How do the rich get richer? This question rings in the minds of those looking to generate more wealth from their available means. The answer lies in the wealth management habits of the wealthy who implement ways that let money grow more money consistently.
The affluent in India are defying the traditional financial stereotypes. A recent report titled ‘360 ONE Wealth Index survey’ reveals that the wealthy, often presumed cautious, especially in later years, are investing with vigor and strategy.
Quality Over Cost
India’s wealthy are not skimping on advisory fees. With most opting to go for wealth management services, it is not the cost but the value that takes center stage for them. For many, it is the value - evaluated through track records and the prestige of wealth management firms that matters the most. Around 30 per cent of respondents prefer advisory services with a fee-based structure on assets under management.
The trend notes that India’s affluent are aiming to go for specialised advice as long as it guarantees them good returns. Here, wealth creation is optimised by expert guidance rather than by savings on fees.
Elderly Taking The Lead
Defying the norms, the elderly have emerged as the most aggressive investors. The report finds that the investment style of wealthy individuals aged over 60 is not to settle for passive income but actively seek wealth multiplication well into their retirement years.
The survey showed that nearly 90 per cent of the total respondents were concerned about the effect of external events on their wealth, with those over the age of 60 far less worried than the younger generation yet to reach 40 years of age.
The reason behind this could be the elderly living through market cycles which has made them more resilient.
Who Has The Most Risk Appetite?
The wealthy Indians, particularly the ultra-high-net-worth individuals (UHNIs) are embracing risk as an inherent component of their wealth-building strategy.
Over 61 per cent of UHNIs identify themselves as entrepreneurs or business founders while 49 per cent of high-net-worth individuals (HNIs) are more frequently salaried professionals.
Salaried and independent professionals, who have greater visibility on cash flows, seem to be less worried about their finances than entrepreneurs, whose businesses can take a hit from any economic turbulence.
Portfolio Outlook of the Wealthy
The report finds that equities dominate the portfolio of India’s affluent with 39 per cent selecting it as their preferred asset class, followed by debt and real estate. Still, gold secures a security vault for them gaining a strategic place at 10 per cent. Gold is typically known for its countercyclical stability in volatile markets.
Rather than a go-to for direct returns, gold is perceived as a defensive asset that acts as a counterbalance within the high-risk equity-centric portfolio.
The Wealth-Building Formula
Wealth advisors play a significant role in portfolio management and investment strategy including complex product guidance, legacy planning, and navigating market volatility for the wealthy.
The wealth index noted that almost a quarter of the respondents say they fully rely on professionals to manage their investments. In fact, more than half are dependent to some degree on wealth managers.
While 12 per cent of respondents say they make their investment decisions on their own, a huge 77 per cent require professional assistance.
The art of getting richer seems to stem from strategic aggression (as shown by the elderly) and huge reliance on financial experts for the management and growth of wealth by India’s affluent.
