Shriram Group, known for its diverse financial services, has teamed up with South African firm Sanlam Group to launch Shriram Wealth Ltd. They aim to tap into the growing wealth management market in India.
Why Enter Wealth Management Now?
The Indian economy is thriving. Currently valued at about $4 trillion, it’s expected to escalate to $35 trillion by 2047. The organized wealth space, currently worth $1.2 trillion, is projected to exceed $10 trillion in the next two decades. With only 15% of Indian wealth managed formally, compared to 75% in developed countries, there’s significant room to grow in this sector.
Leveraging the Shriram Brand
With over 4,600 branches, Shriram’s established reputation is a major asset. They plan to focus on tier-two and tier-three cities where trust in a brand can help attract clients.
Growth Targets
In the first five years, Shriram Wealth aims to manage ₹50,000 crore in Assets Under Advice (AUA). They plan to recruit around 500 wealth professionals to achieve this target.
Target Clients
They categorize clients into three groups:
- Mass Affluent: ₹10 lakh to ₹2 crore
- Affluent/HNI: ₹2 crore to ₹25 crore
- Ultra HNI: Over ₹25 crore
Initially, they’ll focus on clients with ₹2 crore or more, with plans to develop services for those with ₹10 lakh to ₹2 crore in the coming months.
Global Investment Opportunities
Under RBI regulations, Indians can invest up to $250,000 abroad. This could be for purposes like funding education overseas or diversifying investments. Shriram Wealth will offer various international funds and connect clients with advisors through partnerships with Sanlam and others.
Startups and Wealth Management
Startup founders present a unique client base. Typically, they accumulate wealth earlier and often possess a higher risk appetite. Yet, many seek conservative personal investments to mitigate business risks. Recent trends indicate that cities like Bangalore are emerging as startup hubs.
The Need for Professional Guidance
While startup founders excel in their fields, managing wealth is not their specialty. Like any complex task, wealth management requires expert advice. In India, only 15% of wealth management is organized, compared to 75% in developed markets—there’s a clear need for professional guidance in wealth management.
Ongoing Discussions
Regarding the current issues with retail trading, 91% of investors in options and futures are losing money. It highlights the necessity for better education and professional insights in trading. For retail clients, engaging with complex products like Futures & Options may not be advisable.
In summary, Shriram Wealth is stepping into a promising market, backed by a strong brand and an understanding of customer needs. The focus on emerging clients and global investment opportunities positions them to make a significant impact in India’s wealth management sector.
For more insights on India’s wealth management potential, you can refer to this report by the World Bank.
