Aditya Gadge -Presentation - ICAI

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Aditya Gadge -Presentation - ICAI Powered By Docstoc

                        Presented by:

                          Aditya Gadge
CEO – Association of International Wealth Managerment of India
          AIM of this lecture

 To define the wealth management market & the
 Provide an idea of its size and recent growth
 Examine the career opportunities in the wealth
  management industry.
 Describe the competitive landscape and the ways to
  reach there.
 Introduce CIWM Certification program as a gateway
  to careers in Private Banking & Wealth Management
Entry Test
Definition of Wealth Management &
           Private Banking

 Wealth Management:
   financial services provided to wealthy clients, mainly individuals and
    their families , typically with $100,000+ investable assets

 Private banking:
   an important, more exclusive, subset of wealth management,
     typically with $1 million + of investable assets.

 Private banking traditionally consisted of banking services (deposit
  taking and payments), discretionary asset management, brokerage,
  limited tax advisory services and some basic concierge-type services,
  offered by a single designated relationship manager. On the whole,
  private banking relationships were mainly ‘passive’

 Wealth management is broader and typically deals with managing both
  the assets & liabilities side of clients’ balance sheets
Wealth Management - Products

   While asset management is a key feature, wealth management has a greater emphasis on
    financial advice and is concerned with gathering, maintaining, preserving, enhancing and
    transferring wealth.

   Products include:
     Brokerage.
     Core banking-type products
     Lending products, such as margin lending, credit cards, mortgages and private jet
     Insurance and protection products, such as property and health insurance, life assurance
       and pensions.
     Asset management in its broadest sense: discretionary and advisory, financial and non-
       financial assets (such as real estate, commodities, wine and art), conventional,
       structured and alternative investments.
     Advice in all shapes and forms: asset allocation, wealth structuring, tax and trusts,
       various types of planning (financial, inheritance, pensions, philanthropic), family-dispute
       arbitration – even psychotherapy to children suffering from ‘affluenza’.
     A wide range of concierge-type services, including yacht broking, art storage, real estate
       location, and hotel, restaurant and theatre booking.
      As we understand…….

 Wealth managers coordinate retail banking, estate
  planning, legal resources, tax and investment
  management .
 Wealth managers can be an independent Certified
  Financial Planner, MBAs, Certified International
  Wealth Manager (CIWM), CFA Charterholders , etc.
            Client Segments

 Private banking targets only the very wealthiest
  clients or high net worth individuals (HNWIs): broadly
  speaking, those with more than around $1 million in
  investable assets.
 Wealth management, by contrast, targets clients with
  assets as low as $100,000, i.e. affluent as well as high
  net worth (HNW) clients.
 Defining the Wealth Management
        Service Proposition

 The following three criteria differentiate a firm as a wealth
   The relationship that wealth managers have with their clients,
    both in terms of breadth (where providers emphasise terms
    such as ‘holistic’, ‘comprehensive’ and ‘all-inclusive’) and
    depth (‘intimate’ and ‘individualised’).
   The products and services provided, with a particular emphasis
    on estate planning and multigenerational planning services,
    as well as tax advisory expertise and alternative investments.
   The specific objectives of wealthy clients, such as investment
    performance, wealth preservation or wealth transfer.
         Investment Mandates

 Custodian for a client’s assets. That involves, essentially, asset
  safekeeping, income collection, fund disbursement and
  associated reporting.
 Execution-only mandate, the wealth manager executes, or
  selects brokers to execute, securities transactions on behalf of
  the client. Not investment advice, service aimed primarily at self-
  directed clients.
 Advisory mandate
 Discretionary mandate
          Discretionary Mandates

 The wealth manager usually has sole authority to buy and sell assets and execute
  transactions for the benefit of the client, in addition to providing investment

Starts off with:

 Construction of a brief with the client, detailing investment aims, level of risk-
  aversion and other factors that will influence the portfolio (In some discretionary
  accounts, the wealth manager is given only limited investment authority).
  However, in all cases, major investment decisions, such as changing the
  account’s investment strategy or asset allocation guidelines, may be subject to
  the client’s approval.
 The wealth manager is generally paid on the basis of a flat-fee arrangement
  linked to the value of the assets under management.
 The gross revenue margin of a discretionary mandate is typically at least double
  that of an execution-only mandate.
Investment Mandates & Clients Wealth

  The proportion of clients using advisory mandates is, in general,
   relatively stable across the various client wealth bands.
  Execution-only mandates become more prevalent the greater the
   clients wealth
  Discretionary mandates less prevalent, as client wealth rises.
  Wealth management can mean different things in different geographic
    In the US, wealth management is more closely allied to transaction-
       driven brokerage and is typically investment-product driven.
    In Europe, the term is more synonymous with traditional private
       banking, with its greater emphasis on advice and exclusivity.
        Onshore & Offshore Wealth

