Readings: Wealth management, Dollar up & gold down, Fixed Maturity Plans (FMP)
- Business Standard: IT tuned to manage wealth
In 2006, India’s HNI population, or people whose wealth is more than a million dollars, crossed 100,000, which made it the second-fastest growing HNI segment in the world, after Singapore, where the growth was 21%.
The burden of handling administrative tasks can take up to two-thirds of a wealth manager’s time . . . For TCS, wealth management is one of the focus areas among the top four high growth areas in the financial sector for the next three-four years. “While the market is still nascent, we are expecting that this segment will make us grow at 30-40 per cent but that is because the base is small.”
The dollar traded at the highest level in at least three weeks against currencies of commodity- producing nations from Australia to Norway after prices of raw materials tumbled on speculation the global economy is slowing.
Commodities’ tumble and the dollar’s rebound gained momentum after the Federal Reserve on March 18 cut interest rates by 0.75% to 2.25%. The move was less than the full-point cut some traders expected, sapping demand for oil and gold as a hedge against quicker inflation.
Gold posted its biggest weekly drop since 1990, falling from a record $1,032.70 an ounce on March 17. Oil has dropped 8.9% from a record this week, and copper had its biggest weekly slide in 10 months.
- Economic Times: MFs push fixed plans despite lower margins
March is the season for FMPs as investors seek ‘double indexation benefit’, which will lower their capital gains tax liability . . . thanks to the income-tax rules, it is possible for an FMP investor to earn indexation benefit for two years (as investments are spread over two financial years) on capital gains. This is despite investment tenure being only 13 or 14 months.
. . . around Rs 80,000 crore of assets are in the form of FMPs. And anywhere from 5-15 basis points (0.05-0.15%) is what the asset management company is making from it annually. In contrast, asset management fees are as high as 1.25% for equity assets. Yet, the fund house seems to be launching FMPs back-to-back, as it boosts their overall assets under management.
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March 21st, 2008 at 5:02 pm
Fully agree. As an HNI myself, I find it exceedingly difficult to manage paperwork with so many forms filling and copies of certificates/attestations to be supplied/TDS management and now New KYC norm.
Wealth Management arms of Banks are not equipped also to deal with this with their incompetent staff who are mostly looking for new clients than servicing existing ones.
April 14th, 2008 at 2:39 pm
As a financial advisor myself but an independent one, it pleases me to agree with your comment.
However, I can say that when HNIS stick to well informed independent advisors, they are more interested in servicing and retaining their clients rather than chasing new ones. Of course the loyalty is a two way street. HNIs are known to jump from one advisor to the other which leads to malpractices.