Morgan Stanley sees its India wealth management assets growing at a "sustainable pace" of 25 percent a year in the near future as the bank adds more advisers in the rapidly growing Asian economy, a senior official said on March 23.
But the business in India faces challenges due to the lack of a large pool of qualified people to manage assets of wealthy individuals, Leslie Menkes, a Singapore-based managing director for the bank's private wealth management arm, told Reuters.
"We have a strategic plan to expand our footprint and continue to grow the business," he said. "I believe there are many successful wealthy individuals and families here in India that have never had a discussion with a world-class sophisticated wealth manager."
Asia, home to more than 3 million millionaires, has become a battleground for private banks as global and Asian players compete for market share in a region that is fast outpacing the United States and Europe in economic growth. Global players such as Credit Suisse , Standard Chartered , HSBC , Barclays and many local players have said they plan to hire hundreds of bankers between them to boost growth in India.
French bank BNP Paribas said in January it was ramping up its Asia wealth management business with a new ultra-high-net-worth unit and a reorganised structure to help capture burgeoning wealth in emerging markets.
The number of dollar millionaires in India and their collective wealth rose by more than 50 percent in 2009, according to Capgemini and Merrill Lynch.
Only about a tenth of an estimated $477 billion worth of wealth held by Indian millionaires is managed by professional advisers, industry executives have said.
Morgan Stanley, which started its India wealth management business towards the end of 2008, has seen its assets more than doubling in the last couple of years, Menkes said, but declined to give the bank's current total assets under management.
"It's an early stage business so our growth is dramatic," he said at the bank's India headquarters in Mumbai. "I think a sustainable pace for the foreseeable future would be about 25 percent a year over the next few years."
The competition for wealth management talent in fast-growing Asian markets such as India is becoming cut-throat, with a slew of global banks vying with the local financial institutions for a bigger share of the market.
Home-grown wealth firms are also raising the heat on their Western rivals by poaching top talent, as the fight for clients' wallets in the world's second-fastest growing market for millionaires intensifies.
"I see talent as a capacity constraint for the industry," Menkes said. "That is a structural challenge that India is facing in wealth management with the fact that so many players are coming here and there are only a finite number of really good people."
Morgan Stanley, which has slightly above 100 staff in the Indian wealth management business, plans to add more advisers and expand its network of branches in the country from five cities now as it looks to tap new customers who have investible assets of $5 million.
"We are just at the beginning of a multi-year investment and I am very confident that over time these investments in technology, in talent, in solutions for clients will position us very well to be a leading wealth manager in the country," Menkes said.
In the near term, however, Menkes expects private wealth clients to adopt a cautious stance in view of the geo political uncertainty and volatility in the capital markets. "This adds to the uncertainty of clients in terms of pure direction," he said.
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