Authors
- VUNYALE NARENDER
- I RAMA SESHA SARMA
Abstract
This is a market research paper on investing behaviour of High Net-Worth Individuals (HNWIs) based on various factors like age, annual income, awareness level, past experiences of investments, benefits received from various investment options, etc. The information gathered from customers through a questionnaire is used to understand what factors influence HNWIs to determine their investments. This paper lays emphasis on the key factors that influence individual HNWIs in determining various investments that they make. Factors that play a major role in the investment decisions of HNWIs include — trust, transparency of data, portfolio of investments, disclosure of data on costs of transactions and switchover costs, and relationship of the manager with the HNWI customer and ability to convince him/her in terms of performance. Reputation of the fund manager also marks an impression on the mind of the HNWI.
Introduction
The Asset Management Industry is at the threshold of a paradigm shift that would model its future. The report on the Asset Management Industry by PWC (Benjamin, B., 2017) forecasts a huge rise in assets and the emergence of several game changers that would dramatically alter the industry’s landscape. The factors influencing the industry could be many including policies of the government in terms of improving corporate governance, enabling transparency through technology, shift from traditional investments to stock markets, improvement in relationship banking and conversions through personal selling of retail products, innovations in financial products and schemes of the asset management companies. Additionally, government policies which have resulted in formalising businesses in the economy (major steps initiated and notable could be demonetisation, GST Act, Gold Bonds, hints of land and property documentation and The Benami Transactions (Prohibition) Amendment Act, 2016) have further improved the sector’s situation. There is also a big shift witnessed in the recent past with
more and more people channelizing their investments towards capital markets and financial assets.
Fundamentally, the management of assets is the art and science of choosing different asset classes like stocks, bonds and derivatives based on an assurance of returns being commensurate with the risk that the investors are ready to take. This involves combining different investment vehicles in meeting the client’s risk-return needs. Investment managers of the financial services firms offer wealth management or portfolio management services to meet the above-mentioned goal. Over the past few years, the industry has grown and progressed significantly in various dimensions with product innovations and service improvisation to customers.