The organised Indian wealth management industry has recorded a sharp rise in growth, increasing from 40 per cent to 60 per cent in market share since 2007 says a new report called Key Trends in the Indian Wealth Management Market, by the consultancy Celent.

The growth is attributed to a three-way push: increasing presence of organised providers, income and profitability pressures resulting in consolidation, and talent migration. The resulting opportunities for providers have led to the evolution of business models, says Celent.

“The sheer size of the wealth management market in India and the desire of financial institutions to corner a large market share have resulted in fascinating trends in the sector,” said Ravi Nawal, a senior analyst with Celent’s Indian Financial Services Group and author of the report.

Contrary to popular belief, the report states that there is to be no slowdown in the wealth management market opportunity in the country, with India on the cusp of attaining a $1.2 trillion wealth management market by 2014. This is due to demographics, economic growth, and provider push. Currently assets under management are highest for the high net worth and ultra high net worth segments of the market but the report forecasts the mass market opportunity to stand at $300 billion by 2014.

A major contributing factor is considered to be provider specialisation. The last two years have seen the establishment of provider classes which have consolidated positions in the market. Domestic wealth management providers are strong in the affluent segments of the market, while international private banks and boutique wealth management outfits have become strong in the HNW and UHNW segments of the market, says the report.

Furthermore financial supermarkets are on the rise; firms that cover a broad range of financial services are looking to brand identity to establish subsidiaries, a trend that is driven by growth in the mass and mass affluent segments of the market, says Celent.

Added to this, brokerages are morphing into wealth management advisory service providers. Within this shift competition is high to gain a national footprint and enhance product portfolios. There is a focus on advisory businesses to increase margins and reduce dependency on volumes at the mass affluent and upwards segments of the market, according to the report.

Due to this competition, the focus is on a customer-centric approach, particularly as family offices, which have grown to nearly 450 in 2010 from around 300 in 2007, are joining the race, says Celent.

Finally, the financial crisis has led to a shift in asset class preferences. Whilst allocation in equities has decreased slightly, fixed income and debt products have seen a rise as customers are opting for less risky products. Meanwhile alternate investment products such as art and real estate have seen a significant drop in allocation.