNIs) are expected to fuel over 20% annual growth for wealth management firms in the next three years, according to a recent report by global brokerage Jefferies.

Key Drivers of Growth

The report highlights the core wealth management segment in India is gaining momentum, supported by expanding client bases, stronger relationship manager networks, and enhanced productivity.

Challenges Ahead

Jefferies cautions that the HNI space is becoming increasingly competitive, with evolving revenue models. The transition from a distribution to an advisory model is critical but must be timed correctly to avoid profitability dips.

Targeting the Ultra-High-Net-Worth Segment

Wealth managers are focusing more on the ultra-high-net-worth individual (UHNI) segment, where the potential for larger investments is significant. Despite lower fees, the advisory model offers benefits like scale and stronger client retention.

Industry Fragmentation and Risks

The report also points out the fragmentation of India's HNI market, with intense competition from domestic and international players. Jefferies warns of rising cost pressures and attrition risks, emphasizing the need for effective management to ensure sustainable growth.