Wealth management firms are taking note of the 6.2 million non-resident Indians (NRIs) and their estimated $500 billion of investable assets, according to a recent report from London-based market research firm Datamonitor.
Datamonitor defines NRIs as people who were born in India and are now reside abroad. The largest concentrations of NRIs live in the US, the UK, Canada and Australia. Singapore, Hong Kong, Qatar and Bahrain are also emerging as new wealth hotspots.
Both international and Indian private banks and wealth managers are eager to target this niche segment, Datamonitor says. Historically, a combination of cultural traditions, demographics and logistical factors had influenced the development and marketing of the wealth proposition for NRIs.
Strong family ties and an emotional link to their homeland are also believed to be stoking interest in investments into India itself, which account for between 15% and 25% of NRI portfolios. However, Koelle Boyce, a financial services analyst at Datamonitor and the author of the report, says this emotional attachment as a basis for investment allocation has been over-emphasised. A key factor is strong interest in emerging markets and offshore funds, she says.
Datamonitor's survey among wealth managers in Europe and Asia-Pacific reveal a profile of the NRI investor as a sophisticated client who demands online functionality, an active input in the management of his portfolio and frequent communication with his wealth manager. NRIs also demonstrate substantial interest in: tax advisory services; international services such as offshore investments and overseas property investment and management; private equity investments; and linked products such as deposits linked to mortgages or cash management accounts linked to investment portfolios, the report says.
Wealth managers are pursuing a range of strategies, including: joint ventures between Indian firms and international or overseas managers, which provide ready access to investment expertise and to potential clients; distribution agreements with asset managers; and the development or expansion of onshore operations in India. This last, in particular, is proving increasingly important among providers with firms like SG Private Banking and Merrill Lynch pursuing closer integration of their onshore Indian and offshore NRI businesses, while indigenous Indian banks such as ICICI Bank and Axis Bank are leveraging their home advantage, Datamonitor says.