Almost five out of every 10 ultra high networth individuals (HNIs) are based out of non-metro cities. And of these 45% ultra HNI population in non-metro cities, over half of them belongs to B-15 cities, shows Kotak Wealth Management’s ‘Top of the Pyramid 2016’ report prepared by EY.
Ultra HNIs are those who have a minimum net worth of Rs. 25 crore.
Of the total 1.47 lakh ultra HNIs as on March 2016, close to 66,000 ultra HNIs are based out of non-metro cities. The report found that 55% of ultra HNIs are from four metros – Delhi, Mumbai, Chennai and Kolkata while the next top six cities comprise 17% of ultra HNIs.
Surprisingly, 23% of ultra HNIs belong to the top 11-20 cities and the rest i.e. 5% are based in cities beyond the top 20. These cities include Surat, Indore, Raipur, Aurangabad and Jamshedpur. In fact, a few of these cities like Surat, Indore and Jamshedpur are creating new ultra HNIs, mainly in the inheritor and entrepreneur categories.
These non-metro cities, particularly small cities, are gradually becoming centres of wealth and prosperity and leading brands are rapidly waking up to their immense potential, said the report.
The report says, “During our research, we observed that emerging cities and small towns continue to form a significant part of the Indian ultra-HNI population.”
Cafemutual spoke to a few advisers who cater to ultra HNI clients to suggest ideas that might help you acquire wealthy clients.
Suresh Sadagopan of Ladder7 Wealth Advisories believes that IFAs in such cities should upgrade their knowledge to cater to ultra HNIs. “IFAs should develop soft skills which will help advisers groom their personality. Also, pursuing professional qualifications such as CFP and CFA can help advisers differentiate themselves from others.”
Hemant Rustagi of WiseInvest Advisers is of the view that B-15 advisers will have to put a lot of efforts to change the mindset of ultra HNIs in small towns. “These HNIs are particularly entrepreneurs. Typically, HNIs of small cities have a huge exposure to real estate. Hence, IFAs need to put a lot of efforts to convince them to invest in assets like equity. The challenge is to change their mindset.” Rustagi advises that IFAs should make HNI clients understand the importance of diversification across asset classes to reduce risk.
The report has estimated that the number of ultra HNIs will increase to 2.94 lakh with a combined net worth of Rs. 319 lakh crore by FY 2020-21. This growth will come from small cities and towns, said the report.
