The Hindu Business Line : ‘Wealth management will undergo significant transformation’

Kolkata, Sept. 9 The world of wealth management is all set to forge ahead, offering high-quality solutions and embracing new service standards, feels Mr Hitungshu Debnath, Director, Wealth Management Group, Motilal Oswal Securities. “Already, quite a few stereotypes have been broken down. Much more will happen”, he notes, adding that the changes being foreseen will be good for the investor.

Excerpts

A critical part of wealth management seems to be dominated by PMS providers. Is this likely to change?

Well, PMS will continue to be a key offering of the wealth management industry. That is because investors have come to know and appreciate the difference that an efficiently-run PMS can make to their overall returns. That said, let me tell you that there is more to it than just portfolio management. In fact, in the coming years, wealth management will undergo significant transformation. These will be triggered by investors’ overwhelming desire to nurture their wealth in a more productive manner.

Where does your PMS business stand at the moment?

We handle about Rs 700 crore at this juncture, courtesy products that are branded Value and Bulls Eye. Investors have taken to these in good numbers. A few variants may be considered for launch, provided the time is opportune. I cannot share details here, but one of these may be thematic in nature. From what we see, a section of the market is keen on certain ideas. Mid-cap, for instance, is a popular theme. However, as I said, we are not willing to talk more on this at this stage.

What sort of consolidation do you expected in the wealth management industry?

I can just tell you that there will clearly be consolidation in the securities broking space. The top 10 players, which together command a considerable portion of the market, will feel the need to become bigger entities. Perhaps some of them will eye smaller companies in order to pursue their growth strategy. Buyouts have happened in the past. We at Motilal Oswal have ourselves done this more than once. There is no reason to believe brokers will not initiate takeover moves in future.

Have bank tie-ups yielded concrete results for brokers?

This has to be viewed in the context of the business such tie-ups have brought. Obviously, this is a growing area for broking firms. Imagine the reach enjoyed by a large public-sector bank, one that caters to a range of retail clients. We have tie-ups with SBI and PNB; both play dominant roles in India’s banking sector. SBI, for one, has a multitude of committed clients. What needs to be seen here is whether bank executives are clued in on this front. Clients, especially those who have not opened a broking account previously, will have to be told about all the requirements.

Is there any business that brokerages will exit from in future?

Not really, not when one considers the kind of growth that various aspects of their business have started recording. Take, for instance, distribution.

With the number of options increasing – I am referring to the burgeoning universe of mutual funds and insurance – distribution is playing a bigger role in terms of generating revenues. Add to this clients’ new-found willingness to save and invest through market-linked products. Brokers are doing well on several other fronts.

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