 Onshore wealth management is the provision of products and services within
  the client’s main country of residence.
 Offshore wealth management, by contrast, serves clients wishing to manage
  their wealth outside their main country of residence for reasons such as:
   financial confidentiality;
   legal-system flexibility;
   tax considerations;
   the lack of appropriate products and services onshore;
   a low level of trust in domestic financial markets and governments; and
   the need for safety and geographical diversification in response to domestic
     political and macroeconomic risks.
  Some clients treat their offshore account(s) primarily as a ‘vault’.
    Key Wealth Drivers – Regional

 Asia-Pacific: Strong economic development
 Latin America: Traditional offshore-banking
 Middle East: Oil-driven growth
 Africa: Commodity-driven growth

                     Main players

   Pure private banks
   Trust banks
   Retail and universal banks
   Family offices
   Financial advisors
   Stockbrokers
   Direct banks
   Asset managers
   Investment banks
   Others – insurance companies, accountants, solicitors, financial
The Rich & Famous
        The Ubiquitous Common Man
Does he require Wealth Management services ?
… or do they require it ?
Hobbies of a common man

    Hobbies of the rich & famous

   Black Jack
   Golf
   Ice Sculpting
   Yachting
   Polo
   Collecting Cars
                  Some more

   Skydiving
   Flying
   Deep-Sea Diving
   Art
   Buying Islands
   Space Travel
Major financial focus area for the
          common man

 How to grow the income more than the growth in
  inflation & expenses.
Three major financial focus area
    for the HNI Client today

Preserve: How to transfer wealth to the next
  generation ?

Grow: How to earn tax-efficient & inflation-adjusted
  growth to secure the family’s financial future?

Give: What is the most efficient way for charity?
                  Family Offices

Highly successful families manage their wealth by working with
  combinations of in-house professionals and third party vendors
  in a “family office.”

A Single Family Office (SFO) is a private structure created to
  oversee personal financial matters for family members

A Multi-Family Office (MFO) is a commercial enterprise established
  to meet the investment, estate planning and, in some cases, the
  lifestyle and tax service needs of affluent families.
   Types of Single Family Office

In an adminstrative family office, advisory and investment management services are managed
    through contracts with external service providers. The administrative family office typically
    directly employs staff to provide some level of bookkeeping, tax, or administrative
    services—often on a part-time basis.

The hybrid family office keeps functions strategic to the family’s objectives in-house, and
   outsources nonstrategic functions. Some families hire family members for certain strategic
   activities, when the family member has a demonstrated expertise or when privacy and
   continuity of management are top concerns. In addition to administrative functions, hybrid
   family offices employ experts in tax, legal and/or asset allocation.

The comprehensive family office is designed to provide services for families who desire the
   maximum degree of control, security, and privacy. All functions, including administrative,
   tax, legal, risk management, and core investment management, are provided by in-house
   employees. Specialized investment management activities such as hedge fund, venture
   capital, private equity, or emerging market investments may be sourced externally
   depending on each family’s objectives, budget, and their ability to recruit and retain such
Some of the Leading Multi-Family
         Offices in India

 1.   Altamount Capital
 2.   Quant Capital
 3.   Client Associates
 4.   India Infoline Private Wealth
 5.   Karvy Private Wealth
 6.   ASK Wealth Advisors
 7.   Avendus Capital
Association of International Wealth Managers
                      (AIWM® )

 Based in Switzerland, Non-profit Association
  established in 2007 to promote & strengthen global
  education in private banking industry
 Awards the CIWM®         Diploma : an internationaly
  recognised qualification for wealth management
 Offers private banking professionals platform for high-
  quality education & international networking
Association of International Wealth Managers

 Association founded by:
  AZEK , founded in 1990, the Swiss Training Centre for
   Investment professionals
  LawInContext, online legal & training service created
   by global law firm Baker & McKenzie
  Central Law Training(CLT), UK’s leading provider of
   postgraduate legal training & course provider of
   renowned STEP Diploma in International Trust
   AIWM Member Nations

Currently present in Switzerland,
 France, United Kingdom, Germany,
 Italy, Luxemburg , Hong Kong &
Recently Launched in Asia & Gulf
 region by AIWM India
                Role of AIWM

 Assists graduates in acquiring core competencies
  in wealth management & in qualifying for key
  positions within the industry
 Established to set a globally recognised standard
  for the qualification of wealth management
 Facilitates client’s access to first-class, reliable and
  comprehensive advice & services.
           AIWM’s Objectives

 To facilitate research & high quality education in
  field of international wealth management
 To provide internationally recognized certifications
  in wealth management & family office(CIWM®)
 To create a forum for the interchange of ideas and
  information in the finance and wealth
  management field
 To assist a world wide network of private banking
AIWMI – International Alliances

1.   Family Office Group, USA
2.   NUS Business School, Singapore
3.   Family Office Exchange (FOX), USA
4.   Campden IPI, UK
5.   Society of Trust & Estate Practitioners (STEP)

 Wealth management & private banking business is currently a
  major area for development for many of the worlds financial
 The market is large, growing and highly profitable
 Industry is fragmented & there is no agreed single ‘preferred’

                             Thank You

Association of International Wealth Management India (AIWMI)
        Regus, Level 9, Platina, G Block, Plot C-59, BKC, Mumbai-51
                  Ph: 022 67000572 Mob: +91 997017972

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