A Structural opportunity
IIFL Wealth Management (IIFLWM) is one of the fastest growing financial services and private wealth management firms in India, with AUM of ₹ 1,677bn, as on FY19- end. India represents a huge opportunity for IIFLWM, as only 4% of HNI’s wealth is being managed by top wealth managers. Also wealth of HNI’s is expected to more than double by 2023. The company has witnessed robust business growth under the vision, leadership and guidance of its Promoters and senior management. Retaining of top talent has also led to robust business growth as it helps in lower client attrition. The strong brand of ‘IIFL’ has also helped in attracting customers to its products in preference over those of its competitors.
* Huge market potential for wealth management: Total individual wealth in India is currently estimated at ~US$5.6trn and is expected to double to US$10.9trn by 2023 at a CAGR of 14%. Of the total Individual wealth, ultra HNI’s and HNI’s account for approximately US$2.2trn, which is projected to grow to US$5.06trn by 2023. It is estimated that Financial Assets managed by Top Tier Wealth Managers is only USD 201 billion, with other assets (USD 1.1 trillion) outside coverage which is 4% of the ultra HNI / HNI wealth.
* Alternatives to drive asset management vertical: This business vertical has shaped up to become the highest purveyor of asset management in the alternates space, with listed equity, early stage private equity, mid – market / SME private equity, private debt, and global SMA practices being fully established. The focus on alternates and portfolio management services will drive the growth of the asset management vertical for the next few years as they open India’s access to global institutions and UHNIs and family offices for investments for the long term.
* Strong brand name: ‘IIFL’ is a well-established and reputed brand in the broking and financial services sector throughout India. Its brand and reputation serve in attracting customers to its products preferentially over those of its competitors. Brand marketing exercises over the years have helped the company retain its existing customers and gain new ones.
* Retaining top talent leading to client stickiness: Wealth management being a people’s business, requires retention of top talent. The company has offered a significant portion (>20%) of its ownership to employees and has thus created an entrepreneurial culture and an ownership mindset across the firm. Team leader attrition rate was 3.2% in FY19 and has averaged at <2.5% over the last four years. This has resulted in a low client attrition rate of <2.5% per annum.
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