Kotak Wealth Management, pioneer and leader in the wealth management industry in India and CRISIL Research, India’s largest independent and integrated research house, launched the ‘Top of the Pyramid’ report recently. This unique report analyses the earnings, investment and spending patterns of Ultra High Net Worth Individuals (UHNIs) in India. In this report, Kotak Wealth and CRISIL Research have defined an Ultra High Net worth Household (UHNH) as one having a minimum net worth of Rs. 250 million (as of FY 2010-11). The number of UHNHs is expected to triple to 219,000 and their net worth is expected to grow fivefold to Rs. 235 trillion by FY 2015-16.
The study identifies three distinct profiles of UHNIs in India – the inheritor, the self-made and the professional. It draws a clear differentiation between these three profiles in their approach to investing and spending, and perpetuation of wealth and lifestyle.
It points out that UHNIs display greater risk aversion in personal investments. While real estate has been the most preferred avenue, alternate asset classes are now likely to gain popularity.
At the launch of the report, C. Jayaram, Executive Director, Kotak Mahindra Bank Limited said,”We are delighted to launch the first of its kind report of the Indian ultra high net worth individual fraternity today. The Top of the Pyramid report has been developed jointly with CRISIL Research.
The cornerstone of our Wealth Management business rests on providing superior products and services to our clients. In a bid to diversify their portfolio, largely comprising traditional assets like realty and equity, UHNIs have begun investing in emerging, alternate assets such as private equity, hedge funds, structured products and derivatives.
However, the growing interest in alternate assets is not backed by an adequate understanding of these asset classes, thus requiring UHNIs to seek professional advice. The report has been developed to add further value for our clients. This endeavor is testimony to our commitment to offer our clients the highest quality of wealth management products and services in India.”
The report highlights the relationship between increased earning and growth in the luxury market in India. It provides insights into differences in patterns of spending and investing, based on the UHNI profile and geography. “The fivefold increase in net worth and increasing propensity to spend could together have an explosive impact on the luxury goods market.
Our research estimates the potential market size for the luxury jewelry segment at Rs. 229 billion and for the luxury car segment at Rs. 140-150 billion. The full realization of this potential is possible provided luxury brands are able to develop greater points of access, offer wider range and customization of products to suit Indian customers’ preferences.
The Top of the Pyramid report will serve as a useful guide for investment managers and luxury brand marketers to develop more innovative marketing strategies.” said Ms. Roopa Kudva, Managing Director and Chief Executive Officer of CRISIL Limited.
‘Top of the Pyramid’ is based on in-depth interviews with senior personnel at major global luxury brands, art gallery owners and product dealers, and an extensive market research with ultra HNIs across eight cities. It is available free of cost, and can be downloaded from the Kotak and CRISIL websites.
