This document discusses the wealth management landscape and opportunities in India. It outlines the traditional and emerging wealth products available, as well as the major players and business models in the wealthtech space. Key challenges include managing performance expectations, avoiding disintermediation from low-cost alternatives, achieving growth with low margins, and building trust to access customer data. The document analyzes trends in regulations from SEBI and opportunities to disrupt existing wealth management and sales processes through new digital solutions.

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WealthTech Landscape in India and
Strategies to Break into PM

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5. WealthTech in India: Past, present, future
• What is wealth
• Wealth products
• Traditional
• Emerging
• WealthTech players
• Business models
• Regulatory trends
• Challenges
• Scope for
disruption

6. Non-Government
Wealth
Government
Currency
Easy
Hard
Accepted, durable, portable, divisible,
uniform, central bank regulated
supply
The nature of
wealth
Not widely accepted, not
uniform, differently
regulated supply

7. India wealth
story• Formalization of economy (de-mo, GST, more tax
returns)
• Traditional avenues not attractive (gold, real estate, FDs)
• Financialization of savings
• Mutual fund SIPs, trading, PMS, AIF, REIT
• Foreign inflows
• EPFO
• Insurance
• Increasing affluence
• Strong stock markets
• All is good, right?

8. Debt
Lend money via
bank deposits, debt mutual
funds
Equity
Hold shares of growing companies
via trading account, equity mutual
funds
Over long-term,
prices increase faster than
inflation, but go up and down a
lot
Effectively only 2 asset
classes
Over short-term,
grows steadily with interest
income, but does not beat
inflation

9. Equity
Trading
De-mat
Insurers
Money back /
ULIPs
Traditional wealth
products Banks
Fixed
deposits
Below inflation returns
but high sales
commissions
Relationship managers
also push insurance and
trading accounts
Push SMS tips to
churn portfolio for
more brokerage

10. Emerging wealth
products Alternate
Investment
Funds (AIF)
Mutual Funds +
Fund
Distributors
Portfolio
Management
Services (PMS)
44 companies, 8000+ funds,
Min Rs. 1k (Retail), $1B/month
domestic equity SIPs
happeningFund selection can be
challenging
302 entities across
India, Min Rs. 25 lacs
(HNIs)Need to trust the fund
manager and their
skill, Fixed + variable
fees
505 entities across
India, Min Rs. 1 crore
(UHNIs)
Very new products,
Return track record being
established, Fixed + variables fees

11. Discount Equity
Broking
+ Other offerings
B2C WealthTech
players Mutual Fund Distribution
+ Some financial
planning
Limited by number
of active traders
(600K)
Limited by number of
long-term investors (10-
30M)

12. Common models
Transaction Engine
Decision Engine
Relationship Engine
Offline transaction can be done online
Becomes zero fee / go direct to vendor (e.g. airlines)
Curate a limited set of funds or stocks via If-then
Rules (algorithm) and get investor to follow
Some firms using research / advice to build a dialog
Laziness leading to loyalty today (like banks)
In the long-run only performance likely to matter

13. Revenue
modelCustomer fees
Product
commission
Cross-sell?
Either charge the customer or the product maker,
or use a loss leader to cross-sell something,
or B2B service (e.g. for a bank)

14. Cost model
• Business growth
▪ Advertising
▪ Performance marketing (Search)
▪ Performance marketing (Social)
▪ Brand marketing (TV, radio, hoardings)
▪ Sales team (tele-sales and field sales)
▪ Marketing + education
• Product
▪ Engineers, analytics, PMs
▪ Customer support
▪ Investment advisors
▪ Fixed costs
▪ Office space
▪ Broadband internet + Cloud severs, storage, database + Productivity
tools

15. VC/PE Funding
• Few players have been funded
• Getting funding not so easy
• More you take, more pressure to deliver results
• Those who cannot get funding will not scale since space is already crowded
• Bulk of the funding goes towards customer acquisition costs
• Exit options are unclear at this point
• Stay private, keep it slow and steady (e.g. no VC-backed lawyers, accountants)
• Sell to a traditional Indian player
• Sell to a foreign player entering India (e.g. Schwab, Vanguard)
• IPO once profitable

16. SEBI
Regulations• Push towards fee-based Registered Investment Advisors (“RIAs”)
• Doctor + chemist/direct model
• “Incidental advice” exemption still remains, some noise that its going away
• Collecting fees may prove to be challenging, 1076 people + entities registered
• Some are double-dipping
• Passive index tracking funds may start to gain on active large-cap
funds
• Benchmark now includes dividends (“total returns index”)
• Large-cap funds must invest 80% in top-100 stocks by market cap

17. SEBI
Regulations
• Mutual fund commissions reduced
• Capping of Total Expense Ratios (“TERs”)
• Not a viable career option for a human
• Human advisors and banks will sell more insurance
• Direct funds will get more popular as people learn to select funds themselves
• No up-front commission, trail only
• Reduces incentives to mis-sell / churn funds
• Human advisors and banks will sell more insurance

18. Challenges for WealthTech
companies1. Managing performance expectations
• Lots of first-time investors who are still yet to experience the 5-year performance promise
• Still learning how to handle of short-term negative returns and staying invested
2. Not being dis-intermediated
• Index fund (vs. AMC), direct plans (vs. distributors), discount brokers (vs. full-service broker)
3. Growing
• Breaking even with low margins
• Growing the customer base beyond existing investors
4. Building trust to share data
• Traditional financial planners ask for a lot of data to enter into their tools
• Will millennials blindly trust someone else or do they prefer to figure it out themselves
• No security hacks

19. Dis-intermediation
challenges• No brokerage (discount broker)
• No commission (direct plan)
• No active management (index fund)
• So what happens…? No financial services / only cheating ?
• Is the travel agent analogy applicable?
• Or trusted doctor’s prescription + chemist + medicine
company?
• Low cost with scale vs. premium niche vs. hybrid

20. Opportunity: What is being disrupted?
Is the human wealth management process?
No low-cost neural network investment service in India yet
OR
Is it the human marketing / sales of existing wealth
products?
Differentiation comes from curation of choice / sales ability

21. Q&A
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