Excellent presentation on Wealth Management industry by Mr. Yashodhan Nerurkar from PPFAS. Here is the link.
Few key insights:
- For a wealth management business, cost to acquire a customer is probably one of the highest expenses after employee cost
- To cater to lower end of customers by spending minimum cost, global and Indian wealth management companies are investing in technology. Hence technology spend is probably going to be higher for a few years.
(Note to self: Think what may happen when technology spends are complete. When can it happen?) - Advantage to Bank Wealth Managers:
- A client who has bank account with a bank, the data is available readily
- Getting a meeting with client and pitching for wealth management business is not very hard
- Lending against AUM is easier for a bank since they have the know-how in lending and recovering
- Advantage to Boutique Wealth Managers:
- The RM (relationship manager) develops trust with a client
- If a particular RM leaves due to attrition, the client may not feel comfortable with new RM immediately
- Few (not all) boutique wealth management firms are co-owned by the RMs. Hence attrition could be low and a long-lasting relationship with client may be forged.
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