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Edelweiss says financialisation of household savings is creating opportunity for wealth managers

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Edelweiss Group on Friday said financialisation of household savings is creating opportunity for wealth managers.

Edelweiss Group on Friday said financialisation of household savings is creating opportunity for wealth managers.
"There is a lot of household wealth out here and a lot of that is growing and India is now becoming a capital surplus country. As we are becoming capital surplus, it is giving us a huge amount of opportunity to invest money," Rashesh Shah, chairman and chief executive officer said to CNBC-TV18.
According to Shah, India is growing fairly well and all parts of financial services, credit, asset management and wealth management are showing a lot of growth.
Shah said earlier household savings went into gold or real estate property, land or into bank deposits, but now people are ready to diversify their investments into mutual funds, equity insurance products, alternative funds and structured products.
"Overall, both asset management and wealth management businesses have become reasonably profitable. I think most of the companies make about 20 basis points of their assets under management as profit. Yields, your fees and commission will come down, but your cost will also get more and more efficient, because as you get scale you will get economies of scale," Shah said.
"So, overall, we think the margins, even if we look globally also I think our 20 basis point profit after tax margin on assets that we manage is easily achievable and most of the Indian players will be around that. Some will be at slightly higher than that, some will be slightly lower than that, but what is more important is though your yields will come down your scale is going up very fast," he added.
"Assets under management (AUM) are growing at 25 percent per annum and that kind of a growth is going to give a lot of opportunity for people to improve their profitability and keep on investing more in technology as you go towards that. Growth rate is going to be a key ingredient to watch not just the yield into this businesses," Shah said.