The Hindu Business Line : `We consider ourselves as an investment bank for individuals'

The time for private wealth management has arrived, feels Mr Sandeep Sharma, Head, SG Private Banking India. The latter, part of French financial services group Societe-Generale, is in the country since last December.

"The promising wealth management market here is a reflection of India's exceptional economic performance", he states.

Excerpts

What are the emerging trends in wealth management in India?

Real estate and private equity are increasingly becoming important asset classes for high net worth individuals (HNIs). The demand for realty is on a high growth path on account of the burgeoning economy. The real estate market, growing at about 30 per cent annually, is projected to touch $50 billion by 2008.

While a few realty funds have been launched, we believe retail investors have been left out as only HNIs and institutional players have the capacity to participate in these.

However, equity participation will be ensured by the introduction of real estate mutual funds, which are fairly common in developed countries.

How is the private equity scenario developing?

Alternative investments including private equity allow HNIs to broadbase their portfolios. Though at a nascent stage, private equity in India is on the rise because of maturing financial sophistication. Secondary research highlights that in the developed markets, there is a growing conviction among HNIs that investments in fundamentally strong businesses are a very dependable wealth management strategy.

Is the client base expanding? Is it becoming more expensive for people to mandate a private wealth manager?

India is becoming an increasingly attractive market for many industries - wealth management is no exception. There is a promising onshore wealth management services sector here.

Driving the development has been the country's exceptional economic performance over the last decade. The booming economy has led to innumerable opportunities and pushed individual wealth growth.

According to one estimate, India has seen about 19 per cent growth in HNI population in 2005 vis-à-vis the world growth rate of 6.5 per cent. The fee structure here is yet to be developed and is currently accrued from brokerage fees and commissions on the services rendered.

What is SG Private Banking India's strategy?

We consider ourselves as an investment bank for individuals. There are a large number of affluent individuals who are not being served by competitors. They present our pool of potential clients. Our growth pattern reflects SG's global development of private banking, in which Asia Pacific plays a key role. We have offices in New Delhi and Mumbai. Besides, there is a comprehensive IT operation in Bangalore.

How can a wealth manager create a difference in prevailing market conditions?

Wealth management is a highly specialised service, covering all asset classes. Asset allocation helps determine an optimal mix of asset classes, ranging from equity, debt and real estate to alternatives. The latter may include `investments of passion' - even fine art and collectables - as well as structured products and hedge funds. Clients' life goals, time horizon and risk tolerance are three vital factors on this front.

How can technology help?

There is a need for systems, which can provide a single view of a customer's entire portfolio with the wealth management services provider. There is a need for online financial planning tools. Clients are eager to be in control of their portfolios and are often active in selecting products in line with their asset allocation strategy. Overall, technology is beginning to play a more critical role.

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