Minding money

Minding money

Minding money

With the number of millionaires increasing in India, wealth management services have become an integral part of Banking and Financial Services (BFS).Wealth management is the sunrise area  in Banking & Financial Services today. With an increasing number of affluent citizens, the need for specialised services to manage this wealth is increasing.

A large number of exclusive wealth management outfits have mushroomed over the last few years. A number of brokering firms have diversified into this area as well, looking at the growth opportunity.

Roles and responsibilities

A quick scan of job sites will also show you just how fast this area is growing. Given the large gap between demand for people and the supply, this area is a good way to enter the BFS sector and grow fast. All it needs is some focused preparation.

So, what does it take to manage some one’s wealth, and what kind of a career is it?
The area of wealth management broadly covers two levels — one, for what’s called the ‘mass affluent’. That sounds like a contradiction, but refers to that level of affluence which we call ‘upper middle class’.

In India, that can translate to a investible income of INR 1 million (10 lakh)-INR 10 million.  For the mass affluent, it’s more a question of understanding their risk profile and investment needs, and then using standard financial products such as mutual funds, insurance and direct investments into stock and bond markets, to manage their investments.

Skills required

You need the ability to communicate well with your customer and a sound understanding of the area of financial planning and asset allocation. You will also need a solid foundation in understanding financial markets and instruments. This is the area where there is large hiring in India.

At a more advanced level, say for an investible income of  INR 50 million and above, you would need an indepth knowledge of  financial markets and instruments. It’s not enough to know what stocks and bonds are. (Though, believe me, the number of people who actually correctly understand these instruments aren’t many). You also need to understand a more complex class of instruments called derivatives, and also other classes of investments such as commodities.

Trading in commodities such as sugar, coffee and pepper is very popular.
Other asset classes for investments include precious metals and real estate — and not just in India, but across the world.

This ‘upper’ level of wealth management is termed ‘private banking’. Therefore only a senior banker with experience in financial markets works in private banking.

As mentioned, in India, it is wealth management for the mass affluent, which is the focus area for most banks. There is mass hiring at the entry level, where you would join as a ‘relationship manager’. At a very basic entry level job, you would be required to sell mutual funds, insurance, etc  to a database which the bank has. You would then graduate to understanding the customer’s investment profile and advising him/her on what investments s/he should undertake, which is financial planning.

Courses and certification

An MBA from a good business school or a graduate with some years of relevant work experience may enter directly at this level. Wealth management businesses also have research analysts who evaluate investment options, who are typically from business schools.

Wealth management is not the domain of banks alone. I’m sure you have seen hoardings for Wealth management companies such as ASK, Motilal Oswal, Anand Rathi, etc. Other Non Banking Finance Companies (NBFCs) entering this area are India Infoline, Edelweiss Capital, etc.

How does one prepare for a wealth manager’s role? One benchmark certification is called the Certified Financial Planner, or CFP certification. This is a detailed, end-to-end certification offered in India by the Financial Planning Standards Board (www.fpsb india.org), and can take a year or more to complete.

There are very few certifications which offer an overview sufficient for a career in wealth management, but Finitiatives Learning’s (FLIP) Wealth Management Intermediate level certification (www.learnwithflip. com) is one.

The typical roles in this area are that of a relationship manager (requiring sales skills and a basic knowledge of financial products and planning); investment advisor (requiring good knowledge of financial markets), and a behind-the-scenes operations role, that provides all the inputs and ensures delivery of client services.

So equip yourself with the necessary skills, and a rewarding career awaits you.
Finally, here’s an interesting bit of trivia for you. Singapore, with a population of just about 4 million (as against India’s 1.1 billion) has the highest density of USD millionaires in the world! And in Singapore, it’s private banking which is popular. I’m sure India will get there soon.

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