AUM of Wealth management industry to double to USD 2.3 trn in next 5 years: Report

Demand for wealth management services in terms of assets under management (AUM) will more than double from USD 1.1 trillion in FY24 to USD 2.3 trillion by FY29, helped by shifting macroeconomic trends and rising income levels, a report said.

There is a significant unmet demand for wealth management services, according to the Deloitte India report.

Of the USD 1.1 trillion financial wealth held by affluent households in FY24, it is estimated that USD 0.4 trillion will remain self-managed/informally managed, it said.

By FY29, the wealth of these affluent households is expected to surge to USD 2.3 trillion, creating substantial opportunities for both established players and new entrants in the sector, it said.

The number of affluent households, defined as the top 4-5 per cent with annual incomes above USD 25,000, is expected to grow substantially, it said.

There is a noticeable shift from physical assets like real estate and gold to financial assets like mutual funds, equities, and portfolio management services. Mutual fund AUM grew at an annualised rate of 16.2 per cent from FY17 to FY24, reaching USD 651 billion, it said.

Wealth management firms are integrating data modernisation, cloud infrastructure, and cybersecurity measures to enhance offerings, it said.

"Rising affluence and shifting preferences of relevant customer segments are likely to drive unprecedented growth in India's wealth management industry. At the same time, it is a competitive landscape marked by a diverse set of providers," Deloitte India Partner - Banking and Capital Market Vijay Mani said.

Success in terms of growth and profitability will require a different approach from the past, i.e., there is a need for a sharper understanding of the customer, better tailoring of products for varying segments, hybrid operating models that blend technology powerfully with Relationship Manager (RM) talent and a keen eye on regulatory compliance, it said.