The younger generation of non-resident Indians in the UK are making greater use of wealth management services, although the overall NRI population is still relatively cautious about entrusting money to the sector, Ledbury Research said in a report published exclusively by sister publication WealthBriefing.

NRIs tend in general to invest into the Indian economy, in some cases in “significant” amounts. There are 40,000 NRIs in the UK with at least £1 million ($1.6 million) of assets, the report, published today, said.

“This segment certainly isn’t an easy one to service, but it is worth the effort. A crucial factor for success is an understanding of the unique nature of these individuals and how the segment is evolving over time,” said Stuart Rutherford of Ledbury Research.

The NRI population has been targeted by wealth management firms in recent years, driven by the sheer size of this expat segment. The NRI population has a worldwide base of around 21.6 million and represents the world’s second-largest non-resident population; of these individuals, around 170,000 are millionaires, with an average wealth of over $3 million. According to a Bricdata report in April this year, the value of the worldwide wealth management market for non-resident Indian millionaires increased at a compound annual growth rate of 9.4 per cent over the period 2007-2011, and is forecast to grow even faster until 2016. Another study has found that assets of wealthy NRIs have tripled to $3.5 trillion in the last decade and are set to swell to $6.4 trillion by 2015.

Ledbury’s NRI Tribe report, based on in-depth interviews with wealthy NRIs in the third quarter of this year, noted that NRIs are particularly focused on property investments, matching broader behaviour patterns in the UK; they are also interested in business opportunities, especially private businesses giving a high degree of control.

“For wealth managers, NRIs are certainly a very appealing segment and one that isn’t serviced as well as it could be. NRIs who we interviewed told us that while they have a wide variety of relationships with financial services providers, they still tend to entrust them with relatively small amounts of wealth,”  Ledbury’s Rutherford said.