By 2022, India will be the world's 11th wealthiest nation, ahead of countries such as Switzerland, Hong Kong, the Netherlands and Taiwan. The report by Boston Consulting Group (BCG) also predicts that India's personal wealth will grow to $5 trillion by 2022, up from $3 trillion in 2017. Last year, India had ranked 15th globally in terms of total personal wealth.
The US continues to top the wealth chart, with its total personal wealth expected to mushroom from $80 trillion in 2017 to $100 trillion in the next four years. China ranked second, with a total personal wealth of $21 trillion, which the report sees more than doubling to $43 trillion in the same time frame.
According to the report, the pace of India's personal financial wealth accumulation is actually going to accelerate from a CAGR of 12% between 2012 and 2017 to a 13% CAGR till 2022. This makes India the only nation apart from China to have a double digit CAGR for personal wealth, Fortune India reported.
BCG further noted that India is set to constitute the second largest pool of wealth among the emerging markets in the coming years, second only to China. It is already the fifth-largest Asian market in number of affluent, high net worth (HNWI) and ultra-high net worth individuals (UHNWI), numbering 87,000 and 4,000, respectively, in 2017. In addition, the country boasted 322,000 "affluents", or those with wealth up to $1 million. This is reportedly the first time that BCG has released figures for these categories.
HNWI are defined as people boasting private wealth to the tune of between $1 million and $20 million, while the UHNWI category applies to richer folks. According to Ashish Garg, partner and director at BCG, India, the UHNWI category posted the fastest rate of growth.
Of course, this burgeoning pie spells massive opportunities for wealth managers. The report observed that nearly 70% of the country's personal financial wealth would be accessible to wealth managers as investable wealth in 2022, up from 67% last year. This includes listed equity, bonds, investment funds, currency and deposits, and other smaller asset classes. On the other hand, the 30% non-investable wealth includes life insurance and pensions, unlisted equity and other equity.Quoting Anna Zakrzewski, partner and director, BCG Zurich, the publication reported that the investable wealth in India makes it an attractive market for banks to swoop in and offer wealth management and investment advisory services, especially to their HNI clients. However, according to both executives, Indian banks are not doing enough to tap this space.
"Most of the products that banks offer in this space end up looking similar. There is a need to diversify and offer more customised products to clients," said Garg, adding that there is enough scope in this space for both banks and non-bank players to thrive. According to Zakrzewski, though Indian banks have access to a wealth of data in terms of behaviour, investments, life cycles and more, they are using "just 25-30%" of this information. If the domestic players can find a way to leverage this data, they will emerge as winners on the revenue, market share and client satisfaction fronts, she added.The BCG report also estimated that around 6% of India's private wealth is currently held offshore.