Wealth Management

1. Wealth Management Services

Think of Bank regular branches as a local Kirana store – they serve everyone with essential daily products (savings accounts, personal loans, etc.).

Their Wealth Management service, on the other hand, is like a specialist counter within that same trusted store, set up exclusively for its more affluent customers. This counter provides expert advice and a wider range of financial products, not just the Bank’s own, but from other companies as well.

Like: icici bank wealth management​, deutsche bank wealth management​,nuvama wealth management, etc

Key Points

Here’s what you need to know about wealth management in the context of a Bank.

1. The Target Client & Eligibility

• Who are they for? Affluent individuals, High Net-worth Individuals (HNIs), and families who need expert financial management.
• How to Qualify? (Eligibility Criteria)The bank defines eligibility based on a customer’s Total Relationship Value (TRV).
  • TRV includes a combination of Savings Account Balance, Current Account Balance, Fixed Deposits, and the market value of investments made through the bank.
  • While the exact amount changes, a common threshold to enter wealth management services is typically a TRV of ₹15 Lakhs to ₹30 Lakhs and above. Customers with higher TRVs (e.g., above ₹2 Crores) are often moved into a more premium tier like “Radiance” banking.

2. The Structure: Hub and Spoke Model

• Bank operates on a “Hub and Spoke” model for its wealth management services.
  • Hub: These are main wealth management centres in major cities with a team of expert product managers, research analysts, and senior relationship managers.
  • Spoke: These are the individual branches where the clients have their accounts. The Relationship Manager at the branch acts as the “spoke” and connects the client to the expertise of the “hub.”
• Key Person: Your main contact is the Relationship Manager (RM), who is a specially trained Bank employee responsible for your portfolio.

3. The “Open Architecture” Philosophy (Very Important Point)

• This is a crucial concept for PSBs like BoB. “Open Architecture” means that the Bank does not sell only its own products.
• The RM can offer you the best-in-class products from the entire market. For instance:
  • Mutual Funds: They can offer funds from HDFC Mutual Fund, ICICI Prudential, SBI Mutual Fund, etc., not just from Baroda BNP Paribas Mutual Fund.
  • Insurance: They can offer policies from various life and general insurance companies.
• Why is this important? It ensures the advice is client-focused, not company-focused. The goal is to find the best product for you, regardless of which company makes it.

4. Products and Services Offered

Remember these three main pillars of offerings:

• A) Investments:
  • Mutual Funds: A wide range of equity, debt, and hybrid funds from multiple Asset Management Companies (AMCs).
  • Bonds & NCDs: Government and corporate bonds for fixed income.
  • Portfolio Management Services (PMS): For very high-net-worth clients, offering professional management of a concentrated stock portfolio.
  • Alternative Investment Funds (AIFs): Investments in asset classes like real estate or private equity for sophisticated investors.
• B) Insurance (Bancassurance):
  • Life Insurance: Term plans, endowment plans, and ULIPs from partner insurance companies.
  • General Insurance: Health insurance, motor, and property insurance.
• C) Banking & Value-Added Services:
  • Preferential Treatment: Dedicated service counters at branches.
  • Credit Facilities: Pre-approved loans, customized loan offers, and waivers on processing fees.
  • Family Grouping: Clubbing accounts of family members to meet the eligibility criteria and extend benefits to them.
  • Legacy Planning: Assistance and advice on will creation, trusts, and estate planning.

5. Why Choose a PSB like BoB for Wealth Management?

• Trust and Safety: The biggest advantage is the government backing, which gives a higher sense of security.
• Vast Branch Network: Unmatched physical presence across India, providing accessibility even in smaller towns.
• Client-Centric Approach: Under the “Open Architecture” model, the focus is on the client’s needs rather than just pushing the bank’s own products.
• Lower Costs: Often, the fee structure and charges might be more competitive compared to foreign or private banks.

2. Life Insurance

A contract between the insurer and the insured that guarantees financial payment to beneficiaries in case of death.

2.2 Human Life Value (HLV) Concept:

• Life viewed as an economic asset.
• Key calculation factors:
  • Net future earnings (income minus personal expenses).
  • Economic loss suffered by family in case of premature death.
• HLV Formula Example:
  • Earnings after personal expense = ₹4,00,000/year.
  • Discount rate = 8%.
  • HLV = ₹50,00,000 (calculated as ₹4,00,000 / 0.08).

2.3 Life Insurance at Bank:

• Partnership with India First Life Insurance Company Ltd.
• Ownership Structure:
  • Bank: 65%
  • Union Bank of India: 9%
  • Carmel Point Investments: 26%
• Key Products:

3. Standalone Health Insurance

• Provides financial security during health emergencies and protects savings.
• Covers hospitalization, long-term care, personal accident, and travel expenses.

Health Insurance at Bank :

4. General Insurance

• Covers property (fire, burglary), personal accident, liabilities (motor, workmen’s compensation), and health.
• Ensures protection against unforeseen damages or losses due to natural disasters, theft, and accidents.

Insurance Offerings at Bank:

5. Mutual Funds

• A financial instrument pooling investments from individuals to invest in equities, bonds, and securities.

5.2 Benefits of Mutual Funds:

• Professional fund management.
• Diversification to minimize risks.
• Enhanced financial gains above inflation rates.

5.3 Regulation and Compliance:

• Governed by SEBI.
• Bank employees must obtain NISM certification and register with AMFI.

5.4 Mutual Fund Offerings by Bank:

• Partners with 21 Asset Management Companies (AMCs).
• Example Partners:
  • Aditya Birla Sunlife, SBI, Kotak, Axis, Mirae Asset, and Franklin Templeton.

• X
• Instagram
• WhatsApp