India has a paltry 1 pc of world’s wealth market

According to the latest wealth report by global consultancy major Boston Consulting Group (BCG), the global wealth market grew to $109.5 trillion in 2007, up 4.9 per cent over the previous year.

While noting that the wealth market is growing rapidly in India, the report said that the country accounted for only a small fraction of the global market with a size of $1.4 trillion.

BCG has calculated the wealth market size on the basis of assets under management, which includes cash deposits, money market funds, listed securities held directly or indirectly through managed investments and onshore and offshore assets. It excludes wealth attributed to investors’ own businesses, houses or luxury goods. BCG said India’s wealth market, despite being underdeveloped and relatively small, is “attractive enough to be competitive”.

Collectively, the 53 Indian billionaires command a net worth of over $340 billion. Besides, there are three resident Indians — Mukesh Ambani, Anil Ambani and K P Singh — among the 10 richest persons in the world, according to Forbes.

BCG report noted that low barriers to entry have resulted in increased competition and a broad range of offerings in Indian wealth market. Most of the wealth in the country is invested in property or gold and is self-managed, it added. The total wealth stood at $25.5 trillion in the Asia-Pacific region with Japan accounting for nearly half the total amount. Nonetheless, India and China clocked the fastest growth in AUM in the region. “Entrepreneurs represent the region’s most prominent client segment. They tend to have a high appetite for risk and are quite speculative, and they trust cash more than any other type of asset,” the report said.

BCG, however, pointed out that several markets including India were facing acute shortage of relationship managers . “Owing to increased competition, India's shortage of seasoned RMs is acute. This situation has led to high attrition rates, increased compensation and hiring of young, inexperienced RMs,” the report noted.