A Confirmatory Factor Analysis of Wealth Management Behaviour of Investors

Abstract

India is ranked among the Top 10 nations in terms of total private wealth held as per Capgemini’s World Wealth report. In 2017, the individual wealth in India expanded to Rs.344 lakh crore from Rs.310 lakh crore in 2016. Individual wealth witnessed a higher growth rate of 10.91% in 2017 against 8.50% in 2016. India also created higher number of high-net-worth-individuals (HNWIs)with a growth rate of 9.5% to 2.19 lakh HNWIs versus the global average of 7.5% and Asia Pacific region’s 7.4% Preference of Indians is also slowly but definitely shifting to financial assets over physical assets on year-on-year basis.

The aggregate wealth held by Indian High Net worth Individuals (HNWI) (i.e. individuals with investible assets of $ 1 million or more) is expected to grow at a CAGR of 27 percent over next five years to approximately Rs. 400 trillion.

Wealth advisors and wealth managers need to employ specific strategies for acquisition, service and retention of individual investor clients and at the same time deploy bold, game-changing strategies using data analytics to build business models to provide dynamic innovative investible products.

This paper seeks to understand the diverse needs and factors influencing wealth management behaviour of the individual investors using descriptive statistics and confirmatory factor analysis.