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* IIFWAM is planning to enter the mass affluent segment over the next few quarters. We met the founder Dezerv to understand the modalities and opportunities in this space.

* India is at the cusp of a massive uptrend in customers needing wealth management support, especially in digital mode. While the UHNI population is served by the organized wealth managers such as IIFLWAM, Julius Baer, the private client division of Banks, among others, the emerging HNI population is often ignored.

* Insurance agents, chartered accountants, or mutual fund advisors push products to this segment, and hence they do not get true portfolio management advice.

* Young (30-40 year olds) employees who are amassing wealth offers a huge scope for opportunity to the providers of Wealth Management services in the digital mode.

* Post our interaction, our confidence on overall growth of the Wealth Management business only got stronger.

* We maintain our Buy rating on IIFLWAM with a one-year TP of INR2,200.

Differentiated business model amid a plethora of FinTechs

* Wealth Management involves value added services such as advisory, goal planning, and asset allocation. However, relative to the Western world, Indian customers show reluctance towards payment for such value added services.

* Amid the various WealthTech models in India, currently broking, mutual fund (MF) distribution, and robo advisory are the key ones. It is pertinent to create a differentiation to stand out among a plethora of companies.

* MFs play an important role in Wealth Management and there has been an increasing adoption of direct MF investments by digitally savvy customers. Nevertheless, WealthTech firms are innovating to add value by offering services.

* The business of Mass Affluent Digital Platform (MADP) is not comparable with the likes of Groww and Zerodha, which are transaction platforms, as the scale of business increases with an improvement in the market and vice versa. For MADPs, client stickiness will be better even in a falling market. The ideal competition is ICICI Direct, a bank RM, or an IFA.

* The traditional Wealth Management business model has a linear growth, wherein it is more dependent on the number of RMs getting added, while in the digital model those limitations are less.

* Competition is increasing, but the market is large enough for a few players to exist. The key reason for success in this segment is to focus on digitization, not automation, and the same has to flow from the top management.

Huge opportunity for growth from wealth transfer and growing share of affluent customers

* Wealth transfer between generations offers a huge opportunity, along with the addition of incremental AUM. Investments for the current generation are still planned by their parents, who are still not accustomed to a complete digital mode. The change will happen when the current generation takes over.

* The current focus is on the salaried class in the 33-40 year old age bracket, as flows are consistent relative to small business operators or professionals. Setting an appropriate entry limit, which will be a large enough ticket size for the customer to commit to the platform will be a vital strategy. This limit makes onboarding difficult, but improves the longevity of customers.

